ITO 8(1)(2), MUMBAI v. BODHESH TRADE INVEST P. LTD, MUMBAI

ITA 2234/MUM/2012 | 2006-2007
Pronouncement Date: 09-10-2013 | Result: Dismissed

Appeal Details

RSA Number 223419914 RSA 2012
Assessee PAN AAICS3595F
Bench Mumbai
Appeal Number ITA 2234/MUM/2012
Duration Of Justice 1 year(s) 6 month(s) 4 day(s)
Appellant ITO 8(1)(2), MUMBAI
Respondent BODHESH TRADE INVEST P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 09-10-2013
Date Of Final Hearing 09-10-2013
Next Hearing Date 09-10-2013
Assessment Year 2006-2007
Appeal Filed On 04-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI SANJAY ARORA ACCOUNTANT MEMBER ITA NO. 2234/MUM/2012 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 8(1)(2) M/S. BODHESH TRADE INV EST P. LTD. ROOM NO. 205 2ND FLOOR PLOT NO. 123 ROAD NO. 17 AAYAKAR BHAVAN M.K. ROAD VS. MIDC MAROL ANDHERI (E) MUMBAI 400020 MUMBAI 400093 PAN - AAICS3595F APPELLANT RESPONDENT APPELLANT BY: SHRI SURENDRA KUMAR RESPONDENT BY: SHRI DHIRENDRA M. SHAH DATE OF HEARING: 09.10.2013 DATE OF PRONOUNCEMENT: 09.10.2013 O R D E R PER D. MANMOHAN V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 12.01.2102 PASSED BY THE CIT(A) 16 MUMBAI. 2. THE ONLY ISSUE URGED BEFORE US IS WITH REGARD TO TH E CORRECTNESS OF THE ADDITION MADE BY THE AO REFERABLE TO DEEMED DIVIDEN D UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT 1961. 3. THE ASSESSEE COMPANY ORIGINALLY FILED THE RETURN OF INCOME ON 30.11.2006 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 115JB OF THE ACT ON 24.12.200 8 AFTER MAKING ADDITION UNDER SECTION 145A AND 43B OF THE INCOME TAX ACT. T HEREAFTER THE INTERNAL AUDIT PARTY RAISED AN AUDIT OBJECTION IN RESPECT OF UNSECURED LOANS OBTAINED BY ASSESSEE COMPANY FROM VARIOUS SISTER CONCERNS. I N THE OPINION OF THE INTERNAL AUDIT PARTY THE PROVISIONS OF SECTION 2(22 )(E) ARE APPLICABLE WHEREBY THERE IS ESCAPEMENT OF INCOME TO THE EXTENT OF ` 1 11 62 456/-. BASED UPON THE SAID INFORMATION THE COMMISSIONER OF INCOME TAX INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT AND SET ASIDE THE ASSE SSMENT WITH A DIRECTION ITA NO. 2234/MUM/2012 M/S. BODHESH TRADE INVEST P. LTD. 2 TO THE AO TO REDO THE ASSESSMENT ACCORDING TO THE L AW AND SPECIFICALLY DIRECTED THE AO TO CONSIDER THE ADDITION TOWARDS DE EMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. CONSEQUENT TO THE SAID DIRECTION THE AO IN THE ORDER DATED 29.09.2011 MADE THE IMPUGNED ADDITION OVERLOOKING THE CONTENTION OF THE ASSESSEE THAT THE DEEMED DIVIDEND CAN BE TREATED IN THE HANDS OF THE REGISTERED SHAREHOLDERS OF THE LENDER COMPANY AND NOT IN THE HANDS OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRE D AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. IN THE MEANTIME THE COMPANY HAS ALSO FILED AN APPEA L BEFORE THE ITAT MUMBAI BENCHES AGAINST THE REVISION ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT CONTENDING INTER ALIA THAT THE CIT ERRED IN DIRECTING THE AO TO TAX ` 1.11 CRORES RECEIVED BY THE ASSESSEE AS LOAN AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. THE APPEAL WAS NUMBERED AS ITA NO. 3793/MUM/2011 AND POSTED BEFORE B BENC H. VIDE ORDER DATED 23.09.2011 THE BENCH SET ASIDE THE REVISION ORDER VIS--VIS THE ISSUE CONSIDERED UNDER SECTION 2(22)(E) OF THE ACT BY OB SERVING AS UNDER: - 4. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WEL L AS THE LD DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE ISSUE OF DEEMED DIVIDEND U/S 2(22)(E) IT IS PERTINENT TO NO TE THAT THE CIT HAS INVOKED THE JURISDICTION ON THE BASIS OF THE FACT T HAT THE ASSESSEE TOOK LOANS FROM THREE COMPANIES NAMELY ARCO HOLDINGS & T RADING P. LTD. ARCO MICAVER P LTD AND ARCO ELECTRO TECHNOLOGIES LT D. AND SOME OF THE SHAREHOLDERS IN THESE COMPANIES AS WELL AS THE ASSE SSEE COMPANY ARE COMMON. SINCE THIS ISSUE IS SETTLED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. BHAUMIK COLOUR P LTD. REPOR TED IN 118 ITD 1 AND FURTHER BY THE DECISION OF THE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS UNIVERSAL MEDICARE PRIVATE LIMITED REPORT ED IN 324 ITR 263 (BOM); THEREFORE IT IS NOW SETTLED PROPOSITION OF LAW THAT THE INCOME CAN BE DEEMED U/S 2(22)(E) ONLY IN THE HAND OF THE REGI STERED SHARE HOLDER WHO IS THE RECIPIENT AND BENEFICIARY OF ANY SUCH PA YMENT BY THE COMPANY. THEREFORE THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND TO THAT EXTENT THE REVISION ORDER PASSED U/S 263 IS NOT SUSTAINABLE. 5. IN THE LIGHT OF THE AFORECITED DECISION IT WAS CON TENDED BEFORE THE LEARNED CIT(A) THAT THE ADDITION MADE BY THE AO IN THE CONSEQUENTIAL ORDER IS NOT IN ACCORDANCE WITH LAW. IT WAS ALSO CONTENDE D THAT THE 263 ORDER ON THIS ASPECT HAVING NOT BEEN SUSTAINED BY THE HON'B LE ITAT ANY ASSESSMENT MADE PURSUANT TO THE ORDER UNDER SECTION 263 BECO MES VOID AB INITO. IN ITA NO. 2234/MUM/2012 M/S. BODHESH TRADE INVEST P. LTD. 3 THE LIGHT OF THE DECISION OF THE ITAT B BENCH MU MBAI THE LEARNED CIT(A) DELETED THE ADDITION. DESPITE THAT THE DEPARTMENT P REFERRED AN APPEAL AGAINST THE ORDER PASSED BY THE CIT(A) BY CONTENDIN G THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE ITAT IN ITA NO . 3793/MUM/2011. 6. DURING THE COURSE OF HEARING THE LEARNED D.R. FAIRL Y ADMITTED THAT AS ON TODAY THE DECISION OF THE ITAT B BENCH MUMBAI IN ITA NO. 3793/MUM/2011 IS NOT DISTURBED/UPSET BY ANY SUPERIO R COURT. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE ARE OF T HE FIRM VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FO R ANY INTERFERENCE. 7. IN THE RESULT AS PRONOUNCED IN THE OPEN COURT WE HEREBY DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED: 9 TH OCTOBER 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 16 MUMBAI 4. THE CIT 8 MUMBAI CITY 5. THE DR B BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.