M/s P.T.Dot.Com. Pvt. Ltd., Indore v. The ACIT, 3(1), Indore

ITA 447/IND/2010 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Allowed

Appeal Details

RSA Number 44722714 RSA 2010
Bench Indore
Appeal Number ITA 447/IND/2010
Duration Of Justice 1 year(s) 16 day(s)
Appellant M/s P.T.Dot.Com. Pvt. Ltd., Indore
Respondent The ACIT, 3(1), Indore
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 22-07-2011
Assessment Year 2007-2008
Appeal Filed On 06-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARMA A.M. PAN NO. : AACCPU372P I.T.A.NO. 447 / IND /20 10 A.Y. : 2007 - 08 P.T.DOT COM PVT.LTD. ACIT NARAYAN KOTHI VS 3(1) RACE COURSE RO AD INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. S. DESHPANDE C. A. RESPONDENT BY : SHRI ARUN DEWAN SR. DR O R D E R PER R. C. SHARMA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 30 TH MARCH 2010 FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO ADDITION MADE U/S 2(22)(E) AMOUNTING TO RS. 89 79 734/ - ON ACCOUNT OF DEEMED DIVIDEND. - : 2 : - 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF COACHING & TRAINING OF THE STUDENTS FOR ENTRANCE OF MBA EXAMINATION AND OTHER PROFESSIONAL ENTRANCE EXAMINATIONS. IT HAS FRANCHISEE FOR P T EDUCATION AND TRAINING SERVICES LIMITED ( IN SHORT THE PTETSL ) M/S. PTETSL IS A CLOSELY HELD LIMITED COMPANY CARRYING ON BUSINESS OF COACHING TRAINING INSTITUTE. SHRI SANDEEP MANUDHANE HOLDS 97% OF THE SHARE OF THIS COMPANY AND 50% SHARES OF THE ASSESSEE COMPANY. AS PER SCHEDULE 4 OF THE AUDITED BALANCE SHEET THE ASSESSEE COMPANY HAD SHOWN A SUM OF RS. 2 23 72 295/ - UNDER THE HEAD LOANS AND ADVANCES . AS PER THE DETAILS FURNISHED BY THE AUDITORS IN ANNEXURE D OF CLAUS E24(A) & 24(B) THE ASSESSEE COMPANY ACCEPTED LOAN OF RS. 90 90 241/ - FROM M/S. PTETSL . SHRI SANDEEP MANUDHANE HAS 97% SHARE HOLDING IN M/S. PTETSL AND 50% IN THE ASSESSEE COMPANY AND M/S. PTETSL HAD ACCUMULATED PROFIT INCLUSIVE OF GENERAL RESERVES OF RS. 1 21 24 419/ - AS ON 1.4.2006 WHICH WAS ENHANCED TO RS. 1 69 93 299/ - AS ON 31.3.2007. FROM THIS THE AO NOTED THAT - : 3 : - 3 PTETSL HAD ADVANCED LOAN TO THE ASSESSEE OUT OF ITS ACCUMULATED PROFIT. IT WAS FURTHER NOTED THAT LENDING OF MONEY WAS NOT THE BUSINESS OF PTETSL AS EVIDENT FROM THE NATURE OF BUSINESS GIVEN IN SUB - CLAUSE (A) OF CLAUS E 8 OF PART B OF AUDIT REPORT IN FORM NO. 3CD. 4. THE ADDITION MADE U/S 2(22)(E) WAS CONFIRMED BY THE LD. CIT(A) AND ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE DECISION OF THE I.T.A.T. SPECIAL BENCH IN THE CASE OF BHOMIK COLOUR LAB 122 TTJ 865. HE FURTHER DREW OUR ATTENTION TO THE FACT THAT CONDITION WITH REGARD TO ASSESSEE BEING REGISTER ED SHAREHOLDER AS WELL AS BENEFICIAL SHAREHOLDERS ARE REQUIRED TO BE FULFI LLED FOR BRINGING THE CASE INTO THE MISCHIEF OF SECTION 2(22)(E). AS PER THE LD. AUTHORIZED REPRESENTATIVE ASSESSEE COMPANY DID NOT HOLD ANY SHARE OF THE COMPANY FROM WHOM ADVANCE HAS BEEN TAKEN. IT IS SHRI SANDEEP M ANUDHANE WHO HOLDS 97% OF THE SHARES O F LENDER COMPANY AND 50 % SHARE OF THE ASSESSEE COMPANY. THE LD. AUTHORIZED REPRESENTATIVE ALSO PLACED RELIANCE ON THE DECISION OF I.T.A.T. MUMBAI BENCH IN - : 4 : - 4 THE CASE OF BOMBAY OIL INDUSTRIES 28 SOT 383 IN SUPPORT OF THE PROPOSITION THAT INTER - CORPORATE DEPOSITS ARE DIFFERENT FROM LOANS AND ADVANCES AND THE SAME WOULD NOT COME WITHIN PURVIEW OF DEEMED DIVIDEND. AS PER LD. AUTHORIZED REPRESENTATIVE THE ASSESSEE COMPANY HAS NOT RECEIVED ANY LOANS AND ADVANCES BUT IT WAS AN INTER CORPORATE DEPOSIT GIVEN FO R A SHORT PERIOD TO MEET THE URGENT REQUIREMENT OF FUND BY ITS FRANCHISEE FOR M/S. P . T. EDUCATION AND TRAINING SERVICES LIMITED. 6. ON THE OTHER HAND THE LD. SENIOR D.R. RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT SINCE SHRI SANDEEP MANU DHANE WAS HAVING SUBSTANTIAL INTEREST BOTH IN ASSESSEE COMPANY AND LENDER COMPANY THE PROVISIONS OF SECTION 2(22 ) (E) ARE CLEARLY APPLICABLE AND THE AO WAS PERFECTLY JUSTIFIED IN TAXING THE AMOUNT OF LOAN RECEIVED BY THE ASSESSEE COMPANY TO THE EXTENT OF A CCUMULATED PROFIT OF LENDER COMPANY. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE FACTUAL POSITION THAT ASSESSEE COMPANY IS NOT A - : 5 : - 5 REGISTERED SHAREHOLDER OF THE LENDER COMPA NY NOR IT WAS GETTING ANY DIVIDEND INCOME FROM THE LENDER COMPANY. IT IS ONLY ONE OF ITS DIRECTORS WHO WAS ALSO HOLDING SHARE S IN THE LOANEE COMPANY. I.T.A.T. SPECIAL BENCH IN THE CASE OF BHOMIK COLOUR LAB 120 TTJ 865 HAVE HELD THAT BOTH THE CONDITIONS OF REGISTERED SHAREHOLDERS AS WELL AS BENEFICIAL SHAREHOLDERS ARE REQUIRED TO BE FULFILLED FOR THE PURPOSE OF BRINING A CASE WITHIN THE PURVIEW OF SECTION 2(22)(E). THE INSTANT CASE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE I.T.A.T. SPECIAL BENCH . RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH WE ALLOW THE APPEAL IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 22 ND JU LY 2011. SD/ - SD/ - (JOGIND ER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND JU LY 2011 . CPU* 2122