THE DY.C.I.T.-8(3), MUMBAI v. STERANCO HEALTHCARE PVT. LTD., MUMBAI

ITA 5730/MUM/2010 | 2007-2008
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 573019914 RSA 2010
Assessee PAN AABCS6144B
Bench Mumbai
Appeal Number ITA 5730/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant THE DY.C.I.T.-8(3), MUMBAI
Respondent STERANCO HEALTHCARE PVT. LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 25-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2007-2008
Appeal Filed On 14-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (AM ) I.T.A. NO.5730/MUM/2010 (A.Y. 2007-08) DY. COMMR. OF INCOME-TAX-8(3) MUMBAI. VS. M/S. STERANCO. HEALTHCARE PVT. LTD. D-2 MEDLEY HOUSE MIDC AREA ANDHERI (W) MUMBAI-400 093. PAN: AABCS6144B. APPELLANT RESPONDENT APPELLANT BY SHRI V.V. SHASTRI. RESPONDENT BY SHRI A RVIND DALAL. DA TE OF HEARING 17 - 11 - 2011 DATE OF PRONOUNCEMENT 25 - 11 - 2011 O R D E R PER D.K. AGARWAL JM : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 28-04-2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSM ENT YEAR 2007-08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN HEALTHCARE MEDICAL SURGICAL PRODUCTS INSTRUMENTS AND OTHER RELATED PRODUCTS. DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE AO INTER ALIA OBSERVED THAT M/S. MEDLEY LABORATOR IES. PVT. LTD. HAD ADVANCED A SUM OF RS.27 25 000/- TO THE ASSESSEE COMPANY DURIN G THE PREVIOUS YEAR. THE SHAREHOLDING OF THE ASSESSEE COMPANY IS AS UNDER : ITA NO. 5730/M/10 STERANCO HEALTHCARE P.LTD. 2 MR. SAMI KHATIB 5% MR. SAROSH KHATIB 95% THE AO FURTHER OBSERVED THAT THE SHAREHOLDING OF M/ S. MEDLEY LABORATORIES PVT. LTD. IS AS UNDER : MR. SAMI KHATIB (ALONG WITH JOINT HOLDERS OF FAMILY MEMBERS) 66.61% MR. SUHEL KHATIB 3.4% MR. SAHIR KHATIB 14.97% MR. SAROSH KHATIB 14.97% HE FURTHER OBSERVED THAT FROM THE ABOVE IT IS EVIDE NT THAT MR. SAROSH KHATIB IS HOLDING NOT LESS THAN 10% OF SHARE HOLDING POWER IN BOTH THE COMPANIES AND MR. SAMI KHATIB HAS SUBSTANTIAL SHAREHOLING IN M/S. MED LEY LABORATORIES AND BOTH THE COMPANIES ARE CLOSELY HELD COMPANIES RUN BY MEMBER S OF KHATIB FAMILY. THE AO AFTER CONSIDERING THE ASSESSEES EXPLANATION INVOK ED THE PROVISIONS OF SEC. 2(22)(E) AND TAXED THE AMOUNT OF ADVANCE OF RS.27 2 5 000/- AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE COMPANY. ON A PPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN CIT VS. UNIVERSAL MEDICARE P. LTD. (2009) DATED 22-03-2010 AND THE DE CISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. BHAUMIK COL OUR PVT. LTD. (27 SOT 270) WHILE OBSERVING THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELETI ON OF ADDITION OF RS.27 25 000/- MADE BY THE AO ON ACCOUNT OF DEEMED DIVIDEND U/S.2( 22)(E) OF THE ACT. 4. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS TH E ORDER OF AO. ITA NO. 5730/M/10 STERANCO HEALTHCARE P.LTD. 3 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE ISSUE STA NDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS IN CIT VS. UNIVERSAL MEDI CARE PVT. LTD. (2010) 324 ITR 263 (BOM) ACIT VS. BHAUMIK COLOUR PVT. LTD. (27 SO T 270) (SB) (MUM) UNISOL INFRA SERVICES PVT. LTD. (ITA NO.2088/MUM/2008 DAT ED 11-8-2009) AND OF DELHI BENCH OF ITAT IN THE CASE OF DY. CIT VS. NATIONAL T RAVEL SERVICES (31 SOT 76). HE ALSO PLACED ON RECORD COPIES OF THE AFORESAID DECIS IONS. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE CIT(A) IN DELETING TH E ADDITION BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT THE ASSESSEE COMPANY IS NEITHER THE REGISTERED SHAR EHOLDER NOR BENEFICIAL SHAREHOLDER IN THE LENDER COMPANY. IN BHAUMIK COLOU R PVT.LTD. IT HAS BEEN HELD BY THE SPECIAL BENCH VIDE PARA 41 APPEARING AT PAGE 27 OF 118 ITD AS UNDER : ON THE FIRST QUESTION : DEEMED DIVIDEND CAN BE ASS ESSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDE R OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTH ER THAN A SHAREHOLDER. ON THE SECOND QUESTION: THE EXPRESSION SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH A RE GISTERED SHAREHOLDER AND BENEFICIAL SHAREHOLDER. IF A PERSON IS REGISTERED SHAREHOLDER BUT NOT THE BENEFICIAL SHARE HOLDER THEN THE PROVISIONS OF SECTION 2(22)(E) WILL NOT AP PLY. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE LD. D.R. WE RESPECTFULLY FOLLOWING THE DECISION OF THE SPEC IAL BENCH OF THE TRIBUNAL AND OTHER DECISIONS CITED BY THE LD. COUNSEL FOR THE AS SESSEE HOLD THAT THE PROVISIONS OF SEC. 2(22)(E) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE COMPANY AND ACCORDINGLY THE GROUNDS TAKEN BY THE REVENUE ARE R EJECTED. 6. IN THE RESULT THE REVENUES APPEAL STANDS DISMI SSED. ITA NO. 5730/M/10 STERANCO HEALTHCARE P.LTD. 4 ORDER PRONOUNCED IN THE OPEN COURT ON THE 25TH DAY OF NOVEMBER 2011. SD/- SD/- (R.K. PANDA) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 25TH NOVEMBER 2011. NG: COPY TO : 1. DEPARTMENT. 2. ASSESSEE. 3 CIT(A)-18 MUMBAI. 4 CIT-8 MUMBAI. 5.DR H BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA NO. 5730/M/10 STERANCO HEALTHCARE P.LTD. 5 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 17-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 21-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER