ITO, New Delhi v. Sh. Praveen Aggarwal, Gurgaon

ITA 6/DEL/2012 | 2008-2009
Pronouncement Date: 25-10-2013 | Result: Dismissed

Appeal Details

RSA Number 620114 RSA 2012
Assessee PAN AAGPA4937N
Bench Delhi
Appeal Number ITA 6/DEL/2012
Duration Of Justice 1 year(s) 9 month(s) 23 day(s)
Appellant ITO, New Delhi
Respondent Sh. Praveen Aggarwal, Gurgaon
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-10-2013
Date Of Final Hearing 23-10-2013
Next Hearing Date 23-10-2013
Assessment Year 2008-2009
Appeal Filed On 02-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL D.AGRAWAL D.AGRAWAL D.AGRAWAL VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.6/DEL/2012 6/DEL/2012 6/DEL/2012 6/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 INCOME TAX OFFICER INCOME TAX OFFICER INCOME TAX OFFICER INCOME TAX OFFICER WARD WARD WARD WARD- -- -30(1) 30(1) 30(1) 30(1) NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGAR SHRI PRAVEEN AGGARWAL WAL WAL WAL C CC C- -- -122 SOUTH CITY PART 122 SOUTH CITY PART 122 SOUTH CITY PART 122 SOUTH CITY PART- -- -1 1 1 1 GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). PAN : PAN : PAN : PAN : AAGPA4937N. AAGPA4937N. AAGPA4937N. AAGPA4937N. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y.KAKKAR SR.DR. RESPONDENT BY : SHRI AJAY WADHWA ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL D.AGRAWAL D.AGRAWAL D.AGRAWAL VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXV NEW DELHI DATED 13 TH OCTOBER 2011 FOR THE AY 2008-09. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A)-XXV NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.2 21 71 181/- OUT OF TOTAL ADDITION OF RS.2 2 3 29 601/- MADE BY AO U/S 2(22)(E) OF IT ACT. 3. THE FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS TAKEN LOAN/ADVANCE FROM M/S MULTIPLEX FINCAP LTD. (IN SHO RT MFL) AMOUNTING TO ` 2 23 29 601/-. THE ASSESSEE WAS THE BENEFICIAL OWN ER OF EQUITY SHARES HOLDING NOT LESS THAN 10% OF THE VOTING POWE R IN MFL. THEREFORE THE LOAN WAS TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME-TAX ACT 1961. ON APPEAL L EARNED CIT(A) IN ITA-6/DEL/2012 2 PRINCIPLE UPHELD THE APPLICABILITY OF SECTION 2(22 )(E) BUT HE REDUCED THE ADDITION TO ` 1 58 420/- WITH THE FOLLOWING FINDING:- 3.3 I HAVE CONSIDERED THE ADDITION OF THE AO AND T HE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE. THE ASSESSEE WA S ASKED ON 11/10/2011 TO SUBMIT THE DETAILS OF THE P& L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE AND ALSO THE P&L ACCOUNT AND BALANCE SHEET OF THE COMPANY I.E. MULTIPLEX FINCAP LTD. AND THE ASSESSEE HAS SUBMITTE D THE SAME DURING THE COURSE OF HEARING ON 12/10/2011. A PERUSAL OF THE BALANCE SHEET SHOWS THAT THE ACCUMUL ATED PROFITS (RESERVE AND SURPLUS) IS ONLY RS.1 58 420/- (RS.1 51 189/- (+) RS.7 231/-) AS CLAIMED BY THE AS SESSEE EARLIER VIDE ANNEXURE-A AND PARA 14 OF THE AO. THE ACCOUNTS OF THE COMPANY ARE AUDITED BY M/S DEEPAK I P AGGARWAL & CO CAS (MEMBERSHIP NO.503548) AND A COP Y OF THE AUDITED P&L ACCOUNT AND BALANCE SHEET IS MAR KED AS ANNEXURE-B. 4. THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT (A) IS IN APPEAL BEFORE US WHILE THE ASSESSEE IS NEITHER IN APPEAL N OR IN CROSS-OBJECTION. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE MATERIAL PLACED BEFORE US. SECTION 2(22)(E) OF THE ACT READS AS UNDER:- 2. 2.2. 2. IN THIS ACT UNLESS THE CONTEXT OTHERWISE REQUIR ES - (22) (22) (22) (22) DIVIDEND INCLUDES - (E) (E)(E) (E) ANY PAYMENT BY A COMPANY NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED OF A NY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS OF TH E COMPANY OR OTHERWISE)[MADE AFTER THE 31ST DAY OF MA Y 1987 BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER B EING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT B EING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER OR TO ANY CO NCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN T HIS CLAUSE REFERRED TO AS THE SAID CONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF OR FOR THE INDIVIDUAL BENEF IT OF ITA-6/DEL/2012 3 ANY SUCH SHAREHOLDER TO THE EXTENT TO WHICH THE CO MPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS ; (EMPHASIS BY UNDERLINING PROVIDED BY US) 6. FROM THE ABOVE IT IS EVIDENT THAT DEEMED DIVIDE ND AS PER SECTION 2(22)(E) WOULD BE LIMITED TO THE EXTENT TO WHICH THE COMPANY POSSESSES ACCUMULATED PROFITS. THAT THE CIT(A) HAS RECORDED THE FINDING THAT FROM THE BALANCE SHEET OF THE COMPANY IT IS EVIDENT THAT ACCUMULATED PROFITS OF MFL WERE ONLY ` 1 58 420/-. WE FIND THAT THE ASSESSEE MADE SIMILAR CLAIM BEFORE THE ASSESSING OF FICER ALSO WHICH HE HAS REPRODUCED IN PARAGRAPH 14 OF THE ASSESSMENT OR DER. 7. AT THE TIME OF HEARING BEFORE US IT WAS STATED BY THE LEARNED COUNSEL THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE ACCUMULATED PROFITS OF MFL AT ` 1 58 420/- ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED HIS VERSION OF COMPUTATION OF ACCUMULATED PROFIT WITHIN THE MEANING OF SECTION 2(22)(E). HE STATED THAT THERE IS NO QUESTION OF DIFFERENT VERSION OF ACCUMULATED PROFITS. THE ASSE SSEE HAS ALREADY STATED THAT ACCUMULATED PROFIT IS ` 1 58 420/- AND THE ASSESSING OFFICER HAS NOT REBUTTED THE SAME. AFTER CAREFULLY CONSIDE RING THE ARGUMENTS OF BOTH THE SIDES AND PERUSING THE MATERIAL PLACED BEFORE US WE ARE OF THE OPINION THAT THE ADDITION OF DEEMED DIVIDEND UN DER SECTION 2(22)(E) CAN BE MADE ONLY TO THE EXTENT OF ACCUMULA TED PROFIT OF THE COMPANY FROM WHOM THE ASSESSEE HAD TAKEN THE LOAN. IN THE PAPER BOOK THE ASSESSEE HAS GIVEN THE BALANCE SHEET OF M FL AS ON 31 ST MARCH 2008. THE RESERVE AND SURPLUS OF THE SAID C OMPANY IS AS UNDER:- 2) RESERVES AND SURPLUS PROFIT & LOSS ACCOUNT 151 189.30 SPECIAL RESERVE 7 231.38 TOTAL : 158 420.68 ITA-6/DEL/2012 4 8. FROM THE BALANCE SHEET OF MFL IT IS EVIDENT THA T THE ACCUMULATED PROFIT IS ONLY ` 1 58 420/-. IN VIEW OF THE ABOVE WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). THE SAME IS SUSTAINED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2013. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 25.10.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER WARD INCOME TAX OFFICER WARD INCOME TAX OFFICER WARD INCOME TAX OFFICER WARD- -- -30(1) 30(1) 30(1) 30(1) NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 2. RESPONDENT : SHRI PRAVEEN AGGARWAL SHRI PRAVEEN AGGARWAL SHRI PRAVEEN AGGARWAL SHRI PRAVEEN AGGARWAL C CC C- -- -122 SOUTH CITY PART 122 SOUTH CITY PART 122 SOUTH CITY PART 122 SOUTH CITY PART- -- -1 1 1 1 GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). GURGAON (HARYANA). 3. CIT 4. CIT(A) 5. DR ITAT ASSISTANT REGISTRAR