IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "C", MUMBAI
BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. 5099/Mum/2013
Assessment Year: 2008-09
DCIT 10(3) M/s. Plustech
R. No. 451 4th Floor, Fabricators Pvt. Ltd.
Aayakar Bhavan, M.K. 214, J. K. Chambers.
Vs.
Road. Mumbai 400 020 Plot No. 76 Sector- 17,
Vashi, Navi Mumbai
PAN: AAACP 6612 Q
(Appellant) (Respondent)
Assessee by : Dr. P. Daniel
Revenue by : Shri Neil Philip
Date of hearing : 03.11.2014
Date of Pronouncement : 03.11.2014
ORDER
PER AMIT SHUKLA, JM:
This appeal has been preferred by the Revenue against the
order dated 05.04.2003 passed by the Ld.CIT(A) -22, for the quantum of
assessment passed u/s 143(3) (ii) for the A.Y. 2008-09, on the following
grounds:-
"On the facts and in the circumstances of the case and in law, the
Ld.CIT(A) erred in deleting the addition of Rs.50,86,949/- u/s
2(22)(e) of the Act ignoring the provisions of section 2(22)(e) of
the Act."
2. The assessee is a company who has taken advances and
unsecured loans of Rs.50,86,949/- from M/s. Plus Tech Engineering Pvt.
ITA No. 5099/Mum/2013
2 M/s. Plustech Fabricators Pvt. Ltd
Assessment Year: 2008-09
Ltd., a company which was also engaged in similar kind of business. The
AO noted that, since the assessee company had common shareholders
having beneficial interest, of more than 20%, therefore, the provision of
2(22)(e) are squarely applicable. Before the assessing officer, assessee
submitted that the loan transaction between the two sister concerns
were under taken during normal course of business and the assessee
company is not a shareholder in other company or vice versa and
therefore provisions of 2(22)(e) are not applicable. However, the
assessing officer rejected the assessee's contention on the ground that,
issue has not attained finality that no deemed dividend provisions under
section 2(22)(e) are applicable even when assessee is not a shareholder
in other company. Accordingly he treated the amount of Rs.50,86,949/-
as deemed dividend u/s 2(22)(e) as it was sufficient that there were
common shareholders having interest of more than 20%.
3. The Ld.CIT(A) deleted the said addition after relying upon a
decision of Special Bench of ITAT in the case of ACIT Vs. M/s. Bhaumik
Colour Pvt. Ltd. reported in 313 ITR (AT) 146 (AB) and Bombay High
Court in the case of CIT Vs. Universal Medicare P. Ltd reported in 324
ITR 263 (Bom) after observing and holding as under:-
"With regard to the deemed dividend, the appellant submitted
that the assessee had a running account with its sister concern.
The AO. asked for explanation regarding deemed dividend. The
assessee submitted first of all it is a mutual open and close
current account which would not come within the purview of
Loan account. In view of the Special Bench decision of the
Hon'ble ITAT in the case of ACIT v. Bhaumik Colour P. Ltd.
reported in 313 ITR(A T) 146 (S8) which held that "loan account
between two sister concerns cannot be taxed in the hands of the
recipients as the assessee company is not a shareholder in the
other company." The said decision of the Tribunal is approved by
the Bombay High Court in the case of CIT vs. Universal Medicare
P. Ltd. reported in 324 ITR 263 (80m). Reliance is also placed on
ITA No. 5099/Mum/2013
3 M/s. Plustech Fabricators Pvt. Ltd
Assessment Year: 2008-09
the decision of the Bombay Tribunal in the case of M/s. Shruti
Properties Pvt. Ltd. vs. ITO, reported in (2010) R (Trib.) 186
(Mumbai). Hence, the issue have been settled by the Bombay
Court, it is a law of the land till it is reversed by the Supreme
Court their arguments were also advanced. The same were not
considered but merely stated that this issue has not attained
finality. In view of this position it is prayed that the addition made
may please be deleted.
9.2 As the appellant's case is covered in view of the Special
Bench decision of the Hon'ble ITAT in the case of ACIT v.
Bhaumik Colour P. Ltd. reported in (AT) 146 (SB) and approved
by the Hon'ble Bombay High court in the case of CIT VS.
Universal Medicare P. Ltd. reported in 324 ITR 263 (Bom),
addition made on account of deemed dividend amounting to
s.50,86,949/- is hereby deleted. This ground of appeal is
allowed."
4. It has been admitted by both the parties before us, that this issue
stands covered by various decisions of the Jurisdictional High Court.
Learned counsel pointed out that in the latest decision by the Hon'ble
Bombay High Court in the case of CIT Vs. Impact Containers Pvt. Ltd.
and others reported in (2014) 107 DTR (Bom) 145, this proposition has
been reiterated that provisions of section 2(22)(e) cannot be invoked
where the assessee company was not a shareholder in the lending
company, even though directors of the assessee company were holding
more than 20% shares of the assessee company.
5. After considering the relevant facts of the case and the issue
involved, we find that the issue of applicability of deemed dividend u/s
2(22)(e) in the cases, where the assessee company is not a shareholder
in the lending company has been settled by the Hon'ble Jurisdictional
High Court in the case of Universal Medicare Pvt. Ltd (supra) and CIT
Vs. Impact Containers Pvt. Ltd. (supra). In the latest decision, the
ITA No. 5099/Mum/2013
4 M/s. Plustech Fabricators Pvt. Ltd
Assessment Year: 2008-09
Hon'ble Jurisdictional High Court has analyzed this entire issue afresh
and has reiterated the proposition on laid down in Universal Medicare
Pvt. Ltd. (supra) and also the Special Bench decision in the case of
Bhaumik Colour Pvt. Ltd. (supra). Thus in view of the law as of now
settled by the Hon'ble Jurisdictional High Court on this score, we do not
find any merits in the ground raised by the department and accordingly
same is dismissed.
6. In the result, the appeal filed by the Revenue is dismissed.
0
Order pronounced in the open court on this 03rd day of November,
2014.
Sd/- Sd/-
(SANJAY ARORA) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 03.11.2014
*Srivastava
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR "C" Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.
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