Referred Sections:
section 2(22)(e) of the Income Tax Act, 1961
section 2(22)(e) of the Act.
section 234B of the Act.
Referred Cases / Judgments
Hancraft Expo Designs P.Ltd. vs. DCIT
CIT vs. Ankitech Pvt. Ltd.
Sons (HUF) vs. CIT
Services vs. CIT (2018) 89 taxmann.com 332 (SC)
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No. 1333/DEL/2019
A.Y 2014-15
Hancraft Expo Designs P Ltd. Vs DCIT (E)
302-302, Bhikaji Cama Bhawan Circle-11(1)
3rd Floor New Delhi
Bhikaji Cama Place
New Delhi 110 066
PAN: AABCH1215Q
(Appellant) (Respondent)
Appellant by Sh. Ashutosh Jain, CA &
Sh. Udayan Garg, CA
Respondent by Sh. Amit Katoch, Sr.D.R.
Date of Hearing 04.06.2019
Date of Pronouncement 07.06.2019
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 28/02/2018
passed by CIT(A)-4, New Delhi for Assessment Year 2014-15.
2. The grounds of appeal are as under:-
"1. That the CIT(A) has erred on facts and in law in confirming the action of
the assessing officer in making an addition of Rs. 2,51,65,958, being loan
received by the appellant from M/s. Supreme Advertising Pvt. Ltd. during the
relevant assessment year, alleging the same to be in the nature of deemed
ITA No. 1333/Del/2019 A.Y. 2014-15
Hancraft Expo Designs P.Ltd. vs. DCIT
dividend in terms of section 2(22)(e) of the Income Tax Act, 1961 and taxable
in the hands of the recipient, as such.
1.1. That the CIT(A) has erred on facts and in law in holding as above without
appreciating that the appellant is not a shareholder in M/s. Supreme
Advertising Pvt. Ltd. and, therefore, no addition can be made in the hands of
the appellant of the loan received from the payer company as alleged deemed
dividend in terms of section 2(22)(e) of the Act.
2. The CIT(A) has erred on facts and in law in confirming the action of the
assessing officer in levying interest of Rs. 28,51,989 under section 234B of
the Act.
The appellant craves leave to add to, alter, amend, vary, omit, substitute or
delete any of the aforementioned grounds of appeal or add a new ground or
grounds of appeal at any time before or at the time of hearing of the appeal."
3. The assessee Company is engaged in the business of designing,
manufacturing of handicrafts and allied products. During the present
Assessment Year the assessee has a total turnover of Rs.4,11,81,663/- as
compared to Rs.3,72,96,043/- in the last year. The assessee filed its return of
income on 30.09.2014 declaring total income at Rs.2,92,49,729/-. The case
was selected for scrutiny and notice u/s 143(2) of the Income Tax Act, 1961
(`the Act') on 22.09.2015 was issued and served upon the assessee.
Subsequently notice u/s 142(1) of the Act along with questionnaire was issued
on 12.09.2016. In response to notice, C.A., Authorised Representative of the
assessee company attended and furnished the details before the Assessing
Officer. The Assessing Officer observed that during the year the assessee has
taken loans from M/s Supreme Advertising Pvt. Ltd. All the shareholders of
M/s. Supreme Advertising Pvt. Ltd. (SAPL) and the assessee company are
common. Shri Gajendra Singh Rawat and Smt. Poonam Rawat both are
common shareholders having 40% of share holding in both the companies i.e.
the assessee company and lender company SAPL. The Assessing Officer held
that the assessee company is not a shareholder of SAPL as per the assessee's
contention but there is a credit balance throughout the year and the payment
is supposedly made on account of the assessee company in the form of loan
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ITA No. 1333/Del/2019 A.Y. 2014-15
Hancraft Expo Designs P.Ltd. vs. DCIT
which is the admitted position as per the ledger account submitted by the
assessee. Therefore, the Assessing Officer has taken all credits amounting to
Rs.2,51,65,958/- as `deemed dividend' u/s 2(22)(e) of the Act in the hands of
the assessee and taxed.
4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A) and the CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that assessee's case is covered by the Hon'ble
Delhi High Court decision in case of CIT vs. Ankitech Pvt. Ltd. which was now
confirmed by the Hon'ble Apex Court (340 ITR 14). The Ld. AR further
submitted that the CIT(A) though considered the Hon'ble Delhi High Court's
decision has taken into account the Apex Court decision in case of Gopal &
Sons (HUF) vs. CIT (2017) 77 Taxman.com 71 (S.C.) and National Travel
Services vs. CIT (2018) 89 taxmann.com 332 (SC) but has distinguishing
factors. The Ld. AR submitted that the payment made by SAPL to the assessee
company is taxable in the hands of SAPL not in the hands of assessee as
deemed dividend in terms of provisions of Section 2(22)(e) of the Act.
6. The Ld. DR relied upon the order of the CIT(A) and the assessment order.
7. We have heard both the parties and perused all the material available on
record. The Hon'ble Delhi High Court decision in the case of Ankitech Pvt.
Ltd. (supra) has been confirmed by the Hon'ble Supreme Court vide order dated
05th October, 2017 and given a finding that the Hon'ble Delhi High Court's
decision is a detailed judgment going into Sec. 2(22)(e) of the Act which arises
at the correct construction of the said Section. Therefore, the dismissal by the
CIT(A) on the ground that decision of Hon'ble Delhi High Court in case of
Ankitech Pvt. Ltd. will not be applicable, does not hold good law. Therefore, the
appeal of the assessee is allowed.
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ITA No. 1333/Del/2019 A.Y. 2014-15
Hancraft Expo Designs P.Ltd. vs. DCIT
8. In result, appeal of the Assessee is allowed.
Order pronounced in the Open Court on 07th June, 2019.
Sd/- Sd/-
(G. D. AGRAWAL) (SUCHITRA KAMBLE)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 07/06/2019
*Gmv
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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ITA No. 1333/Del/2019 A.Y. 2014-15
Hancraft Expo Designs P.Ltd. vs. DCIT
Date
Draft dictated on 04/06/19
Draft placed before author 06/06/19
Draft proposed & placed before the second
member
Draft discussed/approved by Second
Member.
Approved Draft comes to the Sr.PS/PS
Kept for pronouncement on 07 /06/19
&
Order uploaded on :
File sent to the Bench Clerk
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.
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