TMI Blog2011 (5) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... re the title and ownership rights of the land for the projects and to incur other costs and expenses in relation thereto - Decided in favor of the assessee - ITA Nos. 3390/Del/2010 and 3391/Del/2010 - - - Dated:- 6-5-2011 - C.L. Sethi, K.D. Ranjan, JJ. Mona Mohanty, Sr. DR, for the Appellant C.S. Aggarwal, Sr. Adv. and R.P. Mall, Adv., for the Respondent ORDER Bench: These two appeals, filed by the Revenue are directed against the common order dated 30.4.2010 passed by learned CIT(A) in the matter of an order passed u/s 201/201(1A) of the Income-tax Act, 1961 for the FY 2003-04, 2004-05 and 2006-07 relevant to the AY 2004-05, 2005-06 and 2007-08 respectively. In these appeals, we are concerned only with the AY 2005-06 and 2007-08. 2. The assessee has also filed cross-objections arising from the said appeals. 3. We shall first take the appeal filed by the Revenue pertaining to the FY 2004-05 relevant to AY 2005-06. 4. The grounds of appeal raised by the Revenue are as under:- "On the facts and in the circumstances of the case as well as in law, the learned CIT(A) has erred in (i) Holding that the relevant payments could not be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but assessee has not deducted tax at source as required u/s 194 of the Act. 6. The assessee was incorporated on 22.6.1993 and which is engaged in the business of real estate. The AO initiated the proceedings u/s 201/201(1A) of the Act in the course of which assessee's authorized representative appeared and filed various details for FY 2002-03 to 2006-07. 7. On examination of details, it was noted by the AO that assessee has made payment of Rs.5,50,000/- to M/s ALM Infotech City (P) Ltd. and sum of Rs.7 lakhs to one Shri Alimuddin on which the assessee failed to deduct tax at source. The aforesaid payment made to M/s ALM Infotech City (P) Ltd. and Shri Alimuddin has been treated to be in the nature of deemed dividend as defined in Section 2(22)(e) of the Act by the AO. The AO, therefore, worked out the TDS liability of Rs.2,61,375/- and interest payable thereupon u/s 201 amounting to Rs.86,253/-, aggregating to Rs.3,47,628/-. The AO, therefore, issued demand notice to the assessee to make the payment of Rs.3,47,628/-. 8. Being aggrieved, the assessee preferred an appeal before the learned CIT(A). 9. Before the learned CIT(A), the assessee stated that payment made to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in default u/s 201/201(1A) read with section 194 of IT Act for non deduction of TDS on total payment of Rs.95,196/- for F.Y. 2003-04, Rs.3,47,628/- for F.Y. 2004-05 and Rs.36,83,053/- for F.Y. 2006-07. I, therefore delete the above demand of raised by the u/s 201/201(1A) of I.T.Act." 11. Hence, the department is in appeal before us. 12. We have heard both the parties and carefully gone through the orders of the authorities below. We have deliberated upon the various decisions cited by the learned counsel for the assessee, copies of which have been produced before us in the compilation of judgments containing ten judgments running into 72 pages. Insofar as payment made to M/s ALM Infotech City (P) Ltd. is concerned, we are of the considered view that this payment is not covered by the provisions of Section 2(22)(e) of the Act inasmuch as M/s ALM Infotech City (P) Ltd. is not a shareholder of the assessee company. It is altogether a different matter that some shareholder of M/s ALM Infotech City (P) Ltd. may be a shareholder in the assessee company but the twin conditions contemplated u/s 2(22)(e) as held by the Special Bench of the Tribunal in the case of ACIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed to advance a sum of Rs.30 lakhs to M/s ALM Infotech City (P) Ltd. to enable it to acquire the title and ownership right of the lands for the projects. However, in the remand report, the AO has reiterated his order passed u/s 201/201(1A) and has not disputed the facts so submitted by the assessee before the learned CIT(A). Therefore, the learned CIT(A) has taken a view that M/s ALM Infotech City (P) Ltd. is not a shareholder in the assessee company and provisions of Section 2(22)(e) are not applicable in respect of the payment of advance/security deposit made by the assessee company. In the course of hearing of this appeal, the learned counsel for the assessee has submitted that the payment to M/s ALM Infotech City (P) Ltd. was made under a MoU dated 15.3.2002 to acquire land on behalf of the assessee and was not an amount advanced by way of loan. This fact has not been disputed by the AO in his remand report as so stated by the CIT(A) in his order. It was further contended by the learned counsel for the assessee before the learned CIT(A) that the payment made to M/s ALM Infotech City (P) Ltd. has not been assessed as deemed dividend in its hands while completing the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... projects and to incur other costs and expenses in relation thereto. This agreement is not found to be bogus or sham by the AO by making any comment in the remand report. It was further submitted that these facts were placed before the AO, and AO has not made any comment on the assessee's submission, but merely stated that he supported the order passed by him. 18. It is not in dispute that the moneys advanced in the regular course of business cannot be treated as deemed dividend as held in the following cases:- (i) CIT vs. Ambassador Travels (P) Ltd. - 173 Taxman 407 (Del). (ii) CIT vs. Raj Kumar - 181 Taxman 155 (Del). (iii) CIT vs. Nitin Shantilal Parikh - Income Tax Reference No.66 of 1999 (Gujarat). (iv) CIT vs. Creative Dyeing and Printing (P) Ltd. - 184 Taxman 483 (Del). (v) CIT vs. Sunil Sethi - ITA 569/2009. (vi) Atul Mittal in ITA No.3863/Del/2002 (ITAT Del). (vii) Nigam Chawala (page 303 of the paper book). 19. In the case of CIT vs. Sunil Sethi - ITA No.569/2009, the Hon'ble High Court of Delhi has held that since the amount of Rs.30 lakhs which was given to the assessee was in the nature of imprest payment, the same could not be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall come to the appeal for AY 2007-08. 24. In this year, the AO has treated the following payment in the nature of deemed dividend u/s 2(22)(e) of the Act:- (i) Payment to International Land Developers Ltd. - Rs.3,15,515/-. (ii) ILD Trade Centres - Rs.37,17,194/-. (iii) Shri Alimuddin - Rs.10 lakhs. (iv) Goldman Malls Pvt. Ltd. - Rs.1,00,25,000/-. 25. With regard to the payment of Rs.3,15,515/- paid to International Land Developers Ltd., the assessee submitted before the learned CIT(A) that payment to M/s International Land Developers Ltd. is not covered by Section 2(22)(e) of the Act inasmuch as this concern is not a shareholder of the assessee company. The learned CIT(A) deleted the addition for this reason also. In the light of our view taken in AY 2005-06, we hold that payment made to International Land Developers Ltd. does not come under the ambit of Section 2(22)(e) of the Act inasmuch as International Land Developers Ltd. is not a shareholder of the assessee company. 26. Now, we come to payment of Rs.37,17,194/- made to ILD Trade Centres a business concern of M/s ALM Infotech City (P) Ltd. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
