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2016 (3) TMI 443 - ITAT KOLKATA

2016 (3) TMI 443 - ITAT KOLKATA - TMI - Deemed dividend addition u/s. 2(22)(e) - Held that:- From the evidence available on record it is clear that the actual transfer of shares took place only on 30.8.2008. The wrong mention of date in the annual return filed by GCP was the only basis on which the entire addition has been made. The Annual return has since been rectified by GCP by mentioning the correct date of transfer of 20,000 shares in the name of the Assessee as 30.8.2008. The other documen .....

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s to establish his case. In such circumstances, we are of the view that the order of the CIT(A) deleting the addition does not call for any interference. - Decided in favour of assessee - ITA No. 1658/Kol/2012 - Dated:- 20-1-2016 - N. V. Vasudevan, JM And M. Balaganesh, AM For the Appellant : Shri Amitava Roy, JCIT, Sr. DR For the Respondent : Shri V N Dutta, Adv ORDER Per N. V. Vasudevan, JM This is an appeal by the Revenue against the order dated 13.08.2012 of CIT(A)-VIII, Kolkata relating to .....

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al return submitted before MCA which, being a legal document and created by the company of which the assesse is the Managing director having his full administrative control, is a self sufficient and self evidencing document, reflects that the assesse had received 20,000 shares transferred to his account from N.K. Credits & Holding Pvt Ltd. on 30.04.2008 resulting in total shares to be 88,300 shares out of total of 7,06,600 issued shares, i.e. 12.05% as on 30.06.2008 on which the assesse had .....

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to advance or loan within the meaning of section 2(22)(e ) and in assessing ₹ 69,46,102 as deemed dividend u/s. 2(22)( e) ." 3. The Assessee is an individual. He was the director of a company by name M/s.General Cement Products Pvt. Ltd. (GCP). The assessee held 68300 shares of GCP which constituted 9.7% of the paid up share capital of GCP. AO found from the website of Ministry of Corporate Affairs (MCA) that the GCP filed annual return of allotment of shares made for the financial ye .....

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accumulated profit of GCP were to the extent of ₹ 69,46,102/-. The AO was of the view that to the extent GCP possessed accumulated profits, the loans and advances received by the assessee from GCP had to be treated as deemed dividend within the meaning of section 2(22)(e) of the Act. The AO was of the view that the provisions of Sec.22(22)(e) of the Income Tax Act, 1961 (the Act) were attracted. The provisions of Sec.2(22)(e) of the Act, reads as follows: (e) Any payment by a company, not .....

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r or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits." 4. According to the AO since the Assessee held 10% of the paid up share capital and thereby 10% of the voting power, the provisions of Sec.2(22)(e) of the Act would be attracted in respect of th .....

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which he had gathered from website of MCA. The AO rejected the stand taken by the assessee and made addition of ₹ 69,46,102/- to the total income declared by the assessee by invoking the provision of section 2(22)(e) of the Act. Only in the order of assessment did the AO refer to the shareholding of the Assessee in GCP as found out by him from the website of MCA. 5. Before CIT(A) the assessee pointed out that it was only after the receipt of order of assessment that the assessee came to k .....

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r of 20,000 shares as on 30.04.2008 percentage of the share holding of the assessee in GCP has been worked out by the AO as 12.05%. The assessee pointed out before CIT(A) that the AO never raised a query with regard to the applicability of section 2(22)(e) of the Act in the light of the fact that the assessee holding more than 10% of paid up share capital in GCP. The assessee further pointed that the annual return filed by GCP with MCA in which it has been mentioned that the assessee acquired 20 .....

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in the Assessee's name. Relevant documentary in this regard was filed before CIT(A). It was thus argued on behalf of the Assessee that the said 20,000 shares of GCP were transferred and registered in the name of the Assessee only on 30.08.2008 and not on 30.04.2008, and that in the Annual Return submitted before MCA on 02.11.2008, the date of registration of transfer of shares was wrongly mentioned as 30.04.2008 instead of 30.08.08. 5.2. It was further submitted that having learnt of the sai .....

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2011 of GCP was filed before CIT(A). The said Revised Annual Return had been submitted on 05.09.201. Copy of receipt dated 05.09.2011 of filing the said Revised Annual Return after paying fee of ₹ 5000/- was also filed before CIT(A). 5.3. It was reiterated by the Assessee that the issue had arisen because the Assessing Officer did not inform the Assessee that he had downloaded the Assessee's said Annual Return and had found that the appellant held 88,300 shares i.e., 12.05% as on 30.06 .....

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the assessee to avoid applicability of section 2(22)(e) of the Act. 5.5. Before the CIT(A) the assessee took a plea that since the advance in question was received on 30.6.2008 for purpose of purchase of property and since the said transaction did not materialize, the same was returned by the assessee to GCP on 01.07.2008 without utilisation, the provision of section 2(22)(e) of the Act cannot be applied as it cannot be said that the assessee had availed loans or advances form GCP. The Assessee .....

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t of the said revised return the assessee cannot be said to be a person having substantial interest in GCP. He was also of the view that the legal transfer of shares took place on 30.08.2008 and the contention of the AO that the date of transfer has been manipulated by the assessee and GCP was without any basis. 5.7. The CIT(A) also found that Shri naveen maheshwari, who was the beneficial owner of the shares, had handed over the transfer form duly signed by the registered shareholder N.K.Credit .....

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porting evidence the shares stood registered in the name of the Assessee on 30.8.2008. The CIT(A) also held that incorrect mention of the crucial date as 30.4.2008 in the annual return filed by GCP initially did not falsify the documents held by the Assessee as per requirement of the Company Law. 5.8. For the above reasons CIT(A) was of the view that the addition made u/s 2(22)(e) of the Act cannot be sustained. 5.9. CIT(A) also held that since the money in question remanded with the assessee on .....

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onged to the company was returned to it on the very same day. The Tribunal held that looking at the transactions from the objects of section 2(22)(e) of the Act it cannot be said that there was diversion of dividend in the form of loans or advances. CIT(A) accordingly deleted the addition made by AO. 6. Aggrieved by the order of CIT(A) the revenue has preferred appeal before the Tribunal. 7. We have heard the learned DR, who reiterated the stand of the AO as put forth before CIT(A) in the remand .....

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