TMI Blog2010 (9) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years assessments. The said amount was not reflected in the profit loss account. Further assessee was allowed u /s 36(1)(va) employees contribution to provident fund but the same was not paid on or before due date as required u /s 36(1)(va) of the Act. b) Assessee accepted loan of ₹ 11,87,00,000 from M/s Mega Resources Ltd. (hereinafter referred in short as MRL). That assessee held more than 10% of the equity shares issued by MRL. Hence as per provisions of section 2(22)(e) of the Act the said loan amount was required to be added to the total income of the assessee as deemed dividend. A copy of the said notice is placed at page 1 of the paper book. 3. On behalf of the assessee, a reply dated 15.03.2010 was filed stating, inter alia, as under : i) During the assessment years 2003-04 and 2004-05 a total sum of ₹ 6,46,85,499 (Rs.2,07,50,359 in the assessment year 2003-04 and ₹ 4,39,35,140 in the assessment year 2004-05) was debited in profit loss a/c and the same was disallowed under section 43B in those respective assessment years. In the assessment year 2004-05 assessee debited an amount of ₹ 5,59,35,140 in the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy. It is further stated by learned CIT that provision of section 43B does not extend to the payment made in respect of Employees contribution to provident fund. The extension of time for payment of employers contribution to provident fund vide provisos introduced u /s 43B has never been extended to the payment to be made in respect of Employees contribution to provident fund. Hence action of the AO in allowing belated payment of Employees contribution to provident fund is erroneous and prejudicial to the interest of revenue. b) As regards issue of deemed dividend in respect of loan of ₹ 11,87,00,000 from MRL by the assessee , the learned CIT has stated that certificate from MRL to the effect that the assessee holds only 10,99,300 shares which is only 9.36% is undated and does not say as to what date such holding relates and also what is the total paid up share in relation to which assessee holds 10,99,300 equity shares. The learned CIT has stated that assessee holds 13,99,100 shares out of paid up shares of 1,20,00,000 which is more than 10%. That the AO should have assessed the loan as deemed dividend. Thus the order of the AO is erroneous and prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the revenue. (ii) The learned A.R. further submitted that in respect of second issue , as to whether the loan of ₹ 11,87,00,000 received by assessee from MRL is to be considered as deemed dividend as per section 2(22)(e) of the Act, that the assessee holds only 10,99,300 equity shares out of 1,20,00,000 shares and it constitutes only 9.36% holding of the assessee in MRL. Ld. AR referred to page 23 of the paper book which is a copy of the certificate dated 13.03.2010 from MRL. The learned A.R. submitted figure given by learned CIT that the assessee holds 13,99,100 shares out of paid up shares of 1,20,00,000 is not correct. The learned A.R. submitted that provision of section 2(22)(e) of the Act applies only when the conditions laid down under section 2(22)(e) of the Act are attracted that the assessee should be beneficial and registered owner of atleast 10% shares in a loaning company in which public is not substantially interested. He relied on the decision of Authority on Advance Ruling in the case of Madura Coats Pvt. Ltd. IN RE 195 CTR 193 ; 274 ITR 609. The learned A.R. submitted that unless there is any document to create doubt for applicability of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Employees contribution to provident fund. Learned D.R. further submitted that even if an issue is a debatable one, it is covered by the jurisdiction of learned CIT u /s 263 of the Act and relied on the decision of Indore Bench , ITAT in the case of D H Secheron Electrodes Ltd. vs DCIT 70 ITD 214 and the case of Zehan Numa Palace Hotel (P) Ltd. vs CIT 70 ITD 552. (ii) The learned D.R. further submitted that the assessee company holds more than 10% share of MRL and, therefore, provision of section 2(22)(e) of the Act is applicable and the loan of ₹ 11,87,00,000 taken by the assessee from MRL is to be considered as deemed dividend income of the assessee. He submitted that AO did not make any inquiry. (iii) Learned D.R. submitted that learned CIT has rightly held that assessment order was passed by the AO without making proper verification on substantial issues. He submitted that the order of learned CIT be confirmed by dismissing the appeal filed by the assessee. 7. We have carefully considered the rival submissions of the learned representatives of the parties and the cases relied upon by them in support of their contentions. We have also gone through the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be cancelled or set aside on mere whims and fancies. There must be very compelling reasons for interference by the learned CIT under section 263 of the Act. It was also held by ITAT , Chandigarh Bench in the case of Balajees vs ACIT , 85 TTJ 543 that learned CIT cannot substitute his subjective view in place of the findings of the AO merely because Ld. CIT is of the view that the AO has framed the assessment order without discussing the details in the assessment order. It was held that while making the assessment order, it is the satisfaction of the AO who made inquiry and it should be touchstone to pass a valid assessment order by him. The learned CIT can legally interfere with the assessment order in exercise of his jurisdiction u /s 263 of the Act only after he finds that the assessment order is both erroneous and prejudicial to the interest of the revenue. The mere lack of discussion of the issue in the order of the ITO would not render the order to be erroneous as held by ITAT, Bombay Bench in the case of India Hotels Co. Ltd. vs DCIT (107 Taxman 205, Magazine). 10. We observe that the AO on similar facts and considering the order of Hon ble Calcutta High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer. Considering the facts and circumstances of this case, we are of the view that the action of the CIT u /s 263 was not warranted as the view taken by the AO cannot be said to be erroneous in view of the decisions of the Tribunal quoted elsewhere in this order. We accordingly cancel the orders of the CIT u /s 263 and restore the orders of the AO. In view of the above, we are of considered view that order of ld. CIT cannot be justified to hold that assessment order is erroneous. 11. Now coming to issue of deemed dividend in respect of loan of ₹ 11,87,00,000 received by assessee from MRL, we observe that learned CIT has stated that the assessee holds 13,99,100 shares out of paid up shares of 1,20,00,000 and thus holding of assessee is more than 10% in MRL. On the other hand, the assessee had filed a certificate from MRL stating that share holding of the assessee company in MRL is of 10,99,300 equity shares of ₹ 10/- each. On perusal of said certificate , copy placed at page 23 of paper book , we agree with learned CIT that the said certificate does not state as to what date such holding relates to and also what is the total paid up share in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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