Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ACIT, Circle-10 (2) , New Delhi Versus M/s. G.D. Goenka Pvt. Ltd. And Vice-Versa

2017 (10) TMI 541 - ITAT DELHI

Deemed dividend u/s 2(22)(e) - advances made in the course of bonafide trade transactions - According to the Assessing Officer advances made in the course of bonafide trade transactions are covered by section 2(22)(e) - whether lending of money was substantial part of the business of the company? - Held that:- CIT-(A) while adjudicating the issue in dispute has relied on the decision of the Hon’ble Bombay High Court in the case of Parley Plastic Limited (2010 (9) TMI 726 - BOMBAY HIGH COURT), wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

id not bring before us any contrary decision of the jurisdictional High Court or the Hon’ble Supreme Court. In view of above facts and circumstances, we do not find any infirmity in the finding of the Ld. CIT-(A) on the issue in dispute and accordingly, we uphold the same - Decided against revenue - ITA No.6553/Del/2015 And C.O. No. 79/Del/2016 - Dated:- 11-10-2017 - SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Department : Ms. Sweta Nakara Datta, Sr.DR For Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

raised by the assessee in the cross objection are reproduced as under: Grounds of appeal: 1. On the facts and in the circumstances of the case and law, the learned CIT(A) erred in deleting an addition of ₹ 1,12,05,965/- made by the AO on account of deemed dividend u/s 2(22)(3) of the Act. 2. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of hearing. Cross Objections 1. That learned CIT(A) erred in law as well as in facts by upholding the va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion before the ITAT (in short the Tribunal ). He referred to the petition filed for condonation of the delay alongwith affidavit by the director of the assessee company and submitted that there being a reasonable cause for delay of one week in filing the cross objection, the delay might be condoned. 3.1 The Ld. SR DR, on the other hand, did not raise any serious objections on condoning the delay in filing cross objection. 3.2 We have heard the rival submission of the parties on the issue of con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lso filed an affidavit from the director of the assessee company affirming above facts. In view of the facts and circumstances of the case and bonafide reasons for delay of 7 days, we condone the delay in filing the cross objection. 3.3 Facts in brief of the case as culled out from the orders of the lower authorities are that the assessee is engaged in providing education by running an educational institute in the name and style of GD Goenka World Institute , by offering courses of study of fore .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d assessment and issued notice under section 148 of the Act on 31/03/2013. The assessment under section 147 of the Act was passed on 31/03/2014 after making addition of ₹ 1,12,05,965/- under section 2(22)(e) of the Act, with the observation that the assessee received loans and advances of ₹ 1,21,25,956/- from M/s. GD Goenka Tourism Corporation Limited , which was liable to be assessed as deemed dividend under section 2(22)(e) of the Act in the hands of the assessee. Aggrieved, the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 147 of the Act. 5. The Ld. counsel of the assessee submitted a paper book containing pages 1 to 140 and challenged the reassessment proceedings before us on three counts. Firstly, according to the Ld. counsel, the assessment was reopened on the direction of the superior authority without own satisfaction of the Assessing Officer. The learned counsel submitted that case was reopened merely on the satisfaction of the other Assessing Officer i.e. Addl. CIT, Range 12, who happened to be an imm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

imited, (2002) 256 ITR 1 (Delhi), which has been further upheld by the Hon ble Supreme Court in 320 ITR 561 (SC) 6. In view of the arguments, the learned counsel submitted that reassessment proceedings were not validly initiated and, therefore, same should be held as illegal and quashed. 7. On the other hand, Ld. Sr. DR submitted that the information was sent by Addl.CIT, in the capacity of Assessing Officer of M/s. G.D. Goenka Tourism Corporation Limited and not in the capacity of a superior au .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of deemed dividend. Accordingly, she requested for upholding the reassessment proceedings. 8. We have heard the rival submission and perused the relevant material on record. In the case of the assessee, it is relevant to reproduce the reasons recorded by the Assessing Officer, which are available on page 63 of the assessee s paper book, as under: The income tax assessment of M/s. G D Goenka Pvt. Ltd. for the assessment year 2009-10 was completed after scrutiny in November, 2011 determining inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts as stated above, I have reasons to believe that income chargeable to tax exceeding ₹ 1 lac. has escaped assessment, as the assessee has not disclosed fully and truly all material facts necessary for his assessment for the relevant assessment year. Hence, a notice u/s 147 read with section 148 for reopening of assessment is required to be issued in this case. 9. We find that the learned counsel has assailed the reassessment proceeding, firstly, on the ground that the assessment was r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an Assessing Officer of M/s G.D. Goenka Tourism Corporation Limited, cannot be termed as direction issued by the Additional CIT to the Assessing Officer and, therefore, this contention of the Ld. counsel that Assessing Officer has recorded reasons to believe on the direction of the superior authority is rejected. Further, the Ld. counsel raised the issue that Assessing Officer has not applied his mind while reopening the assessment. We do not agree with the above contention of the Ld. counsel. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot framed any opinion as to the loans in advance from M/s. GD Goenka Tourism Corporation Limited was not in the nature of deemed dividend. The learned counsel could not point out any query raised by the Assessing Officer in original assessment proceedings which could substantiate that the Assessing Officer formed an opinion on the issue of deemed dividend under section 2(22)(e) of the Act. The Ld. counsel has also not brought to our notice whether all the requisites conditions for making the loa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ount of addition of deemed dividend amounting to ₹ 1,12,05,965/- has been challenged. 11. According to the Assessing Officer advances made in the course of bonafide trade transactions are covered by section 2(22)(e) of the Act. The Assessing Officer held that the payment received by the assessee from M/s. G.D. Goenka Tourism Corporation Limited fulfilled all the condition of section 2(22)(e) of the Act as under: i. The assessee is a registered and beneficiary shareholder of the G.D. Goenka .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f money is substantial part of the business. The Assessing Officer held that money lending is not substantial part of the business of G.D. Goenka Tourism Corporation Limited. According to the Assessing Officer following two conditions are to be cumulatively satisfied to be covered under exception as occurring in section 2(22)(e) of the Act: a) Such payment ought to be made by the company in the ordinary course of its business. b) Lending of money is substantial part of the business of the compan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty. 14. Accordingly, the Assessing Officer held the loans in advance of ₹ 1,21,25,956/- received during the year under consideration from M/s. G.D. Goenka Tourism Corporation Limited as deemed dividend in the hands of the assessee. 15. The learned CIT-(A) deleted the addition in view of the decision of the Hon ble Bombay High Court in the case of CIT Vs. Parley Plastic Limited, (2011) 332 ITR 63. The relevant part of the impugned order of the learned CIT-(A) is reproduced as under: 6. Rega .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s so in the case of the appellant. Secondly, the lending of money should be forming substantial part of the business of the creditor which is also fulfilled in this case. As per the AO, the second condition has not been fulfilled. The AO has wrongly interpreted the legal provisions; the Hon'ble Bombay High Court in the case of Pyarelal Plastic Ltd. has held that substantial part does not connote the idea of being major part. In this case M/s G.D. Goenka Tourism Corporation Ltd. has been rece .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version