9911796707
TMI Blog2011 (6) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... Five Lakhs only) for tax under Income from Other Sources, under the head "INCOME FROM DIVIDEND". (ii) The learned Commissioner of Income-Tax, Appeals-I, has grossly erred in not considering the submissions made by the Appellant at the time of hearing about the fact that, the said payment of ₹ 17,50,000/- was received from Mr. Lachiram Naik, to whom the shares in M/s India Poultry Private Limited, was sold/transferred and the amount was received consequent to such transfer, and the Appellant had not received any amount from the Company. (iii) The learned Commissioner of Income-Tax, Appeals-I, has grossly erred in not appreciating the submissions made by the Appellant relating to the Statement of Affairs field by the Appellant and other records produced by the Appellant before the respected Assessing Officer, which clearly established the Opening Cash Balance of ₹ 6,98,070 (Rupees Six Lakhs Ninety Eight Thousand Seventy Only) in the records of the Appellant. 3. The assessee is a specialist in poultry farming and filed his return of income on 31/10/2003 declaring an income of ₹ 48,66,740. Subsequently in response to notice u/s. 148 he confirmed the same income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. The company was sold through a slump sale to M/s. Godrej Agrovet India Ltd. on which profit u/s. 50B was computed at ₹ 5.75 crores. The company decided to distribute the divided on such profits in July, 1999 and also distributed interim dividend in September, 1999 and the balance was paid in February, 2002. However, tax on such dividend declared had already been paid by the company in F.Y. 2000-01. It is further submitted that the company was finally dissolved on 1-7-2007. 5.3 The above submission when examined critically reveals certain inconsistency. Undoubtedly the company was in the process of liquidation in AY 2003-2004. Dividend was declared in July, 1999, a portion of which was paid as interim dividend in September, 1999 and the balance tax paid dividend was distributed in February, 2002. If this can be considered as true, the submission before the A.O. dated: 10-08-2007 wherein it was stated that out of the payment of ₹ 25 lakhs received from the company on 17-11-2002, ₹ 8,20,608/- pertains to balance of dividend has to be necessarily untrue. 5.4 The second argument of the A.R. is that the company has already paid tax on the entire declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quidator, distributed the balance amount in the company after clearing all the liabilities. The said company, The IPF Breeders Pvt. Ltd. was dissolved on 1.2.2007 by the orders of the Hon'ble High Court of Karnataka. It was submitted that the dividend having been declared in accordance with provisions of the companies Act, the said income is assessable under the head 'Dividends' and are liable to be assessed in the year of accrual to the assessee and not U/s.2(22)(e) of the Act. Ld. AR further submitted that the CIT(A) has erred in not appreciating the difference between accrued profits and distributed profits while subjecting the receipt of ₹ 25,00,000 to tax. 7. The ld. DR supported the order of the ld. AO as well as that of the ld. CIT(A). 8. We have heard the rival submissions and perused the material on record. The strong contention of the assessee is that the company has paid tax on distributed profits along with interest computed u/s. 115-O and 115-P of the Act. Further, apart from the submissions of the ld. AR, we have also taken note of the detailed statements submitted by the appellant forming part of the paper book with regard to the payment of income tax in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL) had only two shareholders viz., Mr. T. Manawalan and the assessee, with shareholding of 75% and 25% respectively. Accordingly the shares held by the assessee amounted to ₹ 7,50,000/-, in addition, the assessee had paid a sum of ₹ 7,13,875 towards share application money. Both the shareholders sold their entire shareholding to Mr. Lacchiram Naik and his group and received a sum of ₹ 17,75,000 which included a sum of ₹ 3,07,625 towards reimbursement of expenses in connection with several visits to Hyderabad and other places. Thus the details of amount received are as under: (i) Transfer of shares in IPPL - 7,50,000 (ii) Refund of share application money - 7,13,875 (iii) Refund of out of pocket expenses - 3,07,825 ------------ 17,71,500 ------------- Thus, it was contended by the ld. AR that the CIT(Appeals) erred in sustaining the addition and not appreciating that the amount of ₹ 17,50,000/- consisted of refund of share application money, transfer of equity share capital held by the assessee in IPPL and submitted that the addition is to be deleted. 12. We have considered the facts of the case relating to the addition of ₹ 17,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Godrej Agrovet Ltd. as per TDS certificates filed with the return of income was ₹ 91,10,322. The assessee submitted a reconciliation statement and claimed that an amount of ₹ 7,29,973 represents opening balance receivable from Godrej. The AO on verification observed that the TDS certificates showed that the period pertained to 1.4.2004 to 30.4.2004 and further no such amount was reflected in the balance as on 31.3.2004 receivable from Godrej. Therefore, he treated the amount of ₹ 7,29,973 as assessee's income for the A.Y. 2005-06 and the addition was made accordingly. 17. On appeal by the assessee before the first appellate authority, the ld. CIT(Appeals) deleted the addition observing as under: "8.3 I see justifications in the argument of the A.R. The Assessing Officer has not denied the argument that the payment relates to work done in F.Y. 2003-04. He only objected that since the payment relates to F.Y. 2003-04, the same should have been shown as income of A.Y. 2004-05 as bills receivables as the appellant was consistently following mercantile system of accounting. But I observe, the appellant is consistently following cash method as can be seen from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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