TMI Blog2022 (3) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) by referring the decision of Hon'ble jurisdictional High Court in the case of Shripad Concrete Pvt.Ltd. [ 2013 (7) TMI 117 - GUJARAT HIGH COURT] wherein the Hon'ble court held that advance on account of business transaction cannot be categorized as loans so as to attract deeming fiction under section 2(22)(e) of the Act. We also find merit in the submission that on similar transaction in earlier and subsequent year no such addition was based on similar transaction. In our view, the Ld. CIT(A) is after considering the entire fact and legal position took a legaly plausible view which we affirm. So far as reliance in case of National Travel Services [ 2018 (1) TMI 1159 - SUPREME COURT] by Ld. CIT-DR, we find that in the said decision the Hon'ble apex court merely referred the case before Hon'ble Chief Justice of India to constitute a larger bench and no finding which may be said to the adverse to the assessee is made. In view of the aforesaid factual and legal discussion, we affirm the order of Ld. CIT(A). - Decided against revenue. - ITA No. 90/SRT/2018 And C.O. No.3/SRT/2021 - - - Dated:- 23-2-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es received by assessee. The name of M/s Joy International (I) Pvt. Ltd., ( JIIPL in short) appears at No.3 alongwith address at 211, Nimbus Centre, Oberoi Complex, Andheri (West), Mumbai. As per the details, in the said column, the assessee has taken a loan of ₹ 12 crores from JIIPL. On further perusal of audit report of JIIPL furnished by assessee, the Assessing Officer noted that in the list of shareholders of more than 5% shareholdings, the name of Shri Devji N Palani, appears, whose holding 33.33% in JIIPL. Shri Devji N Palani is also having shareholding in assessee (M/s DNP Foods Ltd.) at 21.74%. Thus, Shri Devji N Palani holds substantial interest in JIIPL as well as in M/s DNP Foods Ltd.,(assessee). The JIIPL is shown advance of ₹ 12 crores. Therefore, the assessee was issued show cause notice as to why the amount of ₹ 12 crores representing as unsecured loan availed by assessee should not be treated ad deemed dividend under section 2(22)(e) in the hand of assessee and be added back to the income of assessee. 3. The assessee filed its reply on16.12.2016. The contents of reply filed by the assessee is extracted by Assessing Officer in para-4.2 of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition, assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee filed detailed written submission as recorded in para-3.2 of the order of Ld. CIT(A). The assessee, in its submission, submitted that assessee-company is not a shareholder in JIIPL. Hence, provision of section 2(22)(e) of the Act is not applicable to assessee. 7. The assessee further explained that reasons for Inter Corporate Deposits; M/s ACE Gum Ind. And Nitcherry Ind. of Rajasthan are suppliers of raw materials to the assessee-company. Both the suppliers are buying goods from JIIPL. Hence, JIIPL have to recover sums (receivable) from ACE Gum Ind. and Nitcherry Ind. Likewise, both these entities are creditors for the assessee-company. In February, 2013, financial position of ACE Gum Ind. and Nitcherry Ind. had become weak. Therefore, JIIPL had recovered their payment directly from assessee-company as debt of JIIPL with the consent of both the suppliers. Thus, in order to overcome the situation, financial transactions were carried out between JIIPL and assessee-company. Accordingly, both the companies i.e., assessee and JIIPL have taken decision for Inter Corporate Deposits being a prudent busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deemed dividend in the hand of assessee because of common shareholding substantial interest in both the companies. The Assessing Officer has not only treated the transaction on receipt of amount from JIIPL as deemed dividend but also treated the assessee-company as deemed shareholder of JIPPL. The assessee also relied on the decision of Tribunal in the case of ITO vs. Seasons Hotels Pvt. Ltd. [ITA Nos 2502, 2503 2504/AHD/2010] dated 30.11.2011, wherein it was held that assessee not being a shareholder, cannot be taxed under section 2(22)(e) of the Act. The Ld. CIT(A) further noted that assessee is neither registered nor beneficial shareholder of JIIPL. Thus, the action of the Assessing Officer to tax deemed dividend under section 2(22)(e) of the Act. The provision of section 2(22)(e) for taxing deem dividend is always meant for the registered and beneficial shareholder of the payer company. 10. On the contention of assessee about the purchase of ₹ 127.43 crores from JIPPL during the year and the receipt was pertaining to the business transaction, is not subject to the fiction of section 2(22)(e) of the Act, the Ld. CIT(A) held that Assessing Officer has not controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be treated as deemed dividend income, as one of the director, Shri Devi N Palani was having substantial shareholding in both the companies. Shri Devi N Palani is director in the assessee-company having holding of 21.74% of share and also holds share to the extent of 33.33% in JIIPL. The assessee has received a loan of ₹ 12 crores during the year under consideration. After considering the show cause and on furnishing finance of JIIPL, the Assessing Officer found that JIPPL having surplus of ₹ 5.74 crores which was treated as deemed dividend. The Assessing Officer made addition with the consent of representative of assessee, who accepted that ₹ 5.74 crores was accumulated profit of JIIPL. The Ld. CIT-DR for the Revenue submits that the decision of Ld. CIT(A) is in conflict with the provision of section 2(22)(e)of the Act. The relief granted by the ld CIT(A) is in contravention with the decision of Hon ble Apex Court in National Travel Services VS CIT in Civil Appeal No. 2068 to 2071 of 2012 14. On the other hand, Ld. AR of the assessee supported the order of Ld. CIT(A), the ld AR for the assessee submits that the grounds of appeal raised by the revenue and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d2 014-15 respectively i.e., one year prior to the year under consideration and one year subsequent to the year under consideration and not addition was made in the assessment orders passed under section 143(3). 17. The Ld. AR of the assessee submits that issue is covered by the judgment of Hon'ble apex court in the case of Bharat Sanchar Nigam Ltd. Anr. Vs. Union of India Ors. (2006) 282 ITR 273; 201 CTR 346 (SC), wherein it was held that where facts and law in subsequent assessment year are same, no authority quasi or judicial can generally be permitted to take different view. 18. In support of ground No.2 raised in assessee s C.O., the Ld. AR of the assessee submits that in alternative and without prejudice it was argued before Ld. CIT(A) and is being urged before this Bench (at the time of hearing) that accumulated profit for the purpose under section 2(22)(e) of the Act does not include current year profit. The current year profit accumulated in JIIPL at ₹ 1.92 crores and in any case the Tribunal came to the conclusion that transaction is covered by fiction under section 2(22)(e), it should be restricted to the accumulated profit of JIIPL on 31.03.2012 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed shareholding of JIIPL. The Ld. CIT(A) by referring the order of ITAT Ahmedabad in the case of Seasons Hotels Pvt. Ltd. (supra), wherein it was held that assessee not being a shareholder cannot be taxed under section 2(22)(e) of the Act. The order of Tribunal is based on Special Bench Bombay Tribunal in the case of CIT vs. Bhaumik Colour Pvt. Ltd. 118 ITD 1 (Mumbai- Tri.), wherein it was held that shareholder should be registered as well as beneficial shareholder. The Ld. CIT(A) held that assessee is neither registered nor beneficial shareholder of JIIPL. Thus, the deeming provision of section 2(22)(e) is for taxing deemed dividend is always meant for registered and beneficial shareholder of the JIIPL company. We find that the Ld. CIT(A) also examined the contention of assessee made purchases to the tune of ₹ 127.24 crores from JIIPL during the year under consideration and that transaction with JIIPL was pertaining to business transaction and not liable to be covered by the ambit of section 2(22)(e) of the Act. The Ld. CIT(A) held that Assessing Officer has not controverted this contention of assessee in the assessment order. 21. The Ld. CIT(A) further held that duri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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