POWERMATIC PACKAGING PVT. LTD.,,CHENNAI vs. ITO, CORPORATE WARD - 5 (2),, CHENNAI

per details of Shareholding pattern as placed on record, it could be

ITA No.733/Chny/2020 :- 7 -: seen that Shri P. Ravindran was holding more than 57% of

shareholding whereas remaining shareholding is held by another 7

members. It is undisputed fact that there is reduction in the asset with

corresponding reduction in reserve and surplus which amount to

distribution of the accumulated profits entailing release of assets by

the company to its shareholders. Accordingly, the assessee has been

held liable to pay dividend distribution tax in terms of Sec.115-O of the

Act.

includes any distribution by a company of accumulated profits, whether

capitalized or not, if such distribution entails the release by the

company to shareholders of all or any part of the assets of the

company. The Ld. CIT(A) also considered the cited decision of Hon'ble

Gujarat High Court in the case of Shashibala Navnitlal v. CIT (1964)

54 ITR 478 which held that to attract the provisions of Sec.2(22)(a),

there must be distribution of accumulated profits and it must entail the

release of all or any assets of the Company. Considering the facts of

the case, the accumulated profits were reduced by the amount of

loans written-off. The loans were receivable from a shareholding

having substantial shareholding. Therefore, the conditions of Sec.

2(22)(a) were satisfied. The argument that payment of loan was in

earlier years was also rejected since the amount will be taxable only

ITA No.733/Chny/2020 :- 8 -: when the right to repay was extinguished. We concur with the

adjudication of Ld. CIT(A) since the conditions of Sec.2(22)(a) were

duly satisfied and the provisions of Sec.115-O were attracted in

assessee’s case. The decision of Hon’ble Calcutta High Court in CIT

vs. Jamunadas Srinivas Private Ltd. (76 ITR 656) renders no

assistance to the case of the assessee since the decision has been

rendered in different context. The argument of Ld.AR that there should

be distribution to all the shareholders also do not impress us since it is

not the requirement of the law that similar distribution should be given

to all the shareholders. Therefore, the arguments thus raised stand

rejected.

it is apparent that a corresponding addition has been made by revenue

u/s 2(22)(e) in earlier assessment years in the case of Shri P.

Ravindran and the assessee seeks exclusion of the same from

impugned addition on the ground that there would be double addition.

We are of the considered opinion that the provisions of Sec. 2(22)(a)

and 2(22)(e) are mutually exclusive. Therefore concurring with the

same, we admit the additional grounds and restore the impugned

matter back to the file of Ld. AO to exclude the amounts already taxed

u/s 2(22)(e). The ground raised thus stand partly allowed.

ITA No.733/Chny/2020 :- 9 -: 8. The appeal stand partly allowed in terms of our above order. Order pronounced on 12th July, 2023.

Sd/- Sd/- (मनोमोहन दास) कुमार अ�वाल अ�वाल अ�वाल) अ�वाल (मनोज मनोज मनोज कुमार मनोज कुमार कुमार (Manomohan Das) (Manoj Kumar Aggarwal) �ाियक सद�/Judicial Member लेखा सद�य सद�य सद�य /Accountant Member सद�य लेखा लेखा लेखा चे�ई/Chennai, �दनांक/Dated: 12.07.2023 EDN/- आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ,/Appellant 2. -.थ,/Respondent 3. आयकर आयु//CIT 4. िवभागीय -ितिनिध/DR 5. गाड) फाईल/GF