THE COMMISSIONER OF INCOME T vs. M/S ENAMAS ENGINEERING PVT

T.C.A.No.895 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 08.10.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.895 of 2019 The Commissioner of Income Tax, Chennai .. Appellant Versus M/s.Enmas Engineering Pvt Ltd 9, Cathedral Road, Chennai – 600 006 .. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai dated 07.11.2012 made in I.T.A.No.1753/Mds/2012 relating to the Asst Year 2008-09. For Appellant :Mr.Karthik Ranganathan Senior Standing counsel Assisted by Mr.S.Rajesh Junior Standing counsel [For Revenue] For Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan 1/6 http://www.judis.nic.in T.C.A.No.895 of 2019 JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

This appeal by the Revenue filed under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity) is directed against the order dated 07.11.2012 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai in I.T.A.No.1753/Mds/2012 for the Assessment Year 2008- 09. The Revenue has raised the following Substantial Questions of Law for consideration: 1. “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the additions made under deemed dividend as per Section 2 (22) (e) of the Income Tax Act, 1961 cannot be sustained?” 2. “Whether for attracting the provisions of Section 2(22)(e) a shareholder has not only to be a beneficial shareholder but also a registered share holder?” 3. “Is not the reasoning of the Tribunal bad especially when the term concern has been defined in Explanation 3(a) to Section 2(22) which includes HUF, Firm or Association of persons, or a body of individuals or a 2/6 http://www.judis.nic.in T.C.A.No.895 of 2019 company and in the present case the shareholders are common in both the companies having substantial interest?” 2. We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel assisted by Mr.S.Rajesh, learned Junior Standing counsel for the Revenue and Mr.R.Vijayaraghavan, learned counsel for M/s.Subbaraya Aiyar Padmanabhan, learned counsel for the respondent. 3. It is not disputed before us that the Substantial Questions of Law raised by the Revenue in the instant case was considered by this Court earlier in the case of The Commissioner of Income Tax, Chennai Vs. M/s T.Abdul Wahid & Co., in T.C.A.Nos.512 & 513 of 2018 dated 21.09.2020. The said judgment was followed in the case of The Commissioner of Income Tax, Chennai Vs. M/s.Checkpoint Apparel Labelling Solutions India Ltd., in T.C.A.No.307 of 2019 dated 29.09.2020. 4. It would be useful to refer to the operative portion of the judgment in the case of The Commissioner of Income Tax, Chennai Vs. M/s.Checkpoint Apparel Labelling Solutions India Ltd., wherein they had 3/6 http://www.judis.nic.in T.C.A.No.895 of 2019 followed the decision in The Commissioner of Income Tax, Chennai Vs. M/s T.Abdul Wahid & Co., and the operative portion of the judgment reads as follows: “8. We had an occasion to consider an identical substantial question of law in the case of CIT Vs. M/s.T.Abdul Wahid & Co. [TCA.Nos.512 & 513 of 2018 dated 21.9.2020]. As contended before us in this appeal, an argument was made by Mr.T.Ravikumar, learned Senior Standing Counsel in the said decision that loans or advances had to be treated as dividend to the extent of accumulated profits and loan or advances may be given directly to the shareholder or it may be given for the benefit of the shareholder or on behalf of the shareholder. Therefore, it was contended that the Assessing Officer was right in treating the loan as deemed dividend under Section 2(22)(e) of the Act. 9. In the said decision, in support of his contentions, the learned Senior Standing Counsel referred to the decisions in the cases of (i) Gopal & Sons (HUF) Vs. CIT [reported in (2017) 145 DR 0289 (SC)]; (ii) Miss.P.Sarada Vs. CIT [reported in [1998] 229 ITR 444 (SC)]; 4/6 http://www.judis.nic.in T.C.A.No.895 of 2019 (iii) CIT Vs. National Travel Services [reported in (2012) 347 ITR 0305]; and (iv) National Travel Services Vs. CIT, [reported in (2018) 401 ITR 0154 (SC)], in which, the Hon'ble Supreme Court doubted the correctness of the decision in the case of CIT Vs. Ankitech Pvt. Lt. [reported in (2012) 340 ITR 0014]. 5. Thus, following the above decision, the Tax Case Appeal filed by the Revenue has to be necessarily rejected. Accordingly, the Tax Case Appeal is dismissed and the Substantial Questions of Law are answered against the Revenue. No costs. (T.S.S.,J) (V.B.S.,J) 08.10.2020 Kak Index: Yes / No Internet: Yes / No To The Income Tax Appellate Tribunal, 'D' Bench, Chennai. T.S.SIVAGNANAM, J. AND 5/6 http://www.judis.nic.in T.C.A.No.895 of 2019 V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.895 of 2019 08.10.2020 6/6 http://www.judis.nic.in