PRINCIPAL COMMISSIONER OF INCOME TAX 1 KOLKATA vs. APEEJAY PVT LTD

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ITAT/18/2024HC CalcuttaWBCHCO000135202401 May 2024Bench: THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM,HON'BLE JUSTICE HIRANMAY BHATTACHARYYA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law raised by the revenue was squarely covered in favour of the assessee by the decisions of the Hon'ble Supreme Court in Commissioner of Income Tax vs. Madhur Housing & Development Co., (2018) 93 taxmann.com 502(SC), and the High Court decisions in (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras). The Court found no distinguishing features presented by the revenue to deviate from these precedents. Consequently, following these binding authorities, the appeal was dismissed, and the substantial question of law was answered against the revenue. The stay application was also dismissed. The specific reasoning of the ITAT regarding the interpretation of Section 2(22)(e) and its applicability to registered/beneficial shareholders was implicitly upheld by dismissing the revenue's appeal.

What were the facts?

This appeal by the revenue, the Principal Commissioner of Income Tax-1, Kolkata, is against an order dated August 10, 2023, passed by the Income Tax Appellate Tribunal (ITAT), 'A' Bench, Kolkata. The appeal pertains to the assessment year 2016-17. The ITAT's order is under challenge. The dispute revolves around an addition made on account of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. The procedural history indicates that the revenue has filed this appeal under Section 260A of the Act, and a stay application (IA No: GA/1/2024) was also filed.

What were the issues?

1. Whether the Learned Income Tax Appellate Tribunal was justified in law to hold that the addition on account of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961, could only be made in the hands of the registered/beneficial shareholders, ignoring the fact that Section 2(22)(e) does not contain any such specific provision or restriction and nowhere provides as to who is to be taxed in respect of such income? (Question of law) Assessee's contentions: The assessee argued that the substantial question of law raised is squarely covered in their favour by the decisions of the Hon'ble Supreme Court in Commissioner of Income Tax vs. Madhur Housing & Development Co., (2018) 93 taxmann.com 502(SC), and other High Court decisions in (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras). The assessee submitted copies of these decisions. Revenue's contentions: The revenue did not present any argument to distinguish the cited precedents or to counter the assessee's submissions. The judgment notes that there was 'nothing brought on record by the revenue to point out any distinguishing feature'.

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 260A

AI-generated summary — verify with the full judgment below

OD–54 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE ITAT/18/2024 IA No: GA/1/2024 THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA VS. APEEJAY PVT. LTD. BEFORE : THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAM And THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : 1st May, 2024 Appearance : Ms. Smita Das De, Adv. Mr. Soumen Bhattacharjee …for appellant Mr. Abhratosh Majumder, Sr. Adv. Mr. Avra Mazumder, Adv. …for respondent The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 10th August, 2023 passed by the Income Tax Appellate Tribunal, `A’ Bench, Kolkata in ITA No. 118/Kol/2023, for the assessment year 2016-17. The revenue has raised the following substantial questions of law for consideration : “Whether the Learned Income Tax Appellate Tribunal was justified in law to hold that the addition on account of deemed dividend under Section 2(22)(e) of Income Tax Act, 1961, could only be made in the hands of the registered/beneficial shareholders, ignoring the fact that the Section

2 2(22)(e) does not contain any such specific provision or restriction and nowhere provides as to who is to be taxed in respect of such income ?” We have heard learned Counsel appearing for the parties. Learned Counsel for the respondent/assessee had submitted that the question of law raised in this appeal is squarely covered in favour of the assessee in the light of the decisions of the Hon’ble Supreme Court in Commissioner of Income Tax vs. Madhur Housing & Development Co., (2018) 93 taxmann.com 502(SC) as well as the decisions in (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras). Copies of the decisions were handed over to the appellant on the last hearing day. There is nothing brought on record by the revenue to point out any distinguishing feature for us not to follow the decisions of the Hon’ble Supreme Court and the decisions referred above. Thus, following the decisions of the Hon’ble Supreme Court in (2018) 93 taxmann.com 502(SC), (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras), (supra) the appeal is dismissed and the substantial question of law is answered against the revenue. The stay application IA No: GA/1/2024 is also dismissed. (T.S. SIVAGNANAM, CJ.)

(HIRANMAY BHATTACHARYYA, J.) SN AR(CR)

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