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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
Per Shri D.S.Sunder Singh, Accountant Member : Delay : There is a delay of delay of 11 days in filing the appeal by the assessee . The assessee filed condonation petition and submitted that the reason for delay in filing the appeal was due to public holidays and civil disturbances due to ‘Samaikyandhra agitation’ at Visakhapatnam and requested to condone the delay. After hearing the Ld.AR, we observe that
2 I.T.A. No.572/Viz/2013, A.Y.2008-09 M/s Sai Concrete Pavers Pvt. Ltd., Visakhapatnam there is sufficient cause for the delay in filing the appeal, hence, we condone the delay and admit the appeal. This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Visakhapatnam vide ITA No.328/10-11/DCIT, C-4(1)/VSP/2013-14 dated 31.05.2013 for the Assessment Year (A.Y.) 2008-09.
All the grounds of appeal in this case are related to the addition made by the Assessing Officer (AO) u/s 2(22)(e) of the Income Tax Act, 1961 (in short ‘Act’). In the instant case, the assessee filed the return of income declaring total income of Rs.2,39,176/- on 30.09.2008. Subsequently filed revised return of income declaring total income of Rs.23,91,760/- on 27.10.2008. During the assessment proceedings, the AO found that the assessee had given the loan of Rs.20,39,767/- to the Director, Shri S.Srinivas who is having substantial interest in the company. The assessee was asked to explain as to why the same should not be treated as deemed dividend u/s 2(22)(e) of the Act. In response to which, the Ld.AR had agreed for the addition in the hands of the assessee company, therefore, the AO made the addition of Rs.15,03,400/- u/s 2(22)(e) of the Act.
3 I.T.A. No.572/Viz/2013, A.Y.2008-09 M/s Sai Concrete Pavers Pvt. Ltd., Visakhapatnam 3. Against the order of the AO, the assessee filed appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO observing that the Ld.AR had accepted the addition in the hands of the company.
Against the order of the Ld.CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld. AR argued that the deemed dividend is required to be assessed in the hands of the beneficiary, but not in the hands of the assessee company. Therefore, argued that the lower authorities have committed the error and requested to set aside the orders of the lower authorities and delete the addition made by the AO.
On the other hand, the Ld.DR supported the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. As per Special Bench decision in the case of Bhaumic Colours (P) Ltd., 313 ITR (AT) 146 the deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder.
4 I.T.A. No.572/Viz/2013, A.Y.2008-09 M/s Sai Concrete Pavers Pvt. Ltd., Visakhapatnam 6.1. The Hon'ble Delhi High Court in case of CIT Vs. Ankitech P. Ltd. (supra) while considering identical issue approved the decision of the ITAT, Mumbai Special Bench in case of Bhaumic Colours (P) Ltd., 313 ITR (AT) 146. In the instant case there is no dispute that the authorized representative who represented the case before the AO had accepted the addition. The same AR has represented before the CIT(A) and the ITAT. He is a senior Chartered Accountant and well aware of the legal position regarding the taxability of the deemed dividend in the hands of company but not in the hands of the beneficiary director. For a query from the Bench as to why the Ld.AR has expressed no objection for making addition in the hands of the company, the Ld.AR could not give satisfactory explanation. The Ld.CIT(A) decided the issue on the premise that the addition was agreed addition. Therefore, there was no occasion to the assessing officer / CIT(A) to examine the issue in detail. Therefore, we are of the considered opinion that the issue required to be examined by the AO as to why the assessee had accepted the addition and again filed appeal and the taxability of the deemed dividend in correct hands. Therefore, in the interest of justice, we set aside the orders of the lower authorities and remit the matter back to the file of the AO for redoing
5 I.T.A. No.572/Viz/2013, A.Y.2008-09 M/s Sai Concrete Pavers Pvt. Ltd., Visakhapatnam the assessment denovo after giving opportunity to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 27th September, 2019
Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नदनधंक /Dated : 27.09.2019 L.Rama, SPS
आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee - M/s Sai Concrete Pavers Pvt. Ltd., D.No.49-58-2, Green Park Road, Akkayyapalem, Visakhapatnam 2. रधजस्व/The Revenue - Dy.Commissioner of Income Tax, Circle-4(1), Visakhapatnam 3. The Commissioner of Income Tax-2, Visakhapatnam 4. The Commissioner of Income Tax (Appeals), Visakhapatnam 5. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 6.गार्ड फ़ाईि / Guard file
आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, Visakhapatnam