VIVEK DATTATRAY SAMANT,ANDHERI vs. ASST. CIT 11 (3)(2), MUMBAI

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ITA 6500/MUM/2019Status: DisposedITAT Mumbai06 January 2021AY 2011-126 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the financial transactions were not in the nature of loans or advances. Following a coordinate bench's decision, the Tribunal deleted the addition made under Section 2(22)(e) in the company's case, rendering the protective addition in the shareholders' cases infructuous.

What were the facts?

The Assessing Officer (AO) treated certain unsecured loans received by Yasham Bio Science Pvt. Ltd. from sister concerns as deemed dividend under Section 2(22)(e) of the Income Tax Act. The AO made additions on a substantive basis in the company's case and on a protective basis in the shareholders' cases (the assessees).

What were the issues?

Whether the unsecured loans received by a company from its sister concerns, where common shareholders exist, constitute deemed dividend under Section 2(22)(e) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI VIKAS AWASTHY, JM & SHRI S. RIFAUR RAHMAN, AM

Heard together (2 matters)

I.T.A. No. 6500/Mum/2019
I.T.A. No. 6499/Mum/2019

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R

Per S. Rifaur Rahman, Accountant Member:

1.

The present two appeals have been filed by the different assessee against the order of Ld. Commissioner of Income Tax (Appeals) – 18 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 28.08.2019 for Assessment Year (in short AY) 2011-12 respectively.

2.

Since the issues raised in both the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. Firstly, we are taking Assessment Year 2011-12.

3.

The brief facts of the case are, the assessee i.e. Shri Vivek Dattatray Samant and Smt. Namita Vivek Samant are the main shareholders in the following companies as detail below:-

Sr Name of the % % Accumulated . concern Shareholding Shareholding profits as on N of Shri Vivek of Namita V. 31.03.2010 o. D. Samant Samant 1. Yasham Bio 40% 20% Science 2. Yasham Cemphar 84% 16% Rs.1,25,65,608 Pvt. Ltd. 3. Yasham Importers 55.71% 18.75% Rs. 2,61,39,865 & Exporters Pvt. Ltd.

4.

In the case of Yashm Bio Science, AO observed that the company Yasham Bio Science Pvt. Ltd. received amounts by way of unsecured loans from Yasham Cemphar Pvt. Ltd. and Yasham Importers & Exporters Pvt. Ltd. Considering the fact that Shri Vivek Dattatray Samant and Smt. Namita Vivek Samant are main shareholders, AO observed that both these companies under common management have accumulated profits in their respective balance sheet. Therefore, he came to the conclusion that provision of section 2(22)(e) of the Act is applicable in the case of Yasham Bio Science Pvt. Ltd, accordingly proceeded to make additions u/s 2(22(e) of the Act.

5.

On appeal before Ld. CIT(A), Ld. CIT(A) sustained the addition on substantive basis in the case of Yasham Bio Science Pvt. Ltd and sustained the addition on protective basis in the case of the shareholders (present assessees)

6.

Aggrieved with the above, assessee and M/s Yasham Bio Science Pvt. Ltd preferred the appeal before ITAT and ITAT deleted the additions made by AO with the following observations:-

22.

We have already adjudicated in in the case of M/s. Yasham Bio Sciences Pvt. Ltd. in which the addition was sustained as substantive addition by the Ld .CIT(A) that the financial transactions between the assessee and two sister concerns are not in the nature of loan/advances and the addition sustained under section 2(22)(e) of the Act on account of deemed dividend was held to be wrongly sustained by Ld. CIT(A) and deleted. Consequently the protective addition as sustained by Ld. CIT(A) in the case of the assessee does not survive and the AO is directed to delete the same.

7.

It is relevant to notice that ITAT order was passed on 25.09.2020, whereas re-assessment order u/s 147 r.w.s 143(3) of the Act was passed on 29.11.2016 and the same was sustained by Ld. CIT(A)-18, Mumbai on 28.08.2019. Since the ITAT has passed the order subsequently i.e. on 25.09.2020, the order passed by Ld. CIT(A) becomes infructuous. Considering the fact that the additions sustained by Ld. CIT(A) is only on the provision of section 2(22)(e) and the Coordinate bench of this Tribunal has already considered the facts and gave detailed findings on this issue, therefore we are inclined to allow the appeal filed by the assessee i.e. shareholders of Yasham Bio Science Pvt. Ltd. Accordingly, the assessment order passed u/s 147 r.w.s. 143(3) is set aside and grounds raised by the assessee are allowed.

8.

Since the other appeal filed by the assessee in for Assessment Year 2011-12 is similar to the appeal in Assessment Year 2011- 12, therefore we also allow the grounds raised by the assessee in this appeal for the parity of reasons.

9.

In the net result, the appeals filed by the respective assessees stands allowed.

Orders pronounced in the open court on 06.01.2021. Sd/- Sd/- (Vikas Awasthy) (S. Rifaur Rahman) न्याययकसदस्य / Judicial Member लेखासदस्य / Accountant Member मुंबई Mumbai;यदनांकDated : 06.01.2020 Sr.PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Assessee 2. प्रत्यथी/ The Respondent आयकरआयुक्त(अपील) / The CIT(A) 3. 4. आयकरआयुक्त/ CIT- concerned

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