SUDESH GUPTA,NEW DELHI vs. ACIT, CIRCLE- 5(1), NEW DELHI

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ITA 7647/DEL/2017Status: DisposedITAT Delhi25 April 2025AY 2013-14Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI M. BALAGANESH (Accountant Member)3 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that inter-corporate deposits, especially when interest is charged and the transaction is commercial, do not fall under the deeming fiction of Section 2(22)(e). Reliance was placed on judicial precedents and CBDT circulars.

What were the facts?

The assessee, a shareholder in two companies, received inter-corporate deposits from one company into another where she held a significant stake. The Assessing Officer treated these deposits as deemed dividends under Section 2(22)(e).

What were the issues?

Whether inter-corporate deposits between companies, where the assessee is a shareholder, can be treated as deemed dividends under Section 2(22)(e) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH

For Respondent: Shri Sahil Kumar Bansal, Sr. DR
Hearing: 07.04.2025Pronounced: 25.04.2025
1.

This assessee’s appeal for assessment year 2013-14, arises against the Commissioner of Income Tax (Appeals)-2 [in short, the “CIT(A)”], New Delhi’s order dated 18.08.2017 passed in case no. 10476/16-17, involving proceedings under section 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Case called twice. None appears at the assessee’s behest. She is accordingly proceeded ex-parte.

3.

We next note that the sole substantive issue between the parties herein is that of correctness of the learned lower authorities’ action making section 2(22)(e) deemed dividend addition amounting to Rs. 1,29,53,126/-; in the course of assessment framed on 24.11.2016 and upheld in the lower appellate discussion.

4.

It is in this factual backdrop that we note that the assessee is admittedly a shareholder holding 34.67% stake in M/s. Biggesto Technologies and 21.08% share in M/s. Kushang Technologies Pvt. Ltd. And that, the above latter entity had made inter-corporate deposits of Rs.2.34 crores in the former which stand treated as covered under the deeming fiction of dividends in the assessee’s hands.

5.

That being the case, we are of the considered view that once the assessee’s stand from the day one is that the impugned sum represents inter-corporate deposits, which has neither been rebutted by the Assessing Officer nor in the lower appellate discussions, case law CIT Vs. Subhkam Monetary Services (P.) Ltd., (2015) 54 taxmann.com 226 (Bombay) holds that such intercorporate deposits do not attract section 2(22)(e) of the Act. All

2 | P a g e this is indeed coupled with the fact that the above former entity had also charged interest as well. We thus conclude in light of the CBDT’s circular no. 19/2017 as well as PCIT Vs. Dwarka Prasad Aggarwal, (2024) 161 taxmann.com 813(SC) that such commercial transactions are very well out of the ambit of the impugned deeming fiction. We accordingly reject the Revenue’s vehement contention supporting the impugned addition which is hereby deleted in very terms.

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