SRI PARTHA SARATHI MANDAL,PASCHIM MEDINIPUR vs. A.C.I.T.,CIRCLE-38, PASCHIM MEDINIPUR

It transpires from the case records during the course of hearing that the relevant factual matrix in both these appeals is identical. These two assessees namely Shri Aloke Kumar Ghosh and Shri Partha Sarathi Mondal are directors in a company namely M/s. Spandan Advance Medicare Pvt. Limited holding its 16% share each. The Assessing Officer framed the assessments in both these assessees cases making the impugned section 2(22)(e) deemed dividend addition(s) after noticing the fact that the above stated company had purchased land(s) in their names and got them registered as their personal holdings. This made the Assessing Officer to treat the sums involved in land transaction as deemed dividend income as upheld in the identical lower authorities discussion.

Both parties reiterated their respective stands during the course of hearing. Smt. Biswas strongly supported the CIT(A)’s action upholding the identical deemed dividend addition(s) in the facts and circumstances of these two cases. I find no merit in Revenue’s stand invoking section 2(22)(e) deemed deduction of dividend under challenge. The fact remains that although the company hereinabove has paid for purchasing land(s) in these two assessees/directors’ names having 16% shares, the said lands 2 Assessment Year: 2015-2016 Shri Aloke Kumar Ghosh & Assessment Year: 2015-2016 Shri Partha Sarathi Mondal form part of company’s balance-sheet only as its assets than that of these two assessees. The said company’s resolution(s) to this effect also indicates that these directors would not enjoy any right in the land. Smt. Biswas at this stage sought to justify the lower authorities’ action that if these two assessees/directors sell the land in future, that sum would indeed be in the nature of deemed dividends only. I find no substance in the instant last argument as well as the land in question purchased in these two directors names cannot be taken as a “payment” per se as well. I, therefore, direct the Assessing Officer to delete the impugned addition(s) made in these two assessees’ cases. No other argument has been raised during the course of hearing.

In the result, these assessees appeals are allowed. A copy of the instant common order be placed in the respective case file. Order pronounced in the open Court on January 31, 2020.