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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by revenue for Assessment Years [AY] 2008-09 & 2009-10 contest separate orders of Ld. first appellate authority. The assessee has filed cross-objections against the same. Since common issues are involved, the same are being disposed-off by way of this common order for the sake of convenience and brevity. First, we take up cross-appeals for AY 2009-10.
Cross Appeals for AY 2009-10 2.1 The revenue has contested the order of Ld. Commissioner of Income Tax (Appeals)-52, Mumbai [CIT(A)], Appeal No.CIT(A)-52/IT/AC- CC-6(4)/190/2015-16 dated 22/06/2016 by raising the following effective grounds of appeal: - (i) Whether on facts and in the circumstances of the case and in law the CIT(A) was justified in deleting the addition of Rs.1,00,43,383/- u/s. 2(22) (e) of the I.T. Act,1961 without appreciating the facts that Smt. Nirmala Thumar has held 10% of shares of M/s. Kalpana Struct. Con (P) Ltd. And she was also having substantial interest in M/s. Pathik Construction as she was entitled to 23% of the Income of the firm. (ii) “Whether on facts and in the circumstances of the case and in law the CIT(A) was justified in deleting the addition of Rs.1,00,43,383/- u/s. 2(22)(e) of the I.T Act, 1961 without appreciating that the loan/ advance given by M/s. Kalpana Struct Con (P) Ltd to the M/s Pathik Construction is not in the ordinary course of business of the company because lending was not at all the business of M/s. Kalpana struct. Con (P) Ltd.?”
2.2 Briefly stated, the assessee being resident individual engaged as real estate broker was assessed u/s 143(3) read with Section 147 on 28/03/2014 at Rs.104.84 Lacs after sole addition of Rs.100.43 Lacs u/s 2(22)(e) as against final assessed income of Rs.4.40 Lacs u/s 143(3). The addition made u/s 2(22)(e) is the sole subject matter of this appeal.
Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 2.3 During assessment proceedings it was noted that the assessee was holding more than 10% shareholding in an entity namely Kalpana Struc. Con Pvt. Ltd. [in short ‘Company’] and was also having 23% share in a partnership concern namely Pathik Construction [in short ‘firm’]. It was noted that the firm received unsecured loan of Rs.206.66 Lacs from the firm out of which fresh loan received during the year was Rs.100.43 Lacs. In view of assessee’s common share in both the concerns, the provisions of deemed dividend as contained in Section 2(22)(e) were applicable to the facts of the case. The assessee defended the same by submitting that the stated advances were mere trade advances in nature towards purchase of land. However, after perusal of agreement between two entities, the Ld. AO, not convinced, added the same to the income of the assessee since other conditions as envisaged by Section 2(22)(e) were fulfilled.
Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 22/06/2016 wherein the assessee reiterated the contentions as raised before Ld. AO. The Ld. CIT(A) noted that similar additions were made u/s 2(22)(2) in the hands of the firm but the same were deleted by first appellate authority since the transactions were found to be purely commercial transactions in nature and therefore, the provisions of Section 2(22)(e) were not applicable to such transactions. It was further noted that the revenue contested the aforesaid stand before this Tribunal vide & 1499/Mum/2012 dated 13/02/2015 wherein the stand of first appellate authority got confirmed. Accordingly, the impugned additions were deleted against which the revenue is in further appeal before us.
Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 4. The Ld. Departmental Representative [DR], Ms.Pooja Swaroop submitted that the provisions of Section 2(22)(e), being deeming fiction, were applicable to the facts of the case notwithstanding the fact that the transactions were business transactions in nature. The Ld. Auhtorized Representative for Assessee [AR], Ms. Hiral Sejpal submitted that the matter stand squarely covered in assessee’s favor by the order of the Tribunal in the case of the firm, a copy of which has been placed on record.
We have carefully considered the rival contentions and perused relevant material on record including the cited decision of the Tribunal in the case of the firm Pathik Construction. We find that similar additions u/s 2(22)(e) were made in the hands of the firm which were deleted by first appellate authority, finding the same to be purely commercial transactions. The stand of Ld. first appellate authority has been confirmed by the Tribunal vide cited order. Therefore, since a view has already been taken, we find no reason to take a different view, the factual matrix being identical. Another reason to concur with the stand of the assessee is that the assessee herself has not received any amount from the Company rather the amount has been received by the firm, in which the assessee was a partner to the extent of 23%. Therefore, the basic condition of Section 2(22)(e) i.e. the assessee has received the amount from the concern, is missing in the case. On both counts, we confirm the stand of Ld. first appellate authority. The revenue’s appeal stand dismissed. The assessee, in the cross objection, has contested the validity of reassessment proceedings. The same become merely
Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 academic in nature since we have already dismissed revenue’s appeal and therefore dismissed as infructuous.
Cross Appeals for AY 2008-2009 6. The assessee, on identical factual matrix, has suffered addition u/s 2(22)(e) for Rs.57.60 Lacs in quantum assessment, which has been deleted by Ld. CIT(A) on similar reasoning. Aggrieved, the revenue is in further appeal before us. Apart from our decision in AY 2009-10, we have another reason to dismiss the appeal of the revenue.
At the outset, it is noted that tax effect of the quantum additions as contested by the revenue is less than prescribed limit of Rs.20 Lacs and the same is covered by recently issued low tax effect Circular No.03/2018 dated 11/07/2018 issued by Central Board of Direct Taxes [CBDT]. The Ld. DR, Ms. Pooja Swaroop, has controverted the same by submitting that necessary instructions / certificate, in this regard, would be required from higher authorities.
We have gone through the circular and find that the tax effect of quantum in dispute is below prescribed limit of Rs.20 Lacs and the assessee stood benefitted by the above circular issued by CBDT wherein the minimum monetary limit for filing the appeals before various appellate authorities have been fixed as under:-
S. No. Appeals/ SLPs in Income-tax Monetary Limit (Rs.) matters 1 Before Appellate Tribunal 20.00,000 2 Before High Court 50.00,000 3 Before Supreme Court 1,00.00,000
Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 The aforesaid limits, as per para 13 of the circular applies to pending appeals also. In view of the admitted position, we dismiss the revenue’s appeal. 9. Therefore, on merits as well as on technical ground as stated above, the revenue’s appeal stand dismissed. The assessee’s cross- objections stand dismissed, being infructuous.
Conclusion 10. The appeals as well as cross-objections stand dismissed.
Order pronounced in the open court on 03rd October, 2018.
Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 03.10.2018 Sr.PS:-Thirumalesh आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6. आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai
Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 आयकर अपीलीय अिधकरण “एफ” �ायपीठ मुंबई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI
�ी श��जीत दे,�ाियक सद� एवं �ी मनोज कुमार अ�वाल, लेखा सद� के सम�। BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM
आयकरअपीलसं./ (Cross Objection No.149/Mum/2018 (िनधा�रणवष� / Assessment Year: 2008-09) Deputy Commissioner of Income Nirmala C. Thumar Tax Central Circle-6(4) Plot No.72, PthikBunglow, बनाम/ Room No.1925, 19 t h Floor Ring Road No.3, Sector-21 Vs. Air India Building Navi Mumbai-400 706 Nariman Point, Mumbai – 400 021 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ACUPT-0407-A (अपीलाथ�/Appellant) (��थ� / Respondent) : & आयकरअपीलसं./I.T.A. No. 5625/Mum/2016 & Cross Objection No.150/Mum/2018 (िनधा�रणवष� / Assessment Year: 2009-10) Deputy Commissioner of Income Nirmala C. Thumar Tax Central Circle-6(4) Plot No.72, PthikBunglow, बनाम/ Room No.1925, 19 t h Floor Ring Road No.3, Sector-21 Vs. Air India Building Navi Mumbai-400 706 Nariman Point, Mumbai – 400 021 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ACUPT-0407-A (अपीलाथ�/Appellant) (��थ� / Respondent) :
Assessee by : HiralSejpal, Ld. AR Revenue by : Pooja Swaroop, Ld. Sr. DR C O R R I G E N D U M
Upon perusal of Tribunal order dated 03/10/2018 in respect of captioned matters, it is noted that the name of the bench has inadvertently been mentioned as “D” bench whereas the matter was Nirmala C.Thumar Assessment Years : 2008-09 & 2009-10 heard by “F” bench. The error is being sought to be rectified by way of this corrigendum. Accordingly, the name of the bench, wherever occurring in the said order, may be read as “F” bench instead of “D” bench.