ROSHA FITNESS SOLUTION PVT LTD,DELHI vs. DCIT CIR 19(1), DELHI

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ITA 4716/DEL/2024Status: DisposedITAT Delhi06 January 2025AY 2018-19Bench: Sh. Satbeer Singh Godara (Judicial Member)3 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the issue required fresh factual verification by the Assessing Officer, as DDT cannot be levied on a loss-making entity. The appeal was restored to the AO for this purpose.

What were the facts?

The assessee was held liable for dividend distribution tax (DDT) of Rs. 3,83,961/-. The assessee contended that it was a loss-making company and the addition was unsustainable, attributing the demand to an arithmetic error in its return.

What were the issues?

Whether dividend distribution tax can be levied on a loss-making company and if an arithmetic error in the return can lead to an unsustainable demand.

Which sections of the Income-tax Act were involved?

Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: Sh. Satbeer Singh Godara

Hearing: 06.01.2025Pronounced: 06.01.2025

ORDER This assessee’s appeal for Assessment Year 2018-19, arises against the Addl./JCIT(A)-2, Pune’s DIN & order No. ITBA/APL/S/250/2024-25/1067610086(1) dated 13.08.2024, in proceedings u/s 143(1) of the Income Tax Act, 1961 (in short “the Act”).

2.

Heard both the parties at length. Case file perused.

3.

The assessee raises the following substantive ground in the instant appeal:

“1. That the Hon. CIT(A)-NFAC has erred in law and on facts in sustaining demand of Rs.3,83,961/- on illegal and untenable ground. Hence, the demand as such may be deleted.

2. That the Hon. CIT(A)-NFAC has erred in law and on facts in sustaining demand of Rs.3,83,961/- on illegal and untenable ground without providing sufficient opportunity to the assessee.”

4.

Learned counsel vehemently submits during the course of hearing that both the lower authorities herein have wrongly held the assessee as liable to pay to dividend distribution tax (DDT) involving a sum of Rs.3,83,961/- despite the fact that it’s balance sheet has already made it clear that since it’s instance a loss making company, and therefore, the addition herein is not sustainable. Learned departmental representative on the other hand vehemently supports the impugned addition on the ground that the CPC has rightly calculated the same going by the assessee’s returned figures only.

5.

Faced with this situation, the assessee submits that there was an arithmetic/clerical error in it’s return wrongly stating the foregoing dividend distribution which goes against the corresponding figures in the balance sheet.

6.

Be that as it may, the tribunal is of the considered view that the instant issue more requires the learned Assessing Officer; afresh factual verification than the detailed discussion as the impugned addition or the “DDT” herein couldn’t be added in case of a loss making entity.

Rosha Fitness Solution Pvt. Ltd. 7. I therefore deem it appropriate to restore the assessee’s instant appeal back to the learned Assessing Officer for it’s afresh factual verification within three effective opportunities, subject to a rider that taxpayer shall plead and prove the case at his own risk and responsibility, in consequential proceedings. Ordered accordingly.

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