THE COMMISSIONER OF INCOME-TAX vs. M/S. NAMDHARI SEEDS

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ITA/311/2015HC KarnatakaKAHC01032252201502 June 2016Bench: JAYANT PATEL,B.SREENIVASE GOWDA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the matter was covered by its previous decision in similar cases. Therefore, the appeal filed by the Revenue was disposed of in line with the earlier judgment.

What were the facts?

The Revenue appealed against an ITAT order that held payments made by a company to an assessee firm could not be assessed as 'deemed dividend'. The issue arose because a partner in the assessee firm was also a shareholder in the company making the payments.

What were the issues?

Whether payments made by a company to a firm, where a partner of the firm is a substantial shareholder in the company, can be treated as '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

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 2ND DAY OF JUNE, 2016

PRESENT

THE HON’BLE MR.JUSTICE JAYANT PATEL AND THE HON’BLE MR.JUSTICE B.SREENIVASE GOWDA ITA NO.311/2015

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX, C R BUILDING, QUEENS ROAD, BANGALORE.

2.

THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-2 (1), NO. 59, HMT BHAVAN, 6TH FLOOR, BELLARY ROAD, GANGANAGAR, BANGALORE-560 032. ... APPELLANTS (By SRI. DILIP, ADV., FOR SRI. K V ARAVIND, ADV.)

AND:

M/S. NAMDHARI SEEDS, ‘SRI SAI ARCADE’, NO.8, 12TH CROSS, 1ST PHASE, IDEAL HOMES TOWNSHIP,

2 RAJARAJESHWARINAGAR, BANGALORE - 560 098. ... RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20/02/2015 PASSED IN ITA NO.1746/BANG/2013, FOR THE ASSESSMENT 2003- 2004.

THIS ITA COMING ON FOR ADMISSION THIS DAY, JAYANT PATEL J., DELIVERED THE FOLLOWING:

J U D G M E N T

The appellants/Revenue have preferred the present appeal by raising following substantial question of law:-

“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the addition made under section 2(22)(e) of the Act on the amount paid to the assessee firm by the company M/s. NSPL, could not be assessed as ‘deemed dividend’ in the hands of the assessee-firm even when all the ingredients of the said provision are satisfied in the case

3 of assessee and Section 2(22)(e) of the Act brings to tax as deemed dividend certain payments made by a company by way of advance or loan to a shareholder or payment to a concern in which the shareholder is a member or partner and in which he has substantial interest, without appreciating that in the present case, the partner, Shri Thakur Uday Singh of the firm M/s. Namdhaari Seeds (50% share of profit), is also a shareholder in M/s. Namdhaari Seeds Pvt. Ltd., (64% stake)?”

2.

We have heard Sri. Dilip, learned counsel appearing for Sri. K.V. Aravind, learned counsel for the appellants.

3.

Learned counsel for the appellants/Revenue fairly conceded that the matter is already covered by the decision of this Court dated 08.01.210s4 in ITA No.322/2012 and allied matters whereby the questions

4 formulated were answered in favour of assessee against the Revenue.

4.

In view of the above declaration, we find that when the matter is already covered by the decision of this Court, the present appeal shall also stand disposed of.

SD/- JUDGE

SD/- JUDGE

PMR/-

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