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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) –I, Chennai, dated 24.06.2014 and pertains to assessment year 2005-06.
The only issue arises for consideration is with regard to addition made by the Assessing Officer under Section 2(22)(e) of the Income-tax Act, 1961 (in short 'the Act').
Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the assessee-company has a common shareholder along with M/s Arjun Technologies (India) Ltd. M/s Arjun Technologies (India) Ltd. was having accumulated profits for distribution as dividend to the extent of `87,75,665/- as on 31.03.2004 and `1,49,09,446/- as on 31.03.2005. The Ld. D.R. further pointed out that M/s Arjun Global Holdings (Mauritius)
Limited is a common shareholder in assessee-company as well as in M/s Arjun Technologies (India) Ltd., holding more than 20% of the shares. Therefore, according to the Ld. D.R., the money received by the assessee from M/s Arjun Technologies (India) Ltd. from its accumulated profit has to be treated as dividend under Section 2(22)(e) of the Act. However, according to the Ld. D.R., the CIT(Appeals) deleted the addition made by the Assessing Officer on the ground that the addition, if any, has to be made only in the hands of M/s Arjun Global Holdings (Mauritius) Limited and not in the hands of the assessee-company. According to the Ld. D.R., the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer.
On the contrary, Shri Mohammed Shaffiq, the Ld.counsel for the assessee, submitted that the assessee-company is not a shareholder in M/s Arjun Technologies (India) Ltd. M/s Arjun Global Holdings (Mauritius) Limited was holding more than 20% shares in M/s Arjun Technologies (India) Ltd. as well as in the assessee- company. Therefore, according to the Ld. counsel, the addition, if any to be made, it has to be made only in the hands of M/s Arjun Global Holdings (Mauritius) Limited and definitely not in the hands of the assessee.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee is not a shareholder in M/s Arjun Technologies (India) Ltd. The assessee-company received a sum of `18,00,000/- from M/s Arjun Technologies (India) Ltd. The question arises for consideration is when the assessee-company is not a shareholder in M/s Arjun Technologies (India) Ltd., whether the receipt of `18,00,000/- can be treated as dividend under Section 2(22)(e) of the Act? The claim of the Revenue appears to be that M/s Arjun Global Holdings (Mauritius) Limited is holding 20% shares in M/s Arjun Technologies (India) Ltd. as well as in the assessee- company, therefore, the amount of `18,00,000/- received by the assessee-company can be assessed as dividend. This Tribunal is of the considered opinion that the dividend has to be assessed only in the hands of the shareholder, for whose benefit the money was advanced. In this case, the assessee-company received the money and it is not a shareholder in M/s Arjun Technologies (India) Ltd. At the best, we may say that the money was advanced by M/s Arjun Technologies (India) Ltd. for the benefit of its shareholder, namely, M/s Arjun Global Holdings (Mauritius) Limited. If at all any addition has to be made under Section 2(22)(e) of the Act, it has to be made only in the hands of M/s Arjun Global Holdings (Mauritius) Limited and definitely not in the hands of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 15th September, 2016 at Chennai.