MSN PHARMACHEM PRIVATE LIMITED,HYDERABAD vs. ACIT., CENTRAL CIRCLE-2(4), HYDERABAD

ITA 884/HYD/2024Status: DisposedITAT Hyderabad08 November 2024AY 2019-20Bench: SHRI LALIET KUMAR, HON’BLE (Judicial Member), SHRI G. MANJUNATHA, HON’BLE (Accountant Member)57 pages
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What did the Tribunal hold?

The Tribunal held that payments made by the appellant company to recipient companies did not fall under Section 2(22)(e) as the funds were used for the recipient companies' business and not for the benefit of the common shareholder. The deduction for expenses against unaccounted receipts was partly allowed by the CIT(A).

What were the facts?

The assessee company's appeal concerns additions made for deemed dividend under Section 2(22)(e) and a claim for deduction of expenses against unaccounted cash receipts. A search operation revealed cash sales of spent solvents and scrap not recorded in books.

What were the issues?

Whether payments to related companies constitute deemed dividend under Section 2(22)(e) without benefit to the shareholder, and whether expenses against unaccounted cash receipts are deductible.

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 115Q,Section 132,Section 153A

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” , HYDERABAD

Before: SHRI LALIET KUMAR, HON’BLE & SHRI G. MANJUNATHA, HON’BLE

For Appellant: Shri M.V. Prasad, C.A
For Respondent: Shri B. Bala Krishna, CIT-DR
Hearing: 24.10.2024Pronounced: 08.11.2024

PER MANJUNATHA G. A.M: These two appeals filed by the assessee are directed against separate, but identical orders of Commissioner of Income Tax (Appeals) – 12, both dated 30.08.2024 and relevant to of the assessee for A.Ys. 2019-20 and 2020-21. Since, the facts are identical and issues are common but for the figures, for the sake of convenience, these two appeals were heard together and are being disposed of, by this consolidated order.

ITA Nos.884 & 885/Hyd/2024

2.

The assessee has more or less raised common grounds for both the assessment years, therefore, for the sake of brevity, grounds raised in ITA

The order continues below.

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