ITO 14(3)(3), MUMBAI vs. SATELLITE CABLE TV CABLE NETWORK P.LTD, MUMBAI

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ITA 2714/MUM/2015Status: DisposedITAT Mumbai30 June 2016AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the provisions of Section 2(22)(e) are attracted in the hands of the shareholders and not the assessee company, as it was not a shareholder in the payer company. The decision followed a precedent in the assessee's own case and a Bombay High Court judgment.

What were the facts?

The Assessing Officer treated an amount received by the assessee from another company as deemed dividend under Section 2(22)(e) due to substantial common shareholding. The CIT(A) deleted the addition, noting the assessee was not a shareholder in the company from which the sum was received.

What were the issues?

Whether an amount received by a company from another company can be treated as deemed dividend under Section 2(22)(e) when the recipient company is not a shareholder in the payer company.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI G.S.PANNU

For Appellant: Shri Santosh Mankoskar
For Respondent: Shri K. Kotresh
Hearing: 30/06/2016Pronounced: 30/06/2016

The captioned appeal filed by the Revenue pertaining to assessment year 2008-09 is directed against an order passed by CIT(A)-22, Mumbai dated 04/02/2015, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 01/03/2013.

2.

In this appeal, the only issue is with regard to the action of the Assessing Officer in treating an amount received by the assessee of Rs.43,17,729/- from M/s. Wire & Wireless Network Pvt. Ltd. as deemed dividend within the meaning of section 2(22)(e) of the Act. The Assessing Officer noted that the share holding pattern in the assessee company and M/s. Wire & Wireless Network Pvt. Ltd. reveal that there was substantial common shareholding and thus, the provisions of section 2(22)(e) of the Act were attracted. The CIT(A) however, noticed that the assessee company was not shareholder in M/s. Wire & Wireless Network Pvt. Ltd. from whom the impugned sum was received. According to the CIT(A), the provisions of section 2(22)(e) would be attracted in the hands of the respective shareholders only and not the assessee company as it is not a share holder in M/s. Wire & Wireless Network Pvt. Ltd. The CIT(A) accordingly, directed the Assessing Officer to delete the addition by following the judgement of the Hon'ble Bombay High Court in the case of CIT vs. Universal Medicare Pvt. Ltd. 324 ITR 263 (Bom). Against such a decision, Revenue is in appeal before the Tribunal.

3.

Before me, it was a common point between the parties that similar issue had come up before the Tribunal in the assessee’s own case for assessment year 2009-10, wherein vide its order in dated 22/5/2015, similar addition made by the Assessing Officer was deleted following the judgment of the Hon'ble Bombay High Court in the case of Universal Medicare Ltd. (supra). It was also a common point between the parties that the decision of the Tribunal dated 22/5/2015(surpa) continues to hold the field and the fact-situation in the instant year is identical to that considered by the Tribunal in assessment year 2009-10.

4.

In view of the aforesaid factual matrix, I find no reason to interfere with the decision of the CIT(A), which is in tune with the earlier precedent in assessee’s own case as well as the judgement of the Hon'ble Bombay High Court in the case of Universal Medicare Pvt. Ltd.(supra). Thus, appeal of the Revenue is dismissed.

5.

In the result, appeal of the Revenue is dismissed.

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