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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI RAJENDRA & SHRI AMIT SHUKLA
ITA No. : 1472/Mum/2014 (Assessment year: 2009-10) एंजेल �ो�कंग �ल�मटेड DCIT- 3(2), Vs Aayakar Bhavan, M/s Angel Broking Ltd, M K Road, G-1, Akruti Trade Centre, Mumbai -400 020 Road No. 7, MIDC, Andheri (E), Mumbai -400 093 �थयी लेखा सं.:PAN: AAACA 8821 G अपीलाथ� (Appellant) ��यथ� (Respondent) Appellant by �मस मालती �ीधरण : Miss Malti Sridharan Respondent by : �ी डी वी लखानी Shri D V Lakhani सुनवाई क� तार�ख /Date of Hearing : 10-03-2016 घोषणा क� तार�ख /Date of Pronouncement : 21-03-2016 . आदेश ORDER अिमत शु�ला : �या. स.: PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the revenue against impugned order dated 02.12.2013, passed by Commissioner of Income Tax (Appeals)-8 [CIT(A)], Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2009-10
At the outset, the Ld. Counsel for the assessee, Shri D V Lakhani submitted that, the issue involved is squarely covered by the decision of the Tribunal in the assessee’s own case for the assessment year 2008-09 wherein, similar addition on �ाआइम वोवेएंस �ल�मटेड 2 M/s Angel Broking Ltd ITA 1472/M/2014 account of deemed dividend under section 2(22)(e) has been deleted.
Ld. DR also admitted that, the issue involved is squarely covered by the decision of the Tribunal in the assessee’s own case.
Brief facts qua the issue are that, the assessee has taken a loan from the following companies: (i) Angel Commodities Broking Pvt Ltd (ii) Angel Securities Ltd. The AO noted that M/s Angel Global Capital Pvt Ltd is a common shareholder having 100% shareholding in Angel Broking Ltd as well as 100% shareholding in Agnel Commodities Broking Pvt and Angel Securities Ltd. The details of loan taken and accumulated profit shown as on 31st March, 2009 has been noted by the AO in the following manner:-
S.No. Name of the Amount of Accumulated Company Loan in Rs. profits as on 31.03.2009 in Rs. 1 Angel Commodities Broking Pvt Ltd 165503465 93526589 2 Angel Securities Ltd. 97200000 49282011 The assessee’s case before the AO is that, these loans are in the nature of inter-corporate deposit and are not in nature of loan or advances and, therefore, provisions of section 2(22)(e) will not be applicable. However, the AO rejected the assessee’s contention and treated the following amounts as deemed dividend:-
S.No. Name of the Amount of Accumulated Deemed Company Loan in Rs. profits as on Dividend 31.03.2009 in Rs. 1 Angel Commodities Broking Pvt Ltd 165503465 93526589 49054580 2 Angel Securities Ltd. 97200000 49282011 1337691
�ाआइम वोवेएंस �ल�मटेड 3 M/s Angel Broking Ltd ITA 1472/M/2014 5. Before the CIT(A), the detailed submissions were made, which has been dealt by the Ld. CIT(A) from pages 16 to 37 of the appellate order, however, he noted the Tribunal order in assessee’s own case for the assessment year 2008-09 and other cases of the Group concern, the addition made on exactly same point has been deleted. Accordingly, he allowed the assessee’s ground on this score.
After going through the relevant findings and the impugned orders and also the order of the Tribunal in assessee’s own case for the earlier years, we find that this issue has been decided in favour of the assessee after detailed discussion. Final conclusion of the Tribunal in to 2086/Mum/2013 order dated 26.07.2013 in the following manner:-
“63. When we look from the angle of ICDs, as well, the issue before us is answered by various fora, including the decision in the case of the group’s own company, Angel Infin Limited (supra). We are not inclined to accept the reasoning of the CIT(A) that charging of interest inter se, shall strike the chord to invite the mischief of section 2(22)(e), as it is only the manner to charge back to compensate in respect of transfer of funds and similarly the assessee also charged at cost, the funds transferred to ACDL. It was a management decision that all intercompany transfers were to be levied a uniform charge of 11%, because here as well, neither the group companies nor its shareholders benefitted. The mere charge back of interest cost does not vitiate the original nature of the transactions and just because interest is charged, concept of transfer of funds between the companies for the purpose of business cannot be rejected. This aspect, as well, was submitted before the revenue authorities, who simply brushed aside and did not consider them, which in our opinion was an important aspect to get to the bottom of the conduct of business. At this stage, we cannot ignore this important aspect. In our opinion, the group companies, who
�ाआइम वोवेएंस �ल�मटेड 4 M/s Angel Broking Ltd ITA 1472/M/2014 were catering to its clients, would not suffer any loss, because of them. This, again, was done strictly in accordance with the procedures placed by the Companies Act, 1956, to be accordance with KYC norms. In these circumstances, we cannot place reliance on the decision of coordinate Bench at Agra, as relied upon by the DR and bring the ratio laid down by the Hon’ble Apex Court and the Hon’ble Bombay High Court to a naught. xxx.. 64.
“65. Considering the entire facts and taking into account the various decisions by the various fora, we are of the opinion that the revenue authorities erred in invoking the provisions of section 2(22)(e), on the transactions, which are purely and patently, normal business transactions, without any hidden agenda amongst the group companies to devise any tax saving measures. We, therefore, respectfully, following the decisions, relied upon by the assessee and the Senior Counsel, covering the various angles, including the angle of funds used by the group company as ICDs, set aside the order of the CIT(A) and direct the AO to delete the addition made under section 2(22)(e) in the group companies, whose appeals are being dealt with by us”.
Thus, consistent with the view taken in the earlier year, we also decide this issue in favour of the assessee and against the revenue accordingly, affirmed the order of the CIT(A).
In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 21st March, 2016.