D.C.I.T CIR - 11,KOLKATA, KOLKATA vs. M/S BONIE APPARELS (P) LTD, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of manufacture and export of garments. The return of income for the year under consideration was filed by it on 18.09.2009 declaring total income of Rs.49,26,090/-. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has received loan amount from M/s. Bonie Impex Pvt. Limited during the year ./2013 Assessment year: 2009-2010 Page 2 of 4 under consideration. According to him, the provisions of section 2(22)(e) were clearly applicable to the said loan, inasmuch as two of the Directors of the asessee-company were also Directors in the said Company holding more than 20% shares and the accumulated profit of the said company, which was not having money lending as substantial part of its business, was more than the loan amount of Rs.51,62,474/- given to the assessee. He, therefore, invoked the provisions of section 2(22)(e) and added the loan amount of Rs.51,62,474/- received from M/s. Bonie Impex Pvt. Limited to the total income of the assessee as deemed dividend in the assessment completed under section 143(3) vide an order dated 15.11.2011.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assesese and perusing the material available on record, the ld. CIT(Appeals) deleted the addition made by the Assessing Officer on account of deemed dividend under section 2(22)(e) after having found that the impugned loan having been advanced by M/s. Bonie Impex Pvt. Limited to the assessee on interest at the rate of 9%, there was no benefit received by the assessee-company from the loan transaction and the provisions of section 2(22)(e) were not attracted. For this conclusion, the ld. CIT(Appeals) relied on the decision of the Hon’ble Delhi High Court in the case of CIT –vs.- Creative Dyeing and Printing Pvt. Limited reported in 318 ITR 476 and the decision of the Hon’ble Calcutta High Court in the case of Pradip Kumar Malhotra reported in 338 ITR 538. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. D.R. has relied on the order ./2013 Assessment year: 2009-2010 Page 3 of 4 of the Assessing Officer in support of the revenue’s case on the issue under consideration. The ld. counsel for the assessee, on the other hand, has strongly supported the impugned order of the ld. CIT(Appeals) deleting the addition made by the Assessing Officer on account of deemed dividend under section 2(22)(e). He has also contended that the assessee- company was not the shareholder of M/s. Bonie Impex Pvt. Limited during the year under consideration and, therefore, the amount in question received by it from the said company cannot be treated as deemed dividend as held by the Special Bench of this Tribunal in the case of Bhaumik Colour Pvt. Limited reported in 313 ITR 146 (AT). In this regard, he has invited our attention to the details of shareholders of M/s. Bonie Impex Pvt. Limited as on 31.03.2008 placed at page no. 5 of the paper book to point out that the assessee-company was not the shareholder of M/s. Bonie Impex Pvt. Limited and contended that the impugned order of the ld. CIT(Appeals) deleting the addition made by the Assessing Officer under section 2(22)(e) deserves to be upheld on this ground also. Keeping in view this submission made by the ld. counsel for the assessee and having regard to the reasons given by the ld. CIT(Appeals) in his impugned order while deleting the addition made by the Assessing Officer under section 2(22)(e) on account of deemed dividend, we find that there is no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. Accordingly, we uphold the same and dismiss this appeal filed by the Revenue.

In the result, the appeal filed by the Revenue is dismissed.