2010 (5) TMI 886 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition on account of annual letting value and deemed dividend u/s 2(22)(e).

Annual Letting Value Issue:
The appeal was based on the deletion of an addition of Rs. 17,13,614 on account of the annual letting value of a property at M Block, Connaught Place. The CIT(A) directed the deletion by relying on previous ITAT decisions for the assessment years 2003-04 and 2004-05. The Tribunal found that the issue was covered by its earlier decision for the assessment year 1998-99, emphasizing the principle of consistency in revenue authorities' views. Consequently, the addition was deleted, and the appeal was allowed.

Deemed Dividend Issue:
The appeal also challenged the deletion of an addition of Rs. 9,15,556 on account of deemed dividend u/s 2(22)(e). The CIT(A) directed the deletion based on previous ITAT decisions for the assessment years 2003-04 and 2004-05. The Tribunal noted that the issue was covered by a special bench decision in the case of Bhaumik Colours Pvt. Ltd., which clarified the intention behind the provisions of section 2(22)(e) to tax dividend in the hands of shareholders. As the assessee was not a shareholder in the concerned company and did not have substantial interest, the addition of deemed dividend was deleted. The Tribunal upheld the deletion, and the appeal was dismissed.

Conclusion:
The Tribunal dismissed the appeal, upholding the deletion of additions related to annual letting value and deemed dividend u/s 2(22)(e) based on previous ITAT decisions and the principle of consistency in revenue authorities' views. The order was pronounced on 06.05.2010.