2014 (11) TMI 1096 - HC - Income Tax

Deemed dividend u/s 2(22)(e) - Held that - We find that the department s appeal against similar order of the Tribunal in deleting the addition made on account of deemed dividend under Section 2(22)(e) passed in earlier assessment years relating to the same assessee was not admitted by us following the judgement in CIT, Kolkata-III, Kolkata vs. M/s.Baljit Securities Pvt.Ltd. (2013 (6) TMI 793 - CALCUTTA HIGH COURT).

Summary

Issues Involved:
1. Deletion of addition under Section 2(22)(e) of the Income Tax Act, 1961 for deemed dividend.
2. Justification for deleting the addition under Section 2(22)(e) when the provision was applicable.
3. Constitutional validity of the non-applicability decision of Section 2(22)(e) of the Income Tax Act, 1961.

Issue 1: Deletion of Addition under Section 2(22)(e) for Deemed Dividend:
The appeal under section 260A of the Income Tax Act, 1961 was raised concerning the deletion of an addition under Section 2(22)(e) for deemed dividend amounting to Rs. 3,76,21,851 for the assessment year 2009-2010. The Tribunal had deleted this addition, prompting the appellant to challenge this decision. However, the High Court found that the department's appeal against a similar order in earlier assessment years for the same assessee was not admitted previously, citing a specific judgment. Consequently, the Court held that the questions raised did not warrant adjudication as substantial questions of law. As a result, the appeal was dismissed.

Issue 2: Justification for Deletion of Addition under Section 2(22)(e) when Applicable:
The appellant also questioned the Tribunal's justification for deleting the addition under Section 2(22)(e) of the Income Tax Act, 1961, even when the provision was squarely applicable. Despite this challenge, the High Court's decision was influenced by the previous non-admittance of the department's appeal against a similar order for prior assessment years. The Court's reliance on the precedent led to the dismissal of the current appeal, as it was deemed that the questions raised did not raise substantial legal issues for consideration.

Issue 3: Constitutional Validity of Non-Applicability Decision of Section 2(22)(e):
Another issue raised was whether the decision of the Tribunal regarding the non-applicability of Section 2(22)(e) of the Income Tax Act, 1961 in the case at hand violated the constitutional validity of the Section itself. However, the High Court did not delve into this constitutional aspect due to the lack of merit in the questions raised. The Court's decision to dismiss the appeal was primarily based on the precedent set by the non-admittance of the department's appeal in a similar matter concerning the same assessee in previous assessment years.

In conclusion, the High Court of Calcutta dismissed the appeal under section 260A of the Income Tax Act, 1961, as the questions raised did not present substantial legal issues for consideration, given the precedent established by the non-admittance of the department's appeal in a similar matter concerning the same assessee in prior assessment years.