2014 (7) TMI 1224 - AT - Income Tax

Deemed divided u/s 2(22) - Held that - The company in question not a Private Limited Company which is alone is attracted to the provisions of section 2(22)(e) of the Act. The said company is a Public company in which public are substantially interested. Considering the above distinction, the CIT (A) correctly granted relief to the assessee - Decided in favour of assessee

Summary

Issues involved:
1. Deletion of addition amounting to Rs. 1,85,02,274/- u/s 2(22)(e) on account of deemed dividend.
2. Contrary nature of the impugned order of the CIT (A) to be set aside and that of the Assessing Officer to be restored.

Analysis:

Issue 1: Deletion of addition under section 2(22)(e):
The appeal filed by the Revenue challenged the order of the CIT (A) which had deleted the addition of Rs. 1,85,02,274 under section 2(22)(e) for the assessment year 2008-2009. The Revenue contended that the company in question was not a Private Limited Company but a Public company in which public interest was substantial. The CIT (A) granted relief to the assessee based on this distinction. The CIT (A) considered various points, such as the shareholding structure, listing on the stock exchange, and relevant CBDT circulars, to support the conclusion that the company was not a Private Limited Company. The Tribunal, after hearing both parties and examining the orders, upheld the decision of the CIT (A) stating that the company fell under the category of a Public company with substantial public interest. The Tribunal dismissed the grounds raised by the Revenue, thereby affirming the deletion of the addition under section 2(22)(e).

Issue 2: Contrary nature of the impugned order:
The Revenue also contended that the impugned order of the CIT (A) was contrary to law and should be set aside, with the Assessing Officer's order restored. However, after considering the arguments and perusing the orders, the Tribunal found that the CIT (A) had appropriately adjudicated the issue. The Tribunal concluded that there was no need for interference in the decision of the CIT (A) and subsequently dismissed the grounds raised by the Revenue. Therefore, the appeal of the Revenue was ultimately dismissed, upholding the decision of the CIT (A) regarding the deletion of the addition under section 2(22)(e).

In conclusion, the Appellate Tribunal ITAT MUMBAI, in the cited judgment, upheld the decision of the CIT (A) to delete the addition under section 2(22)(e) for the assessment year 2008-2009, based on the company's classification as a Public company with substantial public interest. The Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s order and finding no grounds for interference.