2019 (1) TMI 1793 - HC - Income Tax

Deemed dividend addition u/s 2(22)(e) - payment made by the assessee-company to its subsidiary during the previous year - Tribunal confirming the deletion of the entire addition - HELD THAT - We find that this issue was threadbare analysed by the CIT(A) in his order after calling for a remand report. This finding recorded by the CIT(A) was correct as there is no payment made by the assessee-company to its subsidiary during the previous year relevant to the assessment year 2004-05 within the meaning of Section 2(22)(e) of the Act. Thus we find that the first appellate authority as well as the Tribunal has considered the factual position and granted relief to the assessee. Thus we find there is no substantial question of law arising for consideration.

Summary

Issues:
- Appeal against order of the Income-tax Appellate Tribunal regarding deletion of addition made by Assessing Officer under Section 2(22)(e) for the assessment year 2004-05.
- Consideration of whether the amount in question constitutes deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961.
- Analysis of whether a substantial question of law arises for consideration in the appeal.

Analysis:
The judgment delivered by the High Court of Madras pertains to an appeal filed by the Revenue under Section 260A of the Income-tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal regarding the deletion of an addition made by the Assessing Officer under Section 2(22)(e) for the assessment year 2004-05. The High Court, comprising of Mr. Justice T.S.Sivagnanam and Mr. Justice N.Sathish Kumar, considered the substantial question of law admitted on whether the Tribunal was correct in confirming the deletion of the entire addition of Rs. 4,16,12,082. The court heard arguments from Mrs. R. Hemalatha, Senior Standing Counsel for the appellant/Revenue, and Mr. R. Sivaraman, counsel for the respondent/assessee.

Upon reviewing the orders of the Commissioner of Income-tax (Appeals)-III and the Tribunal, the court observed that the dispute primarily revolved around factual aspects, particularly whether the amount in question should be treated as a deemed dividend under Section 2(22)(e) of the Act. The CIT(A) had thoroughly analyzed this issue and concluded that no payment was made by the assessee-company to its subsidiary during the relevant period, thus not falling within the purview of Section 2(22)(e). The court agreed with this finding and noted that both the first appellate authority and the Tribunal had considered the factual position before granting relief to the assessee.

In light of the above analysis, the High Court determined that there was no substantial question of law warranting consideration in the appeal. Consequently, the court dismissed the appeal, emphasizing that the first appellate authority and the Tribunal had appropriately addressed the factual circumstances leading to the relief granted to the assessee. The judgment concluded by stating that the appeal failed and no costs were awarded in this matter.