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2019 (7) TMI 1376 - HC - Income TaxAddition of deemed dividend u/s 2(22) (e) - Whether beneficiary of the advance was itself not a shareholder of the company in question ? - ITAT deleted the addition - impact of reference of decision to larger bench - HELD THAT - ITAT has followed the decision of this Court in CIT v. Ankitech Private Limited 2011 (5) TMI 325 - DELHI HIGH COURT which has been approved by the Supreme Court in CIT v. Madhur Housing and Development Corporation 2017 (10) TMI 1279 - SUPREME COURT As Revenue submits that in National Travel Services vs. CIT 2018 (1) TMI 1159 - SUPREME COURT a two Judge bench of the Supreme Court has doubted the correctness of the view expressed by this Court in CIT v. Ankitech Private Limited 2011 (5) TMI 325 - DELHI HIGH COURT which has been approved by Supreme Court in Madhur Housing 2017 (10) TMI 1279 - SUPREME COURT and has accordingly referred the matter to a larger bench of the Supreme Court. The fact further remains that as of date the decision of this Court in Ankitech Private Limited (supra) approved by the Supreme Court in Madhur Housing (supra) holds the field. Therefore, the Court is unable to find any error committed by the ITAT in following the aforementioned decisions and deciding the issue in favour of the Assessee. No substantial question of law arises. The appeal is dismissed.
Issues involved:
1. Condonation of delay in re-filing the appeal. 2. Deletion of deemed dividend addition under Section 2(22)(e) of the Income Tax Act, 1961 by the ITAT. 3. Interpretation of the decisions in CIT v. Ankitech Private Limited and CIT v. Madhur Housing by the ITAT. 4. Doubt raised by the Supreme Court in National Travel Services case regarding the correctness of the decisions in Ankitech Private Limited and Madhur Housing. 5. Dismissal of the appeal by the High Court based on the existing legal precedents. Condonation of delay in re-filing the appeal: The High Court condoned the delay of 132 days in re-filing the appeal based on the reasons stated in the application and disposed of the delay application. Deletion of deemed dividend addition under Section 2(22)(e) of the Income Tax Act, 1961 by the ITAT: The Revenue appealed against the ITAT's order deleting the addition of deemed dividend under Section 2(22)(e) of the Income Tax Act for the Assessment Year 2012-2013. The Revenue contended that the ITAT erred in deleting the addition as the beneficiary of the advance was not a shareholder of the company. The ITAT based its decision on the precedent set by the Delhi High Court in CIT v. Ankitech Private Limited, which was later approved by the Supreme Court in CIT v. Madhur Housing. The High Court found no error in the ITAT's decision as the relevant legal precedents were in favor of the Assessee, leading to the dismissal of the appeal. Interpretation of the decisions in CIT v. Ankitech Private Limited and CIT v. Madhur Housing by the ITAT: The ITAT followed the decisions in Ankitech Private Limited and Madhur Housing, as approved by the Supreme Court, to rule in favor of the Assessee. The High Court upheld the ITAT's decision, stating that the existing legal position supported the Assessee's case, and no substantial question of law arose from the ITAT's interpretation of the legal precedents. Doubt raised by the Supreme Court in National Travel Services case: The Revenue cited the National Travel Services case where a two-Judge bench of the Supreme Court expressed doubts regarding the correctness of the decisions in Ankitech Private Limited and Madhur Housing. The matter was referred to a larger bench of the Supreme Court for clarification. However, the High Court noted that the decisions in Ankitech Private Limited and Madhur Housing were still valid as of the current date, and therefore, the ITAT's reliance on these decisions was justified. Dismissal of the appeal by the High Court based on the existing legal precedents: Ultimately, the High Court dismissed the appeal by the Revenue, as it found no error in the ITAT's decision to delete the deemed dividend addition under Section 2(22)(e) of the Income Tax Act. The High Court emphasized that the decisions in Ankitech Private Limited and Madhur Housing, which favored the Assessee, were the prevailing legal position, leading to the rejection of the Revenue's appeal.
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