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TMI Blog2011 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... Act - Decided in favour of assessee. - I.T.A. No.219 of 2003 - - - Dated:- 2-8-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J. P. Khaitan, Mr. C. S. Das. For the Respondent: Mr. P. K. Bhowmick. Bhaskar Bhattacharya, J.: 1. This appeal under Section 260A of the Income-tax ( Act ) is at the instance of an assessee and is directed against an order dated April 23, 2003 read with the order dated July 10, 2003 passed by the Income-tax Appellate Tribunal, C Bench, Kolkata, in ITA No.38(Kol) of 2002 for the Assessment Year 1999-2000 and thereby dismissing the appeal filed by the assessee. 2. Being dissatisfied, the assessee has come up with the present appeal. 3. The facts leading to the filing of the present appeal may be summarized thus:- a) The appellant is assessed to tax under the Income-tax Act (hereinafter referred to as the Act ) and the present appeal arises out of the assessment for the Assessment Year 1999-2000 for which the relevant previous year was the Financial Year ending March 31, 1999. b) The appellant has substantial shareholding in a private company called Sumoson Expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant succeeded before the Commissioner of Income-tax (Appeals) who by an order dated June 9, 2000 held that the said amount did not fall within the purview of Section 2(22)(e). h) Against the said order dated June 9, 2000, the Revenue preferred an appeal before the Income-tax Appellate Tribunal. Before the Tribunal, it was contended on behalf of the Revenue that the Assessing Officer was not given any notice regarding hearing of the appeal before the Commissioner of Income-tax (Appeals) and as such, the provisions of Section 250(1) were violated. The Tribunal by its order dated October 30, 2002 accepted the said contention of the Revenue and set aside the said order dated June 9, 2000 and restored the appeal to the Commissioner of Income-tax (Appeals) with a direction to decide the same on merits after giving opportunity of being heard to both the parties. i) During the previous year relevant to Assessment Year 1999-2000, the appellant obtained from the said company a sum of Rs.20,75,000/- by way of security deposit. Out of the said amount, a sum of Rs.20,00,000/- was subsequently returned by the appellant to the said company in the Financial Year 2001-2002. j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the case. Accordingly, the appellant filed a detailed note of his submissions before the next date of hearing, namely, July 4, 2003 indicating the events that happened earlier. q) The Tribunal, however, by an order dated July 10, 2003 rejected the miscellaneous application on the ground that there was no mistake which required rectification and the Tribunal could not review its earlier decision. r) Being dissatisfied with the order dated April 23, 2003 read with the subsequent order dated July 10, 2003, the appellant has come up with the present appeal. 4. A Division Bench of this Court at the time of admission of this appeal formulated the following substantial questions of law: (i) Whether the Tribunal was justified in law in allowing the Revenue s appeal and upholding the treatment of the sum of Rs.20,75,000/- as dividend under section 2(22)(e) of the Income Tax Act, 1961 without granting any opportunity to the appellant to make his submissions on merits and without considering the documents placed on record by him in the Paper Book. (ii) Whether on a true and proper interpretation of section 2(22)(e) of the Income Tax Act, 1961 the Tribunal was just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determination in this appeal is whether the amount of Rs.20,75,000/- released by the company in favour of the appellant can be said to be a deemed dividend within the meaning of Section 2(22)(e) of the Act. 9. In order to appreciate the said question, it will be profitable to refer to the provisions contained in Section 2(22) of the Act, which is quoted below: Section 2(22) .dividend includes (a) any distribution by a company of accumulated profits, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company; (b) any distribution to its shareholders by a company of debentures, debenture-stock or deposit certificates in any form, whether with or without interest, and any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits, whether capitalised or not; (c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company).] Explanation 1. The expression accumulated profits , wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948, and before the 1st day of April, 1956. Explanation 2. The expression accumulated profits in sub-clauses (a), (b), (d), and (e) shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all profits of the company up to the date of liquidation, but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place. Explanation 3. For the purposes of this clause, (a) concern means a Hindu undivided family, or a firm or an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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