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TMI Blog2016 (10) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... - Shri Waseem Ahmed, Accountant Member And Shri K. Narasimha Chary, Judicial Member Shri Soumitra Choudhury, Advocate, for the assessee Shri Niraj Kumar, CIT, D.R. , for the Department ORDER Per Shri K. Narasimha Chary, J. M. This appeal by the assessee is challenging the order dated 25.03.2013 passed by the ld. Commissioner of Income Tax, Kolkata-XIII, Kolkata (hereinafter called as the CIT in short) in respect of the assessment year 2008-09. 2. Brief facts of the case are that the assessee is engaged in conducting manufacturing industries and deriving income from trading in steel tubes. The assessee filed its return of income for the year under consideration on 27.09.2008 declaring a total income of ₹ 10,16,470/-. The Assessing Officer by way of an order dated 04.01.2010 processed the same on the returned income. However, the case was selected for scrutiny and after following the procedure and hearing the assessee, the Assessing Officer assessed the income. Subsequently the ld. CIT by way of an order dated 25.03.2013 enhanced the income and assessed the same at ₹ 1,05,87,423/-. In the process, the ld. CIT added deemed dividend to a tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of 303 days occurred. 4. We have heard the ld. A.R. and ld. D.R. on this aspect. The ld. counsel for the assessee placed reliance on the decision of this Tribunal in the case of Shri Anupam Biswas, Kolkata vs.- ITO, Kolkata in ITA No. 2198/KOL/2014 delivered on 09.12.2015 and also another decision in the case of M/s. Fibre Box Company (since dissolved) vs.- ITO in ITA No. 1301 983/KOL/2008 delivered on 24.12.2008. The ld. counsel for the assessee submitted that these two decisions were rendered condoning the delay on identically situated facts. On the other hand, the ld. D.R. submitted that the assessee is a partnership firm and the partners other than the one, who sworn the affidavit could have pursued the matter diligently as such the medical exigency of one partner will not give any benefit to other partner. On this premise, the ld. D.R. prayed not to condone the delay. 5. We have perused the relevant material available on record. In so far as the sworn statement of the deponent to the effect that their former counsel, i.e. Mr. P.K. Sarkar, FCA, could not give proper guidance due to his lack of knowledge with the matter relating to the Income Tax Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s delay, every second' s delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A l itigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 6. Hon ble Calcutta High Court in the case of Indian Oil Corporation Limited vs.- CEGAT Others 2002 (104) ECR 609 laid down the following guidelines:- 11 . Rules of l imitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee does not stand to gain by filing this appeal with a delay of 303 days. At the same time, no rights are crystallized in favour of the Revenue by afflux of time. In our considered opinion, the highest that would happen by condoning the delay is that a cause would be decided on merits after hearing the parties. With this view of the matter, we hold that non- condonation of delay would amount to preferring technical consideration, as envisaged the possibility of rendering justice on the merits of the case. Therefore, delay is to be condoned and we condone the same. 8. Now coming to the merits of the case, challenge is only in respect of the addition made by the ld. CIT under section 263 order to a tune of ₹ 95,70,953/-. According to the ld. CIT, the unsecured loan advanced by M/s. Mascot Woodcraft Pvt. Limited is hit by section 2(22)(e) of the Act and it shall be deemed as dividend. The reason given by the ld. CIT is that the two partners of the assessee- firm, namely Mrs. Kamala Saha and Mr. Asim Kumar Saha Mondal, were holding 60% and 40% of shares respectively in the assessee-firm. Mrs. Kamala Saha s shareholding in M/s. Saha Sarkar Saw Mill Pvt. Ltd. was at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced. Therefore, that the expression shareholder being a person who is the beneficial owner of shares referred to in first limb of section 2(22)(e) refers to both a registered shareholder and beneficial shareholder. If a person is a registered shareholder but not the beneficial shareholder than the provisions of section 2(22)(e) will not apply. Similarly if a person is a beneficial shareholder but not a registered shareholder than also the first limb of provisions of section 2(22)(e) will not apply. 10. In the case of Shiv Transport Travels (supra), the Single Member Court Bench of this Tribunal followed the same and observed in paragraphs no. 15 16 as under:- 15. The Special Bench further held as follows:- 34. We are of the view that the provisions of Sec.2(22)(e) does not spell out as to whether the income has to be taxed in the hands of the shareholder or the concern(non-shareholder). The provisions are ambiguous. It is therefore necessary to examine the intention behind enacting the provisions of Sec.2(22)(e) of the Act. 35. The intention behind enacting provisions of section 2(22)(e) are that closely held companies (i.e. companies in which public are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Dividend U/s.2(22)(e) of the Act is an inclusive definition. Such inclusive definition enlarges the meaning of the term Dividend according to its ordinary and natural meaning to include even a loan or advance. Any loan or advance cannot be dividend according to its ordinary and natural meaning. The ordinary and natural meaning of the term dividend would be a share in profits to an investor in the share capital of a limited company. To the extent the meaning of the word Dividend is extended to loans and advances to a shareholder or to a concern in which a shareholder is substantially interested deeming them as Dividend in the hands of a shareholder the ordinary and natural meaning of the word Dividend is altered. To this extent the definition of the term Dividend can be said to operate. If the definition of Dividend is extended to a loan or advance to a non shareholder `the ordinary and natural meaning of the word dividend is taken away. In the light of the intention behind the provisions of Sec.2(22)(e) and in the absence of indication in Sec.2(22)(e) to extend the legal fiction to a case of loan or advance to a non-shareholder also, we are of the view that loan or adva ..... 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