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TMI Blog2017 (2) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction Pvt Ltd, the impugned amount of loan cannot be taxed in the hands of the assessee firm as deemed dividend. See CIT vs Universal Medicare Pvt Ltd [2010 (3) TMI 323 - BOMBAY HIGH COURT] - Decided in favour of assessee - I.T.A. No.7246/Mum/2011, I.T.A. No.4527/Mum/2013 - - - Dated:- 30-11-2016 - BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) For The Assessee : Dr. K Shivaram and Shri Rahul Hakani For The Revenue : Ms. Anupama Singla ORDER Per ASHWANI TANEJA, AM: These appeals pertain to same assessee and involve identical issues. Therefore, these were heard together and being disposed of by this common order. 2. First we shall take up ITA No.7246/Mum/2011- A.Y. 2008-09: This appeal by the Revenue is against the order of the Commissioner of Income-tax (Appeals) dated 03-09-2011 passed against the assessment order passed u/s 143(3) dated 21-12-2010 and is filed on the following grounds:- 1. On the facts in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing the deduction claimed u/s 80IB(10) by the assessee, ignoring the detailed reasons given by the AO in the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional evidence considered by the Ld. CIT(A) has a material bearing on the decision taken by him. Under these circumstances, it was incumbent upon him to confront these evidences to the AO and seek his comments. In absence of the same, the order passed by the Ld. CIT(A) is passed in violation of principles of natural justice. After taking into account all the facts and circumstances of the case, we find it appropriate to send this issue back to the file of the AO. The assessee shall submit all the evidences before the AO in support of its claim and shall be free to raise all legal and factual issues before the AO. The AO shall give adequate opportunity of hearing to the assessee and shall decide this issue afresh after considering all the details and evidences and judgements as may be placed by the assessee before him. The assessee shall also file its submissions along with requisite evidences with regard to all the reasons given by the AO in the assessment order which shall be duly considered by the AO before deciding this issue afresh. With these directions, this issue is sent back to the file of the AO. This ground may be treated as allowed for statistical purposes. 7. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the judgment of Mumbai Bench of the Tribunal in the case of Income Tax Officer vs Yash Developers dt 31-01- 2014 in ITA No.809/Mum/2011 and Income Tax Officer vs Uma Developers dt 10-08-2016 in ITA No.77181/Mum/2014 wherein return filed by the assessee u/s 139(4) was accepted and benefit of deduction u/s 80IB(10) was held as allowable. 12. Per contra, the Ld. DR submitted with respect to this preliminary issue that section 80AC stipulates filing of return by tan assessee specifically u/s 139(1) for getting the benefit of deduction u/s 80IB(10). Thus, in absence of compliance of this condition, the assessee should not be granted the benefit of the deduction. In support of her arguments, she relied upon the judgement of the Special Bench of the Tribunal in the case of Saffire Garments vs ITO 140 ITD 6 (Rajkot)(SB). 13. We have gone through the orders passed by both the sides and also judgements placed before us. Before deciding this appeal on merits of the issue raised, we find it necessary to first decide the preliminary issue. During the course of assessment proceedings, it was noted by the AO that in this case the due date for filing of return u/s 139(1) was 30-09-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139(1) or within the time extended by section 139(4). It appears that the whole objective of bringing section 80AC was to encourage the assessees to file the return within time as stipulated u/s 139(1) and to discourage them from late filing of return. Section 80AC was brought into the statute by Finance Act, 2006. Explanatory Notes to the provisions relating to direct taxes were as given in circular No.14/2006 dated 28-12-2006 which read as follows: 10. Benefits of certain deductions not to be allowed in cases where return is not filed within the specified time limit 10.1 Section 139(1) casts an obligation on every assessee to furnish the return of income by the due date. With a view to enforce the compliance in this regard by the assessees who are entitled for deduction under section 10B from their income, a proviso (fourth proviso) to sub-section (1) of section 10B has been inserted so as to provide that no deduction under section 10B shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified in subsection (1) of section 139 . Similarly, with a view to enforce the compliance for furnishing the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that there was lack of negligence on the part of assessee in filing the return late and there was reasonable cause for delay in filing of return . 15.1. The Revenue carried the matter before Hon ble Calcutta High Court and contended that provisions of section 80AC were clear and law could not have been rewritten by the Tribunal to accommodate the assessee, disregarding the clear provisions of section 80AC which mandates filing of return within the time limit as prescribed u/s 139(1). After considering legal position in detail, Hon ble High Court accepted the contentions of the Revenue and held that filing of return u/s 139(1) was mandatory for an assessee to be eligible to claim deduction u/s 80IB(10). Operative part of the observations of the Hon ble High Court are reproduced hereunder: Mr. Khaitan submitted that the provision regarding filing of the return on or before the prescribed day is directory in nature. We are unable to concur with him. The benefit in the present case can only be claimed in case of fulfillment of the preconditions laid down under section 80AC of the I.T. Act. When the preconditions have not been fulfilled, the benefit cannot be claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l is with regard to the addition made by the AO as deemed dividend u/s 2(22)(e) of the Act on account of advances received by the assessee from a concern in which one of the partners of the assessee firm was holding major share holding, which was deleted by Ld.CIT(A). 19. The brief facts on this issue are that it was noted by the AO from the balance-sheet of the assessee that assessee had received an amount as loan from M/s Siroya FM Construction Pvt Ltd wherein one of the partners of the assessee firm namely Shri Shrenik D Siroya was holding major share holding and the said partner was having 50% share in the assessee firm also. Under these circumstances, applying the provisions of section 2(22)(e), the AO treated this amount as deemed dividend in the hands of the assessee firm. In the appeal before the Ld. CIT(A), it was inter-alia submitted by the assessee that deemed dividend could be assessed only in the hands of the person, who has shareholder in the lender company and not in the hands of the borrowing concern in which such shareholder was member or partner having substantial interest. Since the assessee firm was not shareholder in the lender company, viz. M/s Siroya FM Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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