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TMI Blog2019 (7) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal CIT was not called for. In that view of the matter, we set aside the impugned orders passed by the Principal CIT u/s 263 and restore that of the AO passed under section 153A/143(3). - Decided in favour of assessee. - I.T.A. Nos. 542 And 543/KOL/2018 - - - Dated:- 3-5-2019 - Shri P. M. Jagtap, Vice-President (KZ) And Shri S. S. Viswanethra Ravi, Judicial Member For The Appellant : Shri Miraj D. Shah, FCA For The Respondent : Shri A.K. Nayak, CIT, D. R. ORDER 1. These two appeals filed by the assessee are directed against two separate orders dated 23.02.2018 and 12.02.2018 of ld. Principal Commissioner of Income Tax, Central, Kolkata-2 passed under section 263 of the Income-tax Act, 1961 for assessment years 2008-09 and 2011-12 respectively. 2. The assessee in the present case is a Company, which is engaged in the business of Growing/Manufacturing of Tea. In the assessments completed under section 153A/143(3) of the Act for both the years under consideration vide orders dated 30.03.2016, the total income of the assessee was determined by the Assessing Officer at Rs. NIL and at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of section 2(22)(e) of the I. T. Act, 1961. We would like to further submit that the said company had duly charged interest on the loan given and thus such transaction should be treated as being entered during the normal course of business. Copy of loan confirmation as well as copy of audited financial statements of Vijayshree Industries Pvt. Ltd. for the A.Y. 2012-13 are enclosed herewith for your kind perusal. Hence, the said loan transaction should not be considered as deemed dividend and chargeable in the hands of the assessee-company. In support of our contention we would like to submit that the Hon ble Kolkata High Court in the case of Pradip Kumar Malhotra v CIT (2011) 338 ITR 538 held that for gratuitous loan or advances given by a company to those classes of shareholders would come within the purview of section 2(22)(e) but not to the clauses where loan or advances is given in return to an advantage conferred upon the company by such shareholders. In our case also the interest paid by the assessee-company was a return on loan given by M/s Vijayshree Industries Pvt. Ltd. The amount being non- gratuitous is not covered u/s 2(22)(e) . Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(22) (e), it transpires that a company which is carrying on business of granting of loans and advance is out of purview of section 2(22)(e). Since, M/s Govind Promoters Pvt. Ltd. is an NBFC and its principal business is of granting of loans and advances, section 2(22)(e) is not applicable in this case. Copy of audited financial statements of Govind Promoters Pvt. Ltd. for the A.Y. 2011-12 is enclosed herewith for your kind perusal. In support of our contention we would like to place reliance on a recent case of DCIT v. Sindhu Holdings Ltd. ITA No.2766 (Delhi) of 2012) (A.Y. 2008-09) (29.01.2016) where it has been held by the Hon ble Delhi ITAT that - moreover, the fender companies are NBFC which are also excluded from the said deeming provision, therefore, we do not find any merit in this ground of appeal and we uphold the ld. CIT (A) s order and dismiss this ground. We would like to further submit that the said company had duly charged interest on the loan given and thus such transaction should be treated as being entered during the normal course of business. Copy of loan confirmation is enclosed herewith for your kind perusal. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(22)(e) to the loans in question taken by the assessee-company from other group companies was not made by the Assessing Officer. In this regard, he invited our attention to the copies of notices issued by the Assessing Officer under section 142(1) placed in his paper book to point out that the details of all the loans and advances were called for by the Assessing Officer during the course of assessment proceedings and the same were duly furnished by the assessee. He also invited our attention to the relevant Annexure of the Tax Audit Report submitted by the assessee along with its returns of income for both the years under consideration to point out that the loan amounts in question taken by the assessee from other Group concerns during the years under consideration and squared off during the said years itself were duly reflected therein. He also pointed out that the full particulars of persons who were beneficial owners of equity shares of the assessee-company holding more than 10% shares were called for by the Assessing Officer during the course of assessment proceedings and the same were duly furnished by the assessee. He submitted that the assessee-company during the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question received by the assessee-company from the other group companies. He submitted that the query raised by the Assessing Officer and details furnished by the assessee as highlighted by the ld. Counsel for the assessee were general in nature and there was no specific enquiry or verification made by the Assessing Officer regarding the applicability of section 2(22)(e) to the loan amounts in question taken by the assessee from the other Group Companies. As regards the legal position pointed out by the ld. Counsel for the assessee by relying, inter alia, on the decision of the Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra), the ld. D.R. contended that there is nothing to show that the Assessing Officer has taken into consideration this legal position while passing the order under section 153A/143(3). He contended that the enquiry or verification on the issue of applicability of section 2(22)(e) as required in the facts and circumstances of the case thus was not made by the Assessing Officer while passing the orders under section 153A/143(3) and such lack of enquiry or verification made the said orders erroneous as well as prejudicial to the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court in the case of Pradip Kumar Malhotra (supra), the said loans given to the assessee-company by the other Group Companies as a consequence of further consideration, which were beneficial to the said companies, cannot be treated as deemed dividend under section 2(22)(e). It is also relevant to note here that the assessee-company was not the shareholder in the other Group Companies during the year under consideration and the amounts of loan in question thus could not be treated as deemed dividend under section 2(22)(e) even on this ground as rightly contended by the ld. Counsel for the assessee. At the time of hearing before the Tribunal, the ld. D.R. has not disputed this legal position cited by the ld. Counsel for the assessee in support of the assessee s case that section 2(22)(e) was not applicable to the loan amounts in question received by the assessee-company from the other Group Companies. He, however, has contended that there is nothing on record to show that this legal position was specifically considered by the Assessing Officer while completing the assessments under section 153A/143(3) of the Act. We are unable to accept this contention of the ld. D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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