Case Law Details
PCIT Vs Apeejay Surendra Amanagement Services Pvt Ltd (Calcutta High Court)
The Calcutta High Court dismissed the Revenue’s appeal concerning the taxability of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. Before considering the appeal, the Court condoned a delay of 477 days in filing the matter after finding the explanation offered by the Revenue satisfactory.
The Revenue had challenged the order of the Income Tax Appellate Tribunal, Kolkata Bench, for Assessment Year 2014-15. The substantial question raised was whether the Tribunal was justified in holding that an addition on account of deemed dividend under Section 2(22)(e) could be made only in the hands of a registered or beneficial shareholder, despite there being no express provision in the section specifying who should be taxed in respect of such income.
The assessee contended that the issue was already covered in its favour by the decision of the Supreme Court in Commissioner of Income Tax v. Madhur Housing & Development Co. and by other judicial precedents reported in 340 ITR 14 (Delhi) and 120 taxmann.com 125 (Madras).
The High Court noted that the Revenue had not brought any distinguishing feature on record that would justify taking a view different from the decisions relied upon by the assessee. Following the Supreme Court decision in Madhur Housing & Development Co. and the other cited judgments, the Court answered the substantial question of law against the Revenue.
Accordingly, the appeal was dismissed. The connected stay application was also dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Heard learned counsel appearing for the parties.
There is a delay of 477 days in filing the appeal. We are satisfied with the explanation offered for not preferring the appeal within time. Therefore, the delay is condoned. The application being GA/1/2026 is allowed.
This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 19th February, 2024 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Kolkata in ITA No. 988/Kol/2023, for the assessment year 2014-15.
The revenue has raised the following substantial questions of law for consideration :
“Whether the Learned Income Tax Appellate Tribunal was justified in law to hold that the addition on account of deemed dividend under Section 2(22)(e) of Income Tax Act, 1961, could only be made in the hands of the registered/beneficial shareholders, ignoring the fact that the Section 2(22)(e) does not contain any such specific provision or restriction and nowhere provides as to who is to be taxed in respect of such income ?”
We have heard learned Counsel appearing for the parties.
Learned Counsel for the respondent/assessee had submitted that the question of law raised in this appeal is squarely covered in favour of the assessee in the light of the decisions of the Hon’ble Supreme Court in Commissioner of Income Tax vs. Madhur Housing & Development Co., (2018) 93 taxmann.com 502(SC) as well as the decisions in (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras). There is nothing brought on record by the revenue to point out any distinguishing feature for us not to follow the decisions of the Hon’ble Supreme Court and the decisions referred above.
Thus, following the decisions of the Hon’ble Supreme Court in (2018) 93 taxmann.com 502(SC), (2012) 340 ITR 14 (Delhi) and (2020) 120 taxmann.com 125 (Madras), (supra) the appeal is dismissed and the substantial question of law is answered against the revenue.
The stay application IA No: GA/2/2026 is also dismissed.
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