DCIT Vs Aaryavart Infrastructure P. Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that addition on account of deemed dividend as per section 2(22)(e) of the Act unsustainable in the hands of non-shareholders.
Facts- While adjudicating the issue of deemed dividend, the ld.CIT(A) held that as per the provision of law, the loans and advances given to the assessee by related parties could be treated as deemed dividend only to the extent of reserves and surplus available with them, and accordingly taking note of reserves and surplus with the said party, he held that the addition in any case could not have been exceed Rs.37,78,000/-. However, thereafter, taking note of the legal position of the law, with respect to the issue of taxability of deemed dividend in the hands of the shareholder alone and applying the decision of jurisdictional High Court, the ld.CIT(A) deleted the entire addition made on account of deemed dividend as per section 2(22)(e) of the Act, noting the fact that the assessee was not a shareholder of the concerns making the loans/advance.
Being aggrieved, revenue has preferred the present appeal.
Conclusion- Undisputedly, the ld.CIT(A) had deleted the entire addition noting judicial proposition that the amount could not be taxed in the hands of the non-shareholders and we have upheld the order of the ld.CIT(A) on this aspect. Therefore, the entire addition stands deleted in the hands of the assessee, and there remains no grievance of the assessee.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the Revenue against order passed by the Ld.Commissioner of Income-Tax(Appeals)-1, Ahmedabad (hereinafter referred to as “ld.CIT(A)”) dated 10.04.2015under section 250(6) of the Income Tax Act, 1961 (“the Act” for short) pertaining to Assessment Year 2010-11. Thereafter the assessee has also filed cross objection bearing CO No.174/Ahd/2015. Both of them are being disposed of by this common order.
2. The Revenue in its appeal has raised the following grounds:
i) The ld.CIT(A) has erred in law and on facts in deleting the addition made u/s.68 of the Act at Rs.1,31,50,000/-
2ii) The ld.CIT(A) has erred in law and on facts in deleting the addition made u/s.2(22)(e) under section 68 of the Act.
iii) The ld.CIT(A) has erred in law and on facts in deleting the addition made at Rs.1,52,10,011/- being 25% of labour and transportation charges.
iv) The ld.CIT(A) has erred in law and on facts in partly deleting the addition made at Rs.10,00,000/- on account of short term capital gains.
While the assessee in the CO has raised the following grounds:
i) The learned Commissioner of Income Tax (Appeals) has erred in holding that the addition made u/s.2(22)(e) of the I. T. Act, 1961 should have been of Rs.37,78,000/- while deleting the addition made by the Assessing Officer of Rs.130264245/- and allowing the appeal for statistical purpose.
ii) The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of 10,00,000/- out of disallowance made by the Assessing Officer of Rs.1,52,10,011/- for labour charges and transportation charges.
3. As transpires from the orders of the authority below, during the assessment proceedings, the AO made addition to the income of the assessee on account of the following:
