Addition on account of deemed dividend under the Income Tax Act

The Income Tax Appellate Tribunal has dismissed an appeal by the Revenue concerning a deemed dividend addition. The Assessing Officer had added Rs. 5,37,46,284/- to the assessee's income under section 2(22)(e) of the Income Tax Act, treating an advance received from another company as a deemed dividend. However, the Commissioner of Income Tax (Appeals) had deleted this addition, a decision upheld by the Tribunal.

IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH “G”, MUMBAI
 

BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND
SHRI RAVISH SOOD, JUDICIAL MEMBER
 

ITA No.1193/M/2018
Assessment Year: 2012-13

ACIT 16(1),
Room No.439,
4th Floor,
Aayakar Bhavan,
M.K. Marg,
Churchgate,
Mumbai – 400 020

(Appellant)

Vs.

M/s. Gayatri Films &
Music Pvt. Ltd.,
Sagar Villa,
Road No.12A,
JVPD Scheme,
Vile Parle (W),
Mumbai – 400 049
PAN: AAACG8142J

(Respondent)

Present for:
Assessee by : Shri K. Gopal, A.R.
Revenue by : Shri T.S. Khalsa, D.R.
 

Date of Hearing : 15.07.2021
Date of Pronouncement : 26.07.2021
 

O R D E R

The present appeal has been preferred by the Revenue against the order dated 18.12.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.

2. The issue raised in ground No.1 to 3 is against the order of Ld. CIT(A) directing the AO to delete the addition of deemed dividend of Rs.5,37,46,284/- as made by the AO under section 2(22)(e) of the Act.

3. The facts in brief are that the AO during the course of assessment proceedings observed that assessee has received an advance of Rs.5,37,46,284/- from M/s. Sagar Entertainment Pvt. Ltd. in which the two shareholders Shri Jyoti Sagar and Shri Prem Sagar held 26.17% and 18.40% of holdings in the lending company and also held substantial interest in the assessee company equal to 32.40% and 25.34% respectively and consequently the AO invoked the provisions of section 2(22)(e) of the Act and made an addition on account of a deemed dividend of Rs.5,37,46,284/- in the hands of the assessee.

4. The issue raised in ground Nos.4 & 5 is against the deletion of Rs.1,70,00,000/- by Ld. CIT(A) as made by the AO on account of contract with Satar India Pvt. Ltd. by ignoring the fact that term and execution date of the agreement with Star India Ltd. clearly showed that income accrued during A.Y. 2012- 13 as per mercantile system of accounting.

5. After hearing both the parties and perusing the material on record, we find that Ld. CIT(A) has followed the order of the coordinate bench of the Tribunal in ITA No.1881/M/2015 order dated 21.06.2017 for A.Y. 2010-11 in assessee’s own case. We, therefore, do not find any infirmity in the order of Ld. CIT(A) and accordingly the ground Nos.4 & 5 are dismissed.

6. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 26.07.2021.
 

Please find attached the enclosed file for the full judgement