Ita/9/2017 Of Shri. Jagadish. N. Hinduja v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE J2ND DAY OF AUGUST 2027 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR.JUSTICE HEMANT CHANDANGOUDAR. 1LT.A. NO.9 OF 2017 BEITWEEN SHRI. JAGADISH N. HINDUJANO.7 & 12, INDUSTRIAL SUBURB2ND STAGE, YESHWANTHPUR|BENGALURU-560027. (BY SRI. ASHOK A. KULAKARNI, ADV.,) — APPELLANT| AND THE DEPUTY COMMISSIONER|OF INCOME TAX.CIRCLE-11(3), BENGALURU. (BY SRI. E.I. SANMATHI, ADV., FOR|SRI. K.V. ARAVIND, ADV.,). ... RESPONDENT| THIS IB.T.A. IS FILED UNDER SECTION 260-A OFI.T.ACT, 1961 ARISING OUT OF ORDER DATED 12.08.2016PASSED|IN|LTANO.13/73/BANG/2012ANDCROSSOBJECTION NO.48/BANG/2013 AND ASSESSMENT ORDERDATED 24.12.2010, FOR THE ASSESSMENT YEAR 2006-07,PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW|STATED ABOVE. II]. ALLOW THE APPEAL BY SETTING ASIDE THE ORDEROF THE ITAT IN ITA NO.1373/BANG/2012 & CROSSOBJECTION NO.48/BANG/2013 DATED 12.08.2016 ANDASSESSMENT ORDER DATED 274.172.7010 AND SUITABLMODIFY IT AS SOUGHT IN THE APPEAL. III. PASS SUCH OTHER SUITABLE ORDER AS THIS|HON BLE COURT DEEMS FIT TO GRANT IN THE FACTS ANDIN THE CIRCUMSTANCES OF THE CASE IN THE INTEREST OFJUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS|DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short) has|been filed by tne assessee. The subject matter of the appealpertains to the Assessment Year 2006-07. The appeal wasadmitted by a Bench of this Court on the _ followinsubstantial questions of law: 1) Whether on the facts and in thecircumstances of the case the Appellate Tribunalwas right in law in upholding that the action of theAssessing Officer in assuming Jurisdiction u/s 147of the Income Tax Act, 1961 Is valid on the basisof the recording of his u/s 148(2)? 2) Whether on the facts and in_ thecircumstances of the case the Appellate Tribunal Was correctInupnoidingreassessmentproceedings on the basis of reasons not containedInthe recordedFfeaSOn}for.reopeningof.assessment? contrary to law as pronounced by itin tne very order? (3) Whether on the facts and in thecircumstances of the case and naving regard tothe material on record the Appellate Tribunal wasjustified in holding that the requirements forinvoking provisions of Section 147 are satisfied? (4) Whether on the facts and in _ thcircumstances of the case there was any reliableand cogent material in the recording u/s 148(2) ofthe Assessing Officer to initiate reassessmentproceedings? (5) Whether on the facts and circumstancesof the case, the funds provided to the associateconcerns by GIP Ltd as per the terms of the SSSAthe understanding and agreements thereundercan be treated as deemed dividend u/s 2(22)(e)of the [Income Tax Act in tne hands of theappellant, without appreciating the fact that suchadvances were given for business purposes|including capital induction of GI(P) Ltd. (6) Without prejudice even if the books ofaccounts and meterial on record showed thetmoneys were lent to the “Directors” a group as such and not to the appellant one of the 5Directors as such, can such lending be deemeddividend in the hands of the appellant. (7) When no benefit whatsoever as such Is derived by the loanee director through the allegedlending benefiting the lending company can see2(22)(e) be invoked. (8) Whether on the facts and in thecircumstances of the case the finding of tneTribunal that there its absence of any stipulation inthe records of the case indicating the manner inwnicn the loan given and treated as dividendsnould be utilized in a particular manner is aperverse finding of fact and therefore the entireorder Is vitiated. (6) Without prejudice even if the books ofaccounts and meterial on record showed thetmoneys were lent to the “Directors” a group as such and not to the appellant one of the 5Directors as such, can such lending be deemeddividend in the hands of the appellant. (7) When no benefit whatsoever as such Is derived by the loanee director through the allegedlending benefiting the lending company can see2(22)(e) be invoked. (8) Whether on the facts and in thecircumstances of the case the finding of tneTribunal that there its absence of any stipulation inthe records of the case indicating the manner inwnicn the loan given and treated as dividendsnould be utilized in a particular manner is aperverse finding of fact and therefore the entireorder Is vitiated. (9) Whether on the facts and in _ thcircumstances of the case even assuming that tneTribunal is rignt in noiding tnat tne lending by GIPvt. Ltd. was not for its Dusiness purposes but forthe benefit of the appellant only 5.5 crores couldbe taxeq in the nanas of tne appellant u/s2(22)(e). (10) Whether on the facts of the caseSec.2(22)(e) was rightly applied in respect of anypart of the sum of Rs.6,85,00,000/- taxed asdeemed dividend. 2. For the reasons assigned in ITA No.7/2017, theorder dated 12.08.2016 passed by the Tribunal is quasnedand the matter is remitted to the Tribunal for decision afreshafter taking into account the material available on record. In the result, appeal is disposed of. Sd/-JUDGESd/-JUDGE RV