Principal Commissioner Of Income Tax, Kolkata -1 v. M/S. Hooghly Mills Projects Limited

OD-55 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income tax)ORIGINAL SIDE IA No.GA 1 of 2017 (Old No. GA 1326 of 2017) In ITAT 153 of 2017 PRINCIPAL COMMISSIONER OF INCOME TAX, KOLKATA -1VsM/S. HOOGHLY MILLS PROJECTS LIMITED BEFORE:The Hon'ble JUSTICE T. S. SIVAGNANAM ANDThe Hon’ble JUSTICE HIRANMAY BHATTACHARYYADate : 17[th] November, 2021. Appearance:Mr. S.N. Dutta, Adv.…for the appellant. Mr. Asim Chowdhury, Adv.…for the respondent. The Court : Heard Mr. S.N. Dutta, learned Counsel appearing for theappellant/Revenue and Mr. Asim Chowdhury, learned Counsel appearing forthe respondent/assessee. This appeal of Revenue filed under Section 260A of the Income TaxAct,1961 (the ‘Act’ in brevity) is directed against the order dated 26[th] October,2016 passed by the Income Tax Appellate Tribunal, A-Bench, Kolkata (the‘Tribunal’) in ITA No.549/Kol/2011 for the assessment year 2006-07. The Revenue has raised the following substantial questions of law forconsideration : a) Whether on the facts and in the circumstances of the case, theLearned Income Tax Appellate Tribunal, “A” Bench, erred in law inholding that the disallowance of Rs.4,10,00,000/- was not a case ofdeemed dividend u/s 22(2)(e) despite the fact that as the balance sheet of the assessee company, it was holding more than 10% of theshares of the loan creditor company? b) Whether on the facts and in the circumstances of the case, theLearned Income Tax Appellate Tribunal, “A” Bench, erred in law inholding that disallowance of Rs.1.70 Crores with regards toemployees’ contribution was not called for on account of delay indeposit of employees’ contributions beyond the specified date? Learned Income Tax Appellate Tribunal, “A” Bench, erred in law inholding that disallowance of Rs.1.70 Crores with regards toemployees’ contribution was not called for on account of delay indeposit of employees’ contributions beyond the specified date? It is not disputed before us by the Revenue that identical substantialquestions of law in the assessee’s own case for the assessment year 2005-06were considered by the Hon’ble Division Bench in ITA No.97 of 2011 and byjudgment dated 13.06.2016 the appeal was dismissed and the questions wereanswered against the Revenue. The said judgment reads as follows: “The appeal is directed against a judgment and order dated 17[th]September, 2010 passed by the Income Tax Appellate Tribunal, Bench-C,Kolkata in ITA 914/Kol/2010 pertaining to the assessment year 2005-06 bywhich the appeal preferred by the assessee was allowed and the order underSection 263 was set aside. The aggrieved revenue has come up in appeal.The following question of law was formulated at the time of admission of theappeal: “I. Whether the learned Tribunal below committed substantial error oflaw in setting aside the order under Section 263 of the Income Tax holdingthe same is not erroneous and prejudicial to the interest of the Revenue,notwithstanding the fact that the same Bench in the case of M/s. HooghlyMills Project Ltd. in ITA No.913/Kol/2010 has held that the order of theAssessing Officer is erroneous and prejudicial to the interest of the Revenue. II. Whether the learned Tribunal below committed substantial error oflaw in canceling order under Section 263 of the Act wherein the assessmentwas set aside on the grounds of failure to make enquiry and addition underSection 36(i)(v)(a) read with Section 2(24)(x) of the Act on account of Employees’ Contribution to Provident Fund due to non-deposit of contributionwithin the date to the appropriate authority. Mr. Khaitan, appearing for the assessee submitted that the firstquestion is unmeritorious. In the case of Hooghly Mills Projects Ltd. the pointof applicability of Section 2(22)(e) was raised on the basis that theshareholding was more than 10%; whereas in the case before us, theshareholding is restricted to 5.27%. Therefore, there was no question ofapplicability of any deemed dividend. Employees’ Contribution to Provident Fund due to non-deposit of contributionwithin the date to the appropriate authority. Mr. Khaitan, appearing for the assessee submitted that the firstquestion is unmeritorious. In the case of Hooghly Mills Projects Ltd. the pointof applicability of Section 2(22)(e) was raised on the basis that theshareholding was more than 10%; whereas in the case before us, theshareholding is restricted to 5.27%. Therefore, there was no question ofapplicability of any deemed dividend. In so far as the second question is concerned, he pointed out that thepayment of arrear provident fund was in accordance with the order passed bythe High Court. The same practice, as a matter of fact, he added, had beencontinuing for some time. In respect of one of the earlier years, the assessingOfficer had disallowed the payment of provident fund though made inpursuance of order of Court, but subsequently that was allowed by theCIT(Appeal). He, therefore, submitted that both the questions raised by therevenue are without any substance. Mr. Sinha, learned Advocate appearing for the revenue is unable todispute any of the submissions advanced by Mr. Khaitan. In that view of thematter, both the questions are answered in the negative and against therevenue. The appeal, is, thus dismissed.” In the light of the above decision which binds the Revenue, the presentappeal cannot be entertained. Accordingly, the appeal stands dismissed andthe substantial questions of law are answered against the Revenue. The stay application being IA No.GA 1 of 2017 (Old No.GA 1326 of2017) also stands dismissed. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)