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

OD-40 ITAT/267/2017IA No.GA/2/2017 (Old No.GA/2320/2017) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX, KOLKATA-1, KOLKATA -Versus- M/S. HOOGHLY MILLS PROJECTS LIMITED Appearance:Mr. Smarajit Roychowdhury, Adv.Mr. Madhu Jana, Adv....for the appellant. Mr. Asim Choudhury, Adv.Mr. Siddhartha Das, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 25[th] November, 2021. The Court : This appeal of revenue filed under Section260A of the Income Tax Act (the ‘Act’ in brevity) is directedagainst the order dated 31[st] May, 2015 passed by the Income TaxAppellate Tribunal, A-Bench, Kolkata (the ‘Tribunal’) in ITANo.361/Kol/2017 for the assessment year 2006-07. The revenue has raised following substantial questions of law for consideration: “a)Whether on the facts and circumstances of the case,the Hon’ble Tribunal was justified in its interpretation that Section 2(22)(e) of the IT Act, 1961, shall not apply if theshareholder is a beneficial one but not registered, while theAct clearly mentions the beneficial nature of suchshareholding as the conditional requirement and is silentabout the need of being registered?b) Whether on the facts and circumstances of the case,the Hon’ble Tribunal was justified in ignoring theshareholding as reflected in the submitted Balance Sheet anddiscussed as such in the Assessment Order?” We have heard Mr. Smarajit Roychowdhury, learned Counselfor the appellant/revenue and Mr. Asim Choudhury, learned counselfor the respondent/assessee. Identical substantial question of law in the assessee’sown case for the assessment year 2005-06 was considered by theHon’ble Division Bench in ITA NO.97/2011 and by judgment dated 13[th]June, 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 orderdated 17[th] September, 2010 passed by the Income Tax AppellateTribunal, Bench-C, Kolkata in ITA 914/Kol/2010 pertaining tothe assessment year 2005-06 by which the appeal preferred bythe assessee was allowed and the order under Section 263 wasset aside. The aggrieved revenue has come up in appeal. Thefollowing question of law was formulated at the time ofadmission of the appeal: “I. Whether the learned Tribunal below committedsubstantial error of law in setting aside the order underSection 263 of the Income Tax holding the same is noterroneous and prejudicial to the interest of the Revenue, notwithstanding the fact that the same Bench in the case ofM/s. Hooghly Mills Project Ltd. in ITA No.913/Kol/2010 hasheld that the order of the Assessing Officer is erroneous andprejudicial to the interest of the Revenue. II. Whether the learned Tribunal below committedsubstantial error of law in canceling order under Section 263of the Act wherein the assessment was set aside on thegrounds of failure to make enquiry and addition under Section36(i)(v)(a) read with Section 2(24)(x) of the Act on accountof Employees’ Contribution to Provident Fund due to non-deposit of contribution within the date to the appropriateauthority. Mr. Khaitan, appearing for the assessee submitted thatthe first question is unmeritorious. In the case of HooghlyMills Projects Ltd. the point of applicability of Section2(22)(e) was raised on the basis that the shareholding wasmore than 10%; whereas in the case before us, theshareholding is restricted to 5.27%. Therefore, there was noquestion of applicability of any deemed dividend. II. Whether the learned Tribunal below committedsubstantial error of law in canceling order under Section 263of the Act wherein the assessment was set aside on thegrounds of failure to make enquiry and addition under Section36(i)(v)(a) read with Section 2(24)(x) of the Act on accountof Employees’ Contribution to Provident Fund due to non-deposit of contribution within the date to the appropriateauthority. Mr. Khaitan, appearing for the assessee submitted thatthe first question is unmeritorious. In the case of HooghlyMills Projects Ltd. the point of applicability of Section2(22)(e) was raised on the basis that the shareholding wasmore than 10%; whereas in the case before us, theshareholding is restricted to 5.27%. Therefore, there was noquestion of applicability of any deemed dividend. In so far as the second question is concerned, hepointed out that the payment of arrear provident fund was inaccordance with the order passed by the High Court. The samepractice, as a matter of fact, he added, had been continuingfor some time. In respect of one of the earlier years, theassessing Officer had disallowed the payment of providentfund though made in pursuance of order of Court, butsubsequently that was allowed by the CIT(Appeal). He,therefore, submitted that both the questions raised by therevenue are without any substance. Mr. Sinha, learned Advocate appearing for the revenue isunable to dispute any of the submissions advanced by Mr.Khaitan. In that view of the matter, both the questions are answered in the negative and against the revenue. Theappeal, is, thus dismissed.” Thus, following the above decision dismissing the appealagainst revenue, the instant appeal (ITAT No.267/2017) standsdismissed and the substantial questions of law are answeredagainst the revenue. The connected stay application, IA GA/2/2017 (OldNo.GA/2320/2017) also stands dismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s.