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| The Tax Publishers2020 TaxPub(DT) 2941 (Chen-Trib) INCOME TAX ACT, 1961
Section 2(22)(e)
Where firm accepted ITAT's decision to the extent of part amount and therefore, it reached finality and with regard to the addition of remaining amount confirmed by ITAT in the hands of the firm, who had not accepted the ITAT's decision and had contested in appeal before High Court which is pending, therefore, CIT(A)'s decision “since issue under consideration has not reached finality in the apex court, addition in the hands of remaining two partners on a protective basis by AO clearly amounts to a double addition and therefore, is unfair and unreasonable, hence, Revenue's appeal was dismissed.
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Dividend - Deemed dividend under section 2(22)(e) - Addition on protective basis -
There was a transfer of fund from M/s S to M/s SU and three shareholders in the company of M/s S including assessee were also partners in the said firm. Out of the fund transferred, part amount was transferred by the firm to three partners and the remaining amount to wife of one of the partner's/shareholder's close friend and therefore to a third party. By observing that it was a deemed dividend under section 2(22)(e), AO made addition of the entire funds. Held: M/s SU accepted the ITAT's decision to the extent of part amount and therefore, it reached finality and with regard to the addition of remaining amount confirmed by ITAT in the hands of the firm, the firm has not accepted the ITAT's decision and has contested in appeal before High Court which is pending. In such facts and circumstances, CIT(A)'s decision “since the issue under consideration had not reached finality in the apex court, addition in the hands of remaining two partners a protective basis by AO clearly amounts to a double addition and therefore, was unfair and unreasonable, which deserved to be deleted” does not require any interference and hence Revenue's appeal was dismissed.
Followed:National Travel Services v. CIT (2018) 89 taxmann.com 332 (SC) : 2018 TaxPub(DT) 0526 (SC) C.I.T. v. Madhur Housing & Development Company (CA No 3961 of 2013) SC : 2017 TaxPub(DT) 4516 (SC) CIT v. Ankitech Pvt. Ltd. & Others (2012) 340 ITR 14 (Del) : 2011 TaxPub(DT) 1008 (Del-HC) M/s. Subhavarsha Infotech v. DCIT [ITA No. 2365/Chny/2016 and ITA No. 2805/Chny/2016 dated 5-12-2018] : 2019 TaxPub(DT) 1606 (Chen-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2012-13
IN THE ITAT, CHENNAI BENCH
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