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Appellate Tribunal rules in favor of assessees in deemed dividend case, directing deletion of additions The Appellate Tribunal ITAT Kolkata allowed the appeals of the assessees in a case concerning deemed dividend additions under section 2(22)(e) for the ...
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Provisions expressly mentioned in the judgment/order text.
Appellate Tribunal rules in favor of assessees in deemed dividend case, directing deletion of additions
The Appellate Tribunal ITAT Kolkata allowed the appeals of the assessees in a case concerning deemed dividend additions under section 2(22)(e) for the assessment year 2015-16. The Tribunal held that the lands purchased in the directors' names were company assets, not personal holdings, and that the directors had no rights in the land as per the company's resolution. Rejecting the Revenue's argument, the Tribunal directed the Assessing Officer to delete the deemed dividend additions, emphasizing that the land purchase did not constitute a "payment." The order was issued on January 31, 2020.
Issues: - Appeal against deemed dividend addition under section 2(22)(e) for the assessment year 2015-16.
Analysis: - The judgment pertains to two separate appeals by different assessees against the Commissioner of Income Tax (Appeals)-11, Kolkata's orders upholding the Assessing Officer's deemed dividend additions under section 2(22)(e) for the assessment year 2015-16. The appeals were heard by the Appellate Tribunal ITAT Kolkata. - The factual matrix in both appeals was found to be identical. The assessees, who were directors in a company, had land purchased in their names by the company, leading to the Assessing Officer treating the transaction as deemed dividend income under section 2(22)(e). - The Appellate Tribunal, after hearing arguments from both parties, found no merit in upholding the deemed dividend additions. It was noted that the lands purchased in the directors' names were part of the company's assets and not the personal holdings of the directors. The company's resolution also clarified that the directors did not have any right in the land. - The Tribunal rejected the Revenue's argument that if the directors sold the land in the future, it would be deemed dividends. It was emphasized that the land purchase in the directors' names cannot be considered a "payment." Consequently, the Tribunal directed the Assessing Officer to delete the deemed dividend additions in both assessees' cases. - No other arguments were raised during the hearing, and the appeals of the assessees were allowed. The order was pronounced in open court on January 31, 2020.
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