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Tribunal dismisses Revenue's appeal on deemed dividends and service tax, upholding deletions under IT Act. The Tribunal dismissed the Revenue's appeal on 26th May, 2023 at Ahmedabad. The additions made under section 2(22)(e) of the Income Tax Act were deleted ...
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Tribunal dismisses Revenue's appeal on deemed dividends and service tax, upholding deletions under IT Act.
The Tribunal dismissed the Revenue's appeal on 26th May, 2023 at Ahmedabad. The additions made under section 2(22)(e) of the Income Tax Act were deleted by the ld.CIT(A) as the loans and advances received by the assessee-company were not deemed dividends. The matter was sent back to the ld.CIT(A) pending a Supreme Court judgment. Additionally, the deletion of the addition under section 43B was upheld as the service tax collected was deposited before the due date of filing the return and already offered for taxation in a subsequent assessment year.
Issues involved: The judgment involves issues related to additions made under section 2(22)(e) of the Income Tax Act, 1961 and deletion of addition made under section 43B of the Act.
Additions under section 2(22)(e): The Revenue filed an appeal against the appellate order deleting additions made under section 2(22)(e) of the Act. The ld.CIT(A) deleted the addition of Rs.38,29,086/- received from M/s. Neesa Leisure Limited and Rs.2,91,27,917/- received from M/s. Neesa Agritech Private Limited. The ld.CIT(A) considered the argument that loans and advances received by the assessee-company from other companies could not be treated as deemed dividend when the assessee was not a shareholder of that company. The Revenue contended that the addition should be made in the hands of the Director of the Company who is a common shareholder of both companies. The Tribunal set aside the matter back to the ld.CIT(A) pending the outcome of the Larger Bench judgment of the Hon'ble Supreme Court.
Deletion of addition under section 43B: The ld.CIT(A) directed the AO to verify the service tax collected by the assessee, which was deposited before the due date of filing the return. The ld.CIT(A) noted that this amount was already offered for taxation in the subsequent assessment year. The Tribunal found no infirmity in the ld.CIT(A)'s direction and rejected the grounds raised by the Revenue.
In conclusion, the appeal filed by the Revenue was dismissed by the Tribunal on 26th May, 2023 at Ahmedabad.
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