Commissioner of Income Tax-8 vs N.S.N. Jewellers (P.) Ltd.

This appeal by the revenue challenges the order passed by the Income Tax Appellate Tribunal, Bench at Mumbai. The order dated 25th March, 2011 in Income Tax Appeal No. 5021/Mum/2009 pertains to assessment year 2006-07. The issue that was raised before the Tribunal was that the respondent-assessee had received a sum by way of loan or advance from one Sunjewels India Pvt. Ltd. (SIPL for short). The share holding of the said SIPL has been referred by the revenue. The contention was that the two share holders of SIPL had also beneficial ownership of M/s. N.S.N. Jewellers (P.) Ltd. namely the assessee, and therefore, the requirement of section 2(22) clause (e) is satisfied. The payment by way of loan or advance is, thus, a dividend.

In rejecting the revenue''s stand and allowing the appeal of the assessee, the Tribunal referred to the admitted facts. The person may be having a beneficial ownership of the shares of the assessee but the recipient of the loan or advance namely the assessee was admittedly not a share holder in SIPL. It is in these circumstances that the Tribunal relied upon the order of its Special Bench in the case of Asstt. CIT v. Bhaumik Colour (P.) Ltd. (2009) 27 SOT 270 (Mum.).

This ground and the correctness of the view taken by the Special Bench was in issue before this Court and the Division Bench judgment of this Court in the case of The Commissioner of Income Tax Vs. Universal Medicare Private Limited, upheld the Special Bench''s decision.

One of us had an occasion to consider this controversy once again in a batch of appeals, Income Tax Appeal No. 114 of 2012 with connected appeals decided on 4th July, 2014. It is heresy concluded that the judgment of this Court in the case of Universal Medicare (P.) Ltd. (supra) need not be reconsidered as requested by the revenue by a larger bench. In the light of above admitted facts, today it is fairly conceded by the appearing parties that the question and issue raised in the present appeal is fully answered and covered by two decisions of this Court referred by us above. In view thereof, the Question is answered in negative against the revenue and appeal is disposed off accordingly. No costs.