Case Number: ITA 5188/DEL/2019
Appellant: Exotica Housing & Infrastructure Pvt. Ltd., New Delhi
Respondent: ITO Ward – 8(4), New Delhi
Assessment Year: 2013-14
Order Type: Final Tribunal Order
Date of Order: June 24, 2020
Case Filed on: June 6, 2019
Pronounced on: June 24, 2020
The appeal addresses a dispute concerning the classification of financial transactions between Exotica Housing & Infrastructure Pvt. Ltd. and its subsidiary as deemed dividends under section 2(22)(e) of the Income Tax Act. The assessing officer initially added a sum of Rs. 2,88,92,817 as deemed dividend, which the company contested, arguing that the transactions were regular business transactions and not dividends.
The ITAT reviewed the transactions and the relationship between the companies, noting that the transactions were part of normal business operations and should not be classified as dividends. They referenced several precedents where similar business transactions were not deemed as dividends. The ITAT eventually ruled in favor of Exotica Housing, overturning the lower authority’s decision and removing the deemed dividend classification.
This case highlights the complexity of deemed dividends under section 2(22)(e) and the importance of the nature of transactions between related entities. The tribunal’s decision provides clarity on how business transactions between parent companies and subsidiaries should be treated under tax law, emphasizing the context and purpose of transactions over their mere form.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform