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2012 (8) TMI 1008 - AT - Income TaxDeemed dividend u/s 2(22)(e) - Held that:- The AO did not even attempt to examine as to whether or not the share application money can be treated as “loan” or “advance” within the meaning of provisions of sec. 2(22)(e) of the Act. There is nothing on record to show that these transact ions were at tached with certain condit ions or st ipulat ion as to period of repayment, rate of interest, manner of repayment , etc. so as to treat the said transactions as loans or advances. Moreover, the Revenue have not placed before us any material, suggest ing that the transact ions were actually in the nature of loans or advances In CIT vs. I.P. India Pvt. Ltd., Hon’ble jurisdictional High Court in their decision [ 2011 (11) TMI 252 - DELHI HIGH COURT ] concluded that the receipt of share application monies for allotment of shares in the assessee-company could not be treated as receipt of loan or deposit. In the light of view taken by the Hon’ble jurisdictional High Court in the aforesaid decisions, especially when the ld. CIT(A) found as a fact that the amount of ₹ 1 crore was indeed received by the assessee from KMPTL as share application money, we are not inclined to interfere with the findings of the ld. CIT(A). As regards advance of ₹ 3,96,888/- against order, the AO did not record any reasons to tax the amount by way of deemed dividend. On appeal, the ld. CIT(A) concluded that commercial advance was outside the purview of the deeming provisions of section 2(22)(e) of the Act. Hon’ble jurisdictional High Court in Raj Kumar (2009 (5) TMI 17 - DELHI HIGH COURT) following the view in CIT vs. Nagindas M Kapadia(1988 (12) TMI 89 - BOMBAY High Court) held that the trade advance which is in the nature of money transacted to give effect to a commercial transaction does not fall within the ambit of the provisions of sec. 2(22)(e) of the Act
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