2008 (4) TMI 428 - DELHI HIGH COURT

Deemed dividend - business transactions - assessee is engaged in the business of a travel agency - assessee was involved in the booking of resorts for the customers of two companies and entered into normal business transactions as a part of its day-to-day business activities - Assessing Officer came to the conclusion that because of the shareholding pattern, financial transactions would fall in the category of “deemed dividend” defined under section 2(22)(e) - Being a travel agency, it had regular business dealings with the concerns dealing with holiday resorts and the tourism industry. Therefore, since the transactions were normal business transactions, which were carried out during the course of the relevant previous year, they cannot be described as advances or loans, which form a distinct category of financial transactions. Under the circumstances, the Tribunal rightly came to the conclusion that since these transactions did not represent loans or advances, the provisions of section 2(22)(e) of the Act were not at all applicable. – Hence not taxable as deemed dividend