TMI Blog2011 (9) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax Vs. India Discount Co. Ltd. (1969 -TMI - 5158 - SUPREME Court) - the payment made were the result of trading transaction between the parties and the amount was not given by way of loan or advance. - Decided against the revenue. - ITA 589 OF 2011 - - - Dated:- 30-9-2011 - MR. JUSTICE A.K. SIKRI AND MR. JUSTICE SIDDHARTH MRIDUL JJ. Represented by: Mr. Abhishek Maratha, Sr. Standing Counsel with Ms. Anshul Sharma, Advocate. For Appellant Mr. Ved Jain, Advocate. For Respondent A.K. SIKRI, J 1. The assessee is in the business of trading i.e. purchase and sale of books and journals. During the assessment proceedings, the Assessing Officer found that the assessee is a shareholder in a company called A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained reflecting the regular transactions between the two business entities; and the amount of Rs. 47,25,318.80 paise was the result of those business transactions. From this, the CIT (A) concluded that the amount was not given by A A Periodicals to the assessee by way of loan but on this basis, allowing the appeal of the assessee, the CIT (A) deleted the additions. The matter was taken in further appeal before the ITAT by the Revenue. However, the appeal of the Revenue has been dismissed by the Tribunal vide impugned order dated 16.7.2010 holding that the payment made by the A A Periodicals to the assessee is not in the nature of loan or advance. The finding of the CIT (A) is affirmed by the ITAT, on the basis of books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that trade advance does not fall within the ambit of provisions of Section 2 (22) (e) of the Act:- (i) The company making the payment is one in which public are not substantially interested. (ii) money should be paid by the company to a shareholder holding not less than ten per cent (10%) of the voting power of the said company. It would make no difference if the payment was out of the assets of the company or otherwise. (iii) The money should be paid either by way of an advance or loan or it may be any payment which the company may make on behalf of, or for the individual benefit of, any share holder or also to any concern in which such shareholder is a member or a partner and in which it is substantially interested. (iv) And, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "advance'. The rule of construction to our minds which answers this conundrum is noscitur a sociis. The said rule has been explained both by the Privy Council in the case of Angus Robertson v. George Day (1879) 5 AC 63 by observing "it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them" and our Supreme Court in the case of Rohit Pulp Paper Mills ltd v. CCE, AIR 1991 SC 754 and State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610. It is important to note that Rohit Pulp (supra) was the case dealing with taxation. In brief in the said case the assessee was seeking to take benefit of an exemption notification. The Department denied the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to avoid payment of tax by the shareholders; Keeping the aforesaid rule in mind we are of the opinion that the word "advance' which appears in the company of the word "loan' could only mean such advance which carries with it an obligation of repayment. Trade advance which are in the nature of money transacted to give effect to a commercial transactions would not, in our view, fall within the ambit of the provisions of Section 2(22)(e) of the Act. This interpretation would allow the rule of purposive construction with noscitur a sociis, as was done by the Supreme Court in the case of LIC of India v. Retd. LIC Officers Assn. [2008] 3 SCC 321. 6. Learned counsel for the appellant hammered the fact that the amount was shown by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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