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2007 (12) TMI 406 - AT - Income TaxDeemed dividend u/s 2(22)(e) - advance money - investment in shares - money lending business - CIT(A) deleted the addition of expenditure under head of foreign travelling expenditure - HELD THAT:- We after having gone through the memorandum and articles of association placed at assessee’s paper book and its balance-sheet, noticed that money lending was not only one of six main objects of the payer company, but the assessee was carrying on this business in preference to other business and at the same time had deployed funds to the extent of Rs. 37,77,475 by way of loan to the assessee and to the tune of Rs. 1,08,099 to Goyal Metalic P. Ltd., out of total funds available at Rs. 44,56,304 as against the deployment of amount of Rs. 4,14,300 as investment in shares earning dividend. We are of the opinion that substantial part of the business carried on by M/s. Indulal Dahyabhai Investment P. Ltd., was that of money lending and consequential loan given to the assessee (on interest) was loan having been given during the course of money lending business. We, therefore, are of the opinion that the assessee’s case was not covered by the provisions of section 2(22)(e) and the CIT(A) was quite justified in deleting the addition. The order of the CIT(A), on this point is therefore confirmed. Expenditure on account of foreign travelling of its managing director - HELD THAT:- Assessee was able to make export to Taiwan which was claimed to be as a result of the managing director’s visit to that place and the fact that the Revenue had not disputed the genuineness of the export sales, we are of the opinion that the assessee’s explanation that the visit by the managing director to the places in question was in connection with the business is quite plausible one and supported by evidence. Consequently, we do not find any reason to interfere with the decision of the CIT (A), wherein the assessee’s claim was allowed and the addition was deleted. We uphold the order of the CIT (A) on this point also. In the result the Revenue’s appeal is dismissed.
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