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2014 (3) TMI 397 - ALLAHABAD HIGH COURTDeemed dividend u/s 2(22)(e) of the Act - Substantial business - Whether the findings of the ITAT that money lending does not constitute 'substantial business' of the lending company is correct – Held that:- Neither the company nor the assessee having the license of money lending business - Any payment by any company of any sum representing a part of the assets by way of advance would come within the mischief of deemed dividend - deposits made by a closely-held company would also be covered by the expressions advance or loan - Advances given by a company to its shareholders should be treated as payment out of accumulated profits of the company, whether capitalised or not, and must be treated as dividend and would go to reduce the tax liability. Whenever such tax liability is required to be determined as observed in the case of CIT vs. Narasimhan G. [1998 (12) TMI 5 - SUPREME Court] - the assessee has failed to establish that substantial part of the business of the company is money lending - When it is so then we finds no reason to interfere with the impugned order passed by the lower authorities who have rightly observed that the amount is to be included in the income of assessee as deemed dividend under Section 2(22)(e) of the Act – Decided against Assessee.
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