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2014 (4) TMI 891 - AT - Income TaxDeemed dividend u/s 2(22)(e) of the Act Loans and advances made by the company to the firm Held that:- No amount was advanced by the firm to the partners and there was credit balance in the accounts of the partner and at no point of time there was debit balance in the account of the partners from the bank book - there were transactions between the firm and company in the ordinary course of business and no amount received by the firm had been utilized in giving advance to any of the partners, including this assessee - CIT(A) has concluded that the firm in the present year as well as in the previous year has received trade advances from the company for supply of particular type of guwar gum powder thus, the transactions between the company and firm are business transactions and amounts advanced by this company to the firm is only advance for business purpose and not as loan. Assessee rightly contended that the nature of the transactions has to be decided on the basis of true nature of transactions and not as per nomenclature given in the books Relying upon Prakash Cotton Mills P. Ltd. Vs. CIT [1993 (4) TMI 3 - SUPREME Court] - the transactions were for the benefit of the shareholders who were also partners in the firm - it cannot be said that the amounts constitute a dividend even under the deeming provisions the provisions of section 2(22)(e) of the Act are not attracted - the payments were normal business transactions thus, there is no infirmity in the order of the CIT(A) Decided against Revenue.
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