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2014 (12) TMI 758 - ITAT KOLKATALoan to be treated as deemed dividend u/s 2(22)(e) – Loan paid to M/s. Ernst & Young Merchant Banking Services Pvt. Ltd. - Inter corporate deposits to be treated as loans or not - Substantial part of the business of the lending company is that of money lending or not – Held that:- The assessee took inter corporate deposits from its subsidiary company Ernst & Young Merchant Banking Services Pvt. Ltd. - assesses had offered it to tax initially but he claimed it as not taxable and therefore the matter has to examined on merits and to determine as to whether it is taxable under the Act - it is not taxable as decided in Utkarsh Fincap (P.) Ltd. Versus Income-tax Officer, Ward 8 (4) [2005 (11) TMI 167 - ITAT AHMEDABAD-A] as held that interest on inter-corporate deposits are not chargeable to interest tax, as the deposits are in the nature of loan or advances - the main objects of the company was to carry on the business of merchant banking i.e. financing, which clearly reveals that the assessee is in the business of financing and once assessee is in the business of financing, the provisions of section 2(22)(e) of the Act will not apply to inter corporate deposits - the assessee has accepted inter corporate deposits from a sister concern and also assessee is engaged in the business of finance, as is clear from the objects mentioned in Memorandum of Association, the provisions of section 2(22)(e) of the Act will not apply to the facts of this case as the inter corporate deposits cannot be treated as loans or advances in terms of section 2(22)(e) of the Act – Decided against revenue.
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