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2014 (9) TMI 1197 - AT - Income TaxDeemed dividend u/s 2(22)(e) - as per assessee advance was taken for the purpose of purchase of land in Himachal Pradesh and because of the restriction, land could not be purchased and, therefore, amount was returned, therefore, the transaction was of the business nature and the same cannot be treated as deemed dividend - HELD THAT:- There is no evidence to show that company where the assessee was director wanted to set up a resort in the State of Himachal Pradesh. Even if such company wanted to set up a resort, the company itself could have invested the money directly in its own name and that would have been permissible in the State of Himachal Pradesh because land can be purchased in the State of Himachal Pradesh for business purposes. This company is mainly earning income from dividend and interest on fixed deposits. In 2009, this company has received some interest also. The schedule of assets at page 16 clearly shows that most of the investments have been clearly made in the mutual funds. Even if it is assumed that company is mainly engaged in the business of lending money then it cannot be said that the said company has lent money to the assessee in the ordinary course of business because for that to happen the said company would have definitely charged the interest. The making of advances in the ordinary course of business of lending itself connotes charging of interest on such lending and admittedly the assessee had received the advance without any interest. Thirdly, this is only an after thought because original explanation before the lower authority and even before us was that money was taken for the purpose of purchase of land in Himachal Pradesh and it was never claimed that money was lent to the assessee in the ordinary course of business of lending, therefore, we find no force in these submissions. In view of this, we find nothing wrong with the order of CIT(A) and we confirm the same. Resultantly, the appeal of the assessee is dismissed.
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