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2016 (5) TMI 1513 - AT - Income TaxDeemed dividend u/s 2(22)(e) - HELD THAT: It is important that unless advances it is not gratuitous to its shareholder but it is to protect the business interest of the company, it falls out of the purview of taxation u/s 2(22) (e) of the act. It is not a current account but advances in the nature of loan which assessee enjoys, simply on account to being a share holder exceeding specific percentage, then only, the provisions the section 2(2)(e) of the act comes into play. The above view further gets support from the decision of CIT Vs. Creative Dying and Printing Pvt. Ltd [2009 (9) TMI 43 - DELHI HIGH COURT] . No other contrary decisions were brought to our notice by the ld DR. In view of the above finding we reverse the finding of the ld CIT(A) in confirming the addition as deemed dividend u/s 2(22)(e) We also clarify that in the present appeal the accumulated profit are to the tune of only ₹ 1123551/- and the total alleged advances given to the appellant is ₹ 2377000/- and ₹ 15,00,0008/- are on account of security deposit and therefore ₹ 877000/- are the entries of mutual current account transactions, which are also not deemed dividend in view of above judicial precedents and hence, total addition confirmed of ₹ 11,23,551/- by the ld CIT(A) is deleted - Appeal of the assessee is allowed.
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