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2016 (3) TMI 630 - AT - Income TaxDeemed dividend addition u/s 2(22) - whether there was any “Loan or Advance” by PIPL to the Assessee? - Held that:- There is no reason whatsoever to doubt the plea put forth by the Assessee that the sum of ₹ 9 lacs was mistaken paid to RBI in the name of the Assessee instead of PIPL. The reason being that the returned income of the Assessee for the relevant AY was only ₹ 4,26,150/-. The Assessee would get credit of TDS of ₹ 70,480 which was allowed by the AO in the order of assessment. It thus becomes clear that there could not be advance tax liability to the extent of ₹ 9 lacs for the Assessee. The contention of the Assessee therefore that the sum in question was mistaken paid to RBI in the name of Assessee instead of PIPL deserves to be accepted. It is a fact that the sum in question i.e., ₹ 9 lacs never reached the hands of the Assessee and was not available for use by the Assessee. In such circumstances can it be said that there was any “Loan or Advance” by PIPL to the Assessee. The fact that the rents payable by PIPL to the Assessee were adjusted against the monies refundable by the Assessee to PIPL is a matter of adjustment between the parties. That adjustment cannot be the basis to hold that PIPL has given a “ loan or advance” to the Assessee. The primarily requirement of flow of funds for use by the Assessee from PIPL is essential to say that PIPL gave “Loan or Advance” to the Assessee. Such a requirement being absent in the present case, it cannot be said that the conditions for applicability of Sec.2(22)( e) of the Act were satisfied. - Decided in favour of assessee
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