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2018 (4) TMI 1119 - AT - Income TaxDeemed dividend u/s 2(22)(e) - Differentiation between loans and advances received for business purposes or for any other purposes - Held that:- Delhi High Court I CIT vs Raj Kumar (2009 (5) TMI 17 - DELHI HIGH COURT) held that a trade advance which is in the nature of money transacted to give effect to a commercial transaction would not fall within the ambit of the provisions of Section 2(22)(e) of the Act. The Bombay High Court in CIT vs Nagin Das M. Kapadia (1988 (12) TMI 89 - BOMBAY High Court) held that business transactions are outside the purview of Section 2(22)(e) of the Act. The words “loans or advances” can be applied to loans or advances simplicitor and not to those transactions carried out in the course of business. In the course of business between the company and a shareholder, the company may be required to give advance in mutual interest. There is no legal bar in having such transaction. By granting advance, if the business purpose of the company is served and which is not the sum, which it otherwise would have distributed as dividend, cannot be brought within the deeming provision of treating such advance as deemed dividend. Thus such advances cannot be a subject matter of section 2(22)(e) - Decided in favour of assessee
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