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2018 (11) TMI 553 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - AO noticed that the assessee has received loan/advance from M/s. Malpani Cottons Pvt. Ltd., Adilabad wherein assessee is having 12.42% of the share holding in Malpani Cottons Pvt. Ltd. and the company is not a company in which public are substantially interested - Held that:- To attract the deemed dividend provision, it should be otherwise around. Further, we noticed that the opening balance stood as on 01-04-2003 was ₹ 1,05,15,883/- as debit balance which means assessee owes to the company and at the end of the year, closing balance stood at ₹ 85,56,232/- debit balance which means still assessee owes to the company. while comparing opening and closing balances, it is noticed that about ₹ 20 Lakhs was reduced that means assessee has repaid ₹ 20 Lakhs to the company. It clearly shows that assessee has not taken any fresh loan from the company during the current assessment year. On the other hand, to invoke Section 2(22)(e) of the Act during this year, assessee should have received loans or advances and pays the same subsequently. In the given case, no such things were noticed. Therefore, in our considered view, assessee is having business connection and in that process, assessee may have received certain advances which can be treated as ‘trade advances’. Therefore, we cannot cherry pick certain transactions and term them as ‘loans and advances’ in order to invoke the provisions of Section 2(22)(e) of the Act. Therefore, the ground raised by assessee is allowed.
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