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2019 (7) TMI 1365 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - proof of record that the assessee is a substantial shareholder in both the companies [lender and receiver] - advance given under agreement to finance a milk related product project pursuant to appointment of sole selling agent of milk business for seven years - project was not kicked of and advance was refunded - HELD THAT:- Position of Revenue cannot be accepted as section 2(22)(e) itself provides by way of an exception under clause (2) of the exceptions that any advance or loan made to a shareholder or to the said concern by a company in the ordinary course of its business where lending is substantial part of business of the company cannot be treated as deemed dividend. Similarly the CBDT Circular referred supra has also stated that trade advances which are in the nature commercial transactions would not fall within the ambit section 2(22)(e). Therefore, we find that the agreement entered into between the two companies which is placed on record by virtue of which the funds have been lend is clearly a relevant piece of document which needs to be examined. Given that the said agreement has not been taken into consideration by the lower authorities, we are setting aside the matter to the file of the AO to examine the same afresh. In view of the same, various contentions raised by the Ld. AR are left open and the assessee is free to raise the same before the AO. In the result, the ground is allowed for statistical purposes.
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