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2021 (10) TMI 1107 - AT - Income TaxAddition u/s 2(22)(e) - deemed dividend - Proof of substantial interest - assessee being a shareholder having substantial interest in the companies loans imparted by assessee - HELD THAT:- The agreement dated 14.11.2005 entered between both the companies makes it clear that BBPL has made investments in various projects of The Embassy Group and CAPL is involved in these ventures. It is further mentioned that CAPL shall pay money to BBPL as and when required to support the real estate investment activities. It has also been mentioned that the amount invested by CAPL shall be adjusted against the properties. It is an undisputed fact that the amounts invested by CAPL has been adjusted against the properties assigned to CAPL by BBPL, vide assignment agreements dated 28.03.2015. Thus the original agreement dated 14.11.2005 stands corroborated by the assignment agreements dated 28-03-2015. These uncontroverted documents supports the submissions of the assessee that the amounts given by CAPL to BBPL are not loans or advances contemplated in sec.2(22)(e) . What is required to be seen is whether CAPL has advanced moneys as pure loan amounts or for business purposes. The agreements produced by the assessee before Ld CIT(A), which were also confronted with the AO, would prove that the transactions entered between the parties are business transactions. The Ld A.R also submitted that both the companies are maintaining accounts as running accounts only and real estate investment activity was agreed to be a continuous activity. Hence the question of making one to one reconciliation, as contended by Ld DR. would not arise in these types of transactions. Accordingly, we confirm the order of Ld CIT(A) in deleting the additions made u/s 2(22)(e) of the Act in all the three years under consideration. Protective addition of undisclosed income in the hands of the assessee - When the sources stood explained, the question of making any addition on substantive basis or protective basis does not arise. Accordingly, we do not find any infirmity in the order of Ld CIT(A) in deleting the additions made on protective basis in all the three years. - Assessee appeal allowed.
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