Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1276 - AT - Income TaxDeemed dividend u/s 2(22)(e) - assessee is a major share holder in loan granting company - HELD THAT:- We are of the view that an advance against agreement to sale of the property is trade advance which is in the nature of commercial transaction. Trade or commerce connotes the idea of buying and selling and there are judicial precedents which hold that even a single transaction may constitute business/trade. It is not in dispute that the company M/s. AMP gave the advance to the assessee towards sale of property under Agreement to Sale and the said amount was received as part payment by the buyer M/s. AMP to the seller of the property, namely the assessee as per the obligation in the Agreement to Sale which is clearly borne out from the recitals in the MOU. The Hon’ble Delhi High Court has hold in CIT vs. Raj Kumar [2009 (5) TMI 17 - DELHI HIGH COURT] that trade advances cannot be treated as deemed dividend. In such a fact scenario as set out above, we are of the view that even though the assessee is substantial shareholder in the company M/s. AMP which had made the impugned advance to the assessee, it is not a fit case to invoke the provisions of section 2(22)(e) of the Act. The words “loans or advances” occurring in the provision can be applied to loans or advances simplicitor and not to those transactions carried out in the course of trade/business. By giving advance, if the business purpose of the company is served, such advance cannot be brought within the provision of deemed dividend under section 2(22)(e) of the Act. Trade advance given as a consideration for purchase of a capital asset (i.e. property) as in the case before us which indirectly would benefit the company giving advance, such advance would not fall within the ambit of provisions of section 2(22)(e) of the Act. CBDT circular No. 19/2017 dated 12.06.2017 squarely applies to the case of the assessee. We do not find any substance in the appeal of the Revenue and uphold the order of the Ld. CIT(A). - Decided in favour of assessee.
|