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2023 (3) TMI 91 - AT - Income TaxDeemed dividend u/s.2(22)(e) - payments made by M/s.IEIL is nothing but loans & advances taken by shareholders having more than specified percentage of share capital, which attracts provisions of Sec.2(22)(e) - as submitted whatever amount paid by M/s.IEIL, has been subsequently re-paid by the assessee through his mother Smt.V.Padma account on very same day or within a short period i.e. less than one month without there being any outstanding balance in the name of the assessee in the books of M/s.IEIL - HELD THAT:- It is very clear that company has paid to M/s.Chaitanya Builders on behalf of the assessee for purchase of property as a stop gap arrangement and the same has been subsequently re-paid by the assessee and his mother out of their source of income. The amount paid by M/s.IEIL to M/s.Chaitanya Builders on behalf of the assessee, cannot be considered as loan or advance which can be treated as deemed dividend u/s.2(22)(e) because, at no point of time, there is no outstanding loan or advance in the name of the assessee in the books of accounts of M/s.IEIL. At best transactions between the assessee and M/s.IEIL can be treated as a running current account between the shareholder and company, but said transaction cannot be considered as loan or advance within the meaning of provisions of Sec.2(22)(e) of the Act. In this case, facts are entirely different, because, at no point of time, M/s.IEIL has given any loan or advance to the assessee either by way of cash payment or through account transfer - the company has given some payments to the third party on behalf of the assessee, but said payments have been subsequently re-paid by the assessee or his family members either on the same day or within a short period i.e. less than one month without there being any outstanding balance in the books of accounts of the company. Therefore, transactions between the assessee and company cannot be treated as loan or advance within the meaning of provisions of Sec.2(22)(e) - AO as well as the Ld.CIT(A) are completely erred in invoking provisions of Sec.2(22)(e) of the Act, and making additions u/s.2(22)(e) of the Act. Hence, we direct the AO to delete the additions made towards deemed dividend u/s.2(22)(e) of the Act, in the hands of the assessee. Appeal filed by the assessee is allowed.
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