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2024 (1) TMI 1071 - AT - Income TaxDeemed dividend u/s 2(22)(e) - transactions of advancing of money by the company to appellant and earning interest on it is not amounted to business transactions - HELD THAT:- The factum of interest and deduction of TDS thereon is also reflected in the ledger account and the confirmation thereof by the corresponding party. Hence, the advances made by the lender company to the assessee is not a loan/advance simplicitor but is beset with the character of quid pro quo owing the charge of interest for the benefit of lender company. In the circumstances, in the case of Pradip Kumar Malhotra [2011 (8) TMI 16 - CALCUTTA HIGH COURT] has observed that advances given by lender firm was not for the individual benefit of the share holder but for business purposes and therefore, such transaction could not fall within the sweep of deeming fiction created under section 2(22)(e) of the Act. This reason, on a standalone basis, is sufficient to exclude the applicability of section 2(22)(e) of the Act on the money received by the assessee. Similar view has been expressed in PCIT vs. Mohan Bhagwatprasad Agrawal [2020 (1) TMI 1139 - GUJARAT HIGH COURT] and JAYSON INDUSTRIES [2022 (8) TMI 217 - ITAT DELHI] We see considerable force in the plea of the assessee for exclusion of loan and advances in question from the ambit of deeming fiction provided in section 2(22)(e) of the Act. Appeal of assessee allowed.
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