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2018 (2) TMI 1532 - HC - Income TaxDeemed dividend u/s 2(22)(e) - assessee claimed the amount received as guarantee fee for advance received from Ginza - Held that:- All indications were that the assessee was sanguine and assured about the nature of the amount given by Ginza, i.e. that it could use it for its own purposes– as it did by advancing substantial amounts at commercial rates of interest which could not be conceivably attributable to short term deposits and also for the purpose of yielding income, i.e. by investing with the object of trading in shares. In these circumstances, both the lower authorities, in the opinion of the Court overlooked that the real intent of Ginza in advancing the sums it did to the assessee was to share its profit by way of deemed dividend. The sum of ₹ 6.16 crores clearly fell within the description of “deemed dividend” under Section 2(22)(e) of the Act like in the case of Sunil Chopra (2011 (5) TMI 218 - DELHI HIGH COURT). For these reasons, the first question is answered in favour of revenue and against the assessee Disallowance of commission - CIT (A) and the ITAT deleted the disallowance holding that the original transaction of advance was genuine and a trading one and furthermore that the commission was paid through payment channels in terms of the tripartite agreements - Held that:- AO’s findings are based upon facts. A significant detail that seems to have escaped the notice of lower appellate authorities, i.e. that after obtaining substantial sums, the assessee even made over a substantial part of it – ₹ 6.14 crores to Adani to whom it paid ₹ 43.5 lakhs as commission for the standing guarantor. The latter payment in the light of the transactions previously discussed strain ones’ credibility and does not accord with prudent commercial practice. For these reasons the Court is of the opinion that the findings of the lower authorities are based upon a mis-appreciation of circumstances and are, therefore, unreasonable, and are premised on an erroneous appreciation of the facts and the law. The disallowance of ₹ 43.5 lakhs was just and warranted. - Decided against assessee.
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