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2022 (12) TMI 939 - AT - Income TaxDeemed dividend u/s 2(22)(e) - receipt of amount from the lender co. where the assessee holds substantial interest is in question - credibility of explanation offered by the assessee to support its claim of business transaction qua a loan transaction of ordinary nature - assessee has inter alia undertaken certain related party transactions - as found that the assessee has received loans from a company wherein the assessee holds 20% equity shares and thus a holds substantial interest - HELD THAT:- The assessee claimed to have entered into an MOU dated 2nd April, 2012 with the lender company seeking to part with 50% right therein in favour of Landspace. As claimed, the MOU was acted upon and the money was transferred by the lender to the assessee in consideration of acquisition of rights in the property allotted in favour of the assessee by the builder. An Agreement to Sale (ATS) dated 13.07.2015 was thereafter was entered into jointly with Landspace (confirming party) as proposed sellers with the proposed buyer M/s. Garrison Developer. MOU was duly acted upon at a later point of time. The resultant profit were also claimed to have been shared equally as provided in MOU to support the inherent character of money received from Landspace. These facts clearly vindicates the claim of the assessee that the amount received was in consideration of transfer of rights in the property allotted and thus cannot be regarded as a loan transaction of ordinary nature. To support the nature of money received from Landspace, the assessee claims that such MOU has been acted upon. Where the rights in the property was sold and profits have been shared as business receipt by Landspace, the other considerations fades into insignificance. CIT(A), has examined the issue threadbare and has rightly concluded that the amount obtained from Landspace is in the nature of business transaction outside the purview of Section 2(22)(e). Mere declaration in the financial statement of amount received as inter corporate loan is neither here nor there. The nature of amount received is vouched by the subsequent actions. Thus, propriety of such explanation can hardly be questioned. Hence, without further delineation of factual matrix, we see no perceptible justification in the allegations made by the Revenue seeking to displace the character of transaction. We thus endorse the view taken by the CIT(A) and hence decline to interfere. Appeal of the Revenue is dismissed.
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