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TMI Blog2013 (12) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made by invoking the provisions of section 2(22)(e) of the Act. On the other hand, the assessee company has, in its cross objection, supported the order of CIT(A). 3. As the issue raised by the Revenue and the cross objection of the assessee are common, they were heard together and disposed of in this consolidated order. 4. Briefly stated, the facts of the issue are that the assessee company is engaged in the business of conversion of rough granite blocks/slabs into polished granite slabs, granite tiles and monuments. The assessee is 100% EOU, approved by the specific authority under the Act. While concluding the assessment for the assessment year under dispute, the AO disallowed, among others, the benefits of deduction u/s 10B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing reasoning, namely: "(On page 10) I have considered the submission of the appellant and also the reasons given by the assessing officer in the assessment year (sic) order and the remand report. The assessing officer in his report has categorically stated that the transaction between the assessee and the sister concern are business transactions as per the evidence filed, however, he chose to rely on the decision of the Hon'ble High Court of Mumbai in the case of Badiyani (76 ITR 369), and submitted that the said amounts can be considered as 'loan or advance' within the meaning of section 2 (22)(e) of the Act. the factual submissions made by the assessing officer reveal that the transactions are of commercial in nature, therefore the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excess receipts were not made due to commercial or trade transactions but due to their common ownerships. It was also the view of the learned DR that the CIT (A) had failed to appreciate the fact that s. 2 (22)(e) of the Act not only covers loan transactions but also 'advances' with the exception of advance in the ordinary course of business where the lending of money was a substantial part of the business. It was, therefore, prayed that the findings of the CIT (A) be reversed and that of the AO be restored in so far as the issue of deemed dividend u/s 2 (22)(e) of the Act was concerned. 5.1. On the other hand, the learned AR had strongly supported the findings of the CIT (A) on the issue. It conclusion, it was pleaded that as there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature, therefore, the conclusion arrived (at) by the assessing officer that these are loans or advances within the meaning of section 2 (22)(e) is totally against the provisions of the said section'. [Refer: Page 10 of CIT (A)'s order]. The CIT (A) had also distinguished the case law on which the AO, in his remand report, sought to place strong reliance, with an observation that the decision of the Bombay High Court in the case of Badiyani (76 ITR 369)is not justifiable as the ratio laid down by the High Court is different. 6.1. We have also perused the judgment of the Hon'ble Delhi Court in the case of CIT v. Raj Kumar reported in (2009) 318 ITR 462 (Del) which is directly on the issue under consideration. For appreciation of facts, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained the order of the CIT (A). On the Revenue's appeal, the Hon'ble Court has held as under: " 10.9. Keeping the aforesaid rule in mind, we are of the opinion that the word 'advance' which appears in the company of the word 'loan' could only mean such advance which carries with it an obligation of repayment. Trade advance which are in the nature of money transacted to give effect to a commercial transactions would not, in our view, fall within the ambit of the provisions of section 2 (22)(e) of the Act....." 6.2. Above all, the assessing officer had, in his remand report to the appellate authority, fairly conceded that (at the cost of repetition) "The details now supplied with regard to various transactions appearing in the document ..... X X X X Extracts X X X X X X X X Extracts X X X X
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