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2016 (10) TMI 933 - ALLAHABAD HIGH COURT

2016 (10) TMI 933 - ALLAHABAD HIGH COURT - TMI - Deemed dividend addition u/s 2(22) - nature of substantial part of the business - Held that:- Where the substantial part of the business is of a financial nature, the exception clause (ii) of Section 2(22) (e) of the Act would apply. See Ravi Agarwal Versus Assistant Commissioner of Income Tax, Circle-II, Bareilly [2015 (10) TMI 755 - ALLAHABAD HIGH COURT ] - Decided in favour of assessee - Income Tax Appeal No. 419 of 2006 - Dated:- 24-10-2016 - .....

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under:- "(1) Whether the provisions of Section 2 (22) (e) of the Act applies to the facts and circumstances of the case? (2) Whether on the facts and in the circumstances of the case, the amount of ₹ 64,46,152/- could be treated as a deemed dividend within the meaning of Section 2 (22) (e) of the Act? (3) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in the addition of ₹ 64,46,152/- made by the A.O. as deemed dividend u/s 2 (22) (e) .....

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ve was not in the nature of a loan or advance and, therefore, it would not attract the provisions of Section 2 (22) (e) of the Act. The plea of the assessee was that the transaction was in ordinary course of business with DSM Capitals Ltd, which was substantially engaged in finance and investment business. It was further pointed out that there was no loan, no borrower nor anything taken on loan, the transactions were purely sale of goods on credit and did not amount to loan or advance. The AO he .....

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