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The Commissioner of Income Tax Versus M/s Goel Investment Ltd.

2016 (10) TMI 933 - ALLAHABAD HIGH COURT

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 .....

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umar Misra, JJ. For the Appellant : S.C.,A.N.Mahajan For the Respondent : R.R.Agrawal,Suyash Agrawal ORDER Heard Sri Shubham Agrawal, learned Counsel for the department and Sri Suyash Agrawal, learned Counsel for the assessee. This is an income tax a .....

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on 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) ( .....

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during the course of assessment proceedings the AO noticed from the list of sundry creditors in the balance sheet of the assessee that there was a credit balance of ₹ 65,46,152/- in the account of M/s DSM Capitals Ltd. The AO asked the assessee .....

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, 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 b .....

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was not the case and the assessee would not be entitled to the exemption under Section 2 (22) (e) of the Act and the AO, therefore, came to the conclusion that the amount would be treated as a deemed dividend under Section 2 (22) (e) of the Act. The .....

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Ltd to the assessee, there was no loan or advance. The department, thereafter, filed an appeal. The appeal has been decided against the department. The Tribunal records a finding of fact in paragraph no.23 of its judgement, which is quoted hereunder: .....

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money. We find considerable force in this argument of the assessee as it has sufficiently been demonstrated that the financing assets forms substantial part of the said company being 31.36% of assets employed towards financing activities and income .....

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