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TMI Blog2021 (8) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... he advance or loan is immaterial is contrary to the CBDT Circular No. 19/2017 dated 12.06.2017 - thus we are of the considered view that the business transaction of ₹ 78 lakhs cannot be treated as deemed dividend u/s 2(22)(e) of the Act. We, accordingly, direct the Assessing Officer to delete the addition Addition on account of 5% of car expenses - HELD THAT:- This issue was not seriously contested by the ld. AR and, therefore, the same is dismissed. - ITA No. 4668/DEL/2019 - - - Dated:- 6-8-2021 - Shri N.K. Billaiya, Accountant Member, And Ms. Suchitra Kamble, Judicial Member For the Assessee : Shri Kapil Goel, Adv For the Revenue : Shri E.V. Bhaskar, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer issued a show cause notice to the assessee asking it to explain as to why the loan amount should not be treated as deemed dividend u/s 2(22)(e) of the Act. 6. In its reply, the assessee contended that it has received ₹ 78 lakhs from the said company as it was not loan but received as an advance for purchase of property owned by the assessee and since the transaction had not materialised, the amount was returned back to the said company. 7. The assessee furnished necessary evidence in support of its contention. This contention of the assessee was dismissed by the Assessing Officer who was of the firm belief that any payment by a company by way of advance or loan attracts the provisions of section 2(22)(e) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Board of Direct Taxes Circular No. 19/2017 New Delhi, Dated 12th June, 2017 Sub: Settled View on section 2(22)(e) of the Income Tax Act, trade advances -reg. Section 2(22) clause (e) of the Income Tax Act, 1961 (the Act) provides that dividend includes any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city generators belonging to the sister concern. The company utilised gas available to it from GAIL to generate electricity and supplied it to the sister concern at concessional rates. It was held that the security deposit made by company to its sister concern was a business transaction arising in the normal course of business between two concerns and the transaction did not attract section 2(22) (e) of the Act. (CIT, Agra vs Atul Engineering Udyog, Allahabad High Court). 3. In view of the above it is, a settled position that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word 'advance' in section 2(22)(e) of the Act. Accordingly, henceforth, appeals may not be filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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