Partners' Trade Advances and Reimbursements Not Deemed Dividend Under Section 2(22)(e) as Transactions Show Regular Business Operations

ITAT dismissed Revenue's appeal against CIT(A)'s order regarding deemed dividend addition under section 2(22)(e). The assessee, a converted LLP, maintained ledger accounts showing loan transactions with a company where partners held substantial interest. The transactions reflected regular business operations with trade advances taken and returned, along with expense reimbursements, forming a running account for mutual benefit. The AO's treatment of peak credit as deemed dividend was rejected as they failed to establish that payments were made for individual shareholder benefits. While CIT(A) ruled based on LLP's non-shareholder status, ITAT upheld the order considering the regular business nature of transactions predating LLP conversion. .....

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