Deemed dividend provision not applicable on loan received from company engaged mainly in lending business

The issue for our consideration in the present context is whether the exclusion clause (ii) of section 2(22)(e) of the Act is applicable in the facts of the present case or not. As provided in the said clause, any advance or loan made by a company to a shareholder or concern in which the shareholder has a substantial interest would not be regarded as a deemed dividend u/s 2(22)(e) if lending of money is a substantial part of the business of the lending company and the loan or advance is made by the lending company in the ordinary course of its business. The expression used in clause (ii) of se...