Subhash Chander Oberoi Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that trade advances, being in the nature of commercial transaction, would not fall within the ambit of the provisions of section 2(22)(e) of the Act and therefore the addition made by the AO is deleted. Accordingly, appeal allowed.
Facts- The assessee has filed the present appeal against the impugned order dated 07/02/2024 passed u/s. 250 of the Income Tax Act, 1961 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2014-15. The solitary grievance of the assessee is against the addition made by treating the amount received by the assessee as deemed dividend under section 2(22)(e) of the Act.
Conclusion- Circular No. 19 of 2017 dated 12/06/2017 issued by the Central Board of Direct Taxes provides that the 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.
Held that in the present case, as noted in the foregoing paragraph, upon receipt of advance from M/s AGIV India Pvt. Ltd., M/s Paros Corp purchased the shares of IND-AGIV Commerce Ltd. and RST Technologies Ltd., which facilitated the completion of the transaction between M/s AGIV India Pvt. Ltd. and M/s FOR-A Group Japan. Thus, we are of the considered view that the advance was given in return for an advantage conferred upon M/s AGIV India Pvt. Ltd. by the assessee. Therefore, we are of the considered view that such a transaction, being completely in the nature of a commercial transaction, would not fall within the ambit of the provisions of section 2(22)(e) of the Act and therefore the addition made by the AO is deleted. As a result, grounds raised by the assessee are allowed.
