Case Law Details
Brief of the Case
Gujarat High Court held In the case of CIT (TDS) vs. Schutz Dishman Bio-Tech Pvt. Ltd. that there are large number of adjustment entries between the corporates. Unlike transactions of loans and advances, in this kind of adjustment entries, the movement of funds is both ways and the same is more in the nature of current account rather than a loan account. Transactions in the nature of loans and advances are usually very few and for a longer duration. Henec these entries are not in nature of loan or advances. In the absence of any loans and advances, the provisions of section 2(22)(e) in respect of deemed divided are not attracted and therefore, the question of deduction of tax at source also would not arise.
Facts of the Case
The assessee company had made advances in favour of one M/s. Dishman Pharmaceuticals & Chemicals Ltd. having 22.23% holding in the assessee company. According to the Revenue, therefore, such advances were in the nature of deemed dividend under section 2(22)(e). Since no deductions were made at the time of payment of such dividend, section 201, was invoked.
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