Deemed Dividend’ not attracted in case of Normal Business Transactions

Shri Deven Chachra Vs. DCIT (ITAT Delhi)

In Circular No. 19/2017, paragraph 3, the CBDT has also held 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.

In the case under consideration, the addition u/s 2(22)(e) is made in the case of an assessee who is an individual. Admittedly, no advance or borrowed money is received by the assessee from the concerns in which the assessee is a shareholder. There is a transaction of advancing of money by M/s Superior Films (P) Ltd. to the group concerns in the normal course of business. In view of the above decision of Hon’ble High Court of Calcutta as well as CBDT’s Circular, Section 2(22)(e) is not applicable in the facts of the case under appeal before us.