Deemed Dividend’ not attracted in case of Normal Business Transactions

By Editor4 Income Tax Judiciary November 10, 2017

TaxGuru Citation: 2017 taxguru.in 1057
Case Name: Shri Deven Chachra Vs. Deputy Commissioner of Income Tax (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2011- 12 and 2012- 13
Courts: All ITAT, ITAT Delhi

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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.

FULL TEXT OF THE ITAT JUDGMENT

These appeals by the assessee for the assessment year 2011-12 & 2012-13 are directed against the order of learned CIT(A)-21, New Delhi dated 18th April, 2017.2. In both these appeals, the assessee has challenged dis allowance under Section 2(22)(e) of the Income-tax Act, 1961 amounting to Rs. 2,84,87,233/- in assessment year 2011-12 and Rs. 6,37,55,557/- in assessment year 2012-13.