Loan to Shareholders in the course of lending business cannot be treated as deemed dividend

Brief of the Case

ITAT Kolkata has held in the case ITO Vs. Piyush Jalan that where lending of money is substantial part of the business of the concerned company and any advance or loan is made by it to a shareholder in the ordinary course of its business, the amount so advanced cannot be treated as deemed dividend under clause (e) of section 2(22). Substantial part of the business is lending of money is to be ascertained from the income of the lending company and also from the amount of loan given by t

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