INCOME TAX ACT, 1961

Section 2(22)(e)

Deemed dividend under section 2(22)(e) - Applicability of provision - Business transaction only between assessee and his family members with group of concerns -

Assessee contended that CIT(A) erred in upholding order of AO, who made addition of Rs. 5,71,38,687 invoking provisions of section 2(22)(e). Held: Apparently, business transaction was only between assessee and his family members with group of concerns. Explanation presented by assessee could not be simply brushed aside. If assessee had withdrawn amount from Kasani group of Companies which was received from Amsri Group of business entities due to business transaction between assessee and his family members with Amsri Group of business entities, then it could not be said that Kasani group of Companies extended loan to assessee. There was nothing on record to suggest that there was any business relationship between Amsri Group of entities and Kasani Group of Companies other than business transaction between Amsri group of companies with the assessee and his family members. Thus, it was obvious that Kasani Group of Companies was only used as a conduit by Amsri Group of companies to deliver money to assessee and his family. In such situation, financial transaction between Kasani Hotels and Resorts Pvt Ltd., and assessee could not be treated as loan transaction. Therefore, provisions of section 2(22)(e) had no application in case of assessee.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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