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of <h1>Advances not Deemed Dividends under Tax Act: Assessee's Transactions Analyzed</h1> <h3>The Commissioner of Income Tax (TDS) Versus Schutz Dishman Bio-Tech Pvt. Ltd.</h3> The Commissioner of Income Tax (TDS) Versus Schutz Dishman Bio-Tech Pvt. Ltd. - TMI Issues:1. Interpretation of section 2(22)(e) of the Income Tax Act regarding deemed dividend.2. Application of section 201(1) and 201(A) of the Act for non-deduction of tax at source.Analysis:Issue 1: Interpretation of section 2(22)(e) of the Income Tax Act regarding deemed dividendThe Revenue contended that advances made by the assessee company to another entity constituted deemed dividend under section 2(22)(e) of the Income Tax Act due to the shareholding relationship. The Revenue invoked section 201 of the Act for non-deduction of tax at the time of payment of such deemed dividend. However, the Commissioner (Appeals) disagreed, stating that the transactions were not in the nature of loans or advances but were current adjustment accommodation entries. The Commissioner observed that the movement of funds was both ways on a need basis, distinguishing it from typical loan transactions. The Tribunal upheld this view, concluding that the amounts were not Inter Corporate Deposits and did not fall under section 2(22)(e) of the Act.Issue 2: Application of section 201(1) and 201(A) of the Act for non-deduction of tax at sourceThe Commissioner (Appeals) and the Tribunal concurred that the transactions between the entities were not loans or deposits but adjustments based on the large number of entries in the accounts. As the nature of the transactions did not qualify as loans or advances, the application of section 2(22)(e) of the Act was deemed unnecessary. Consequently, the courts dismissed the tax appeals, emphasizing that no question of law arose as the facts were adequately appreciated. The judgments highlighted the importance of factual analysis in determining the applicability of tax provisions and upheld the decision that the transactions in question did not fall under the purview of deemed dividend under section 2(22)(e) of the Act.This detailed analysis of the judgment showcases the careful consideration given to the interpretation of tax provisions and the significance of factual findings in determining tax liabilities.
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