Deemed Dividend Not Attracted to Genuine Commercial Transactions; Addition Deleted on the Facts Found.

Amounts arising from commercial sale and purchase transactions between the concerned entities were treated as genuine on the facts found, so they were not characterised as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961. The addition made on that basis was deleted, and the appeals were accepted.

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Issues: Whether the addition made under section 2(22)(e) of the Income-tax Act, 1961, as deemed dividend, was sustainable.

Analysis: The assessee produced material to show that the impugned amount arose from commercial sale and purchase transactions between the concerned entities. On the facts found, the transactions were treated as genuine and not liable to be characterised as non-genuine for the purpose of deeming the amount as dividend.

Conclusion: The addition under section 2(22)(e) was deleted and the appeals were accepted.

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