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The ITAT held that the provisions of deemed dividend under section 2(22)(e) do not apply where the assessee, not being a beneficial or registered shareholder, received loans from sister concerns in which the holding company has substantial interest. Both limbs of the section were found inapplicable as there was no evidence of funds being transferred to the holding company. Consequently, the addition under section 2(22)(e) was deleted. Regarding the addition under section 68 for an unsecured loan from a related party, the Tribunal accepted the assessee's evidence of genuineness and creditworthiness, including group affiliations, consistent bookkeeping, confirmation, and a favorable arbitration award. The AO's observations were insufficient to disprove the transaction's bona fides. The Tribunal affirmed the genuineness without remitting the matter, ruling in favor of the assessee and directing deletion of the impugned additions.
The ITAT held that the provisions of deemed dividend under section 2(22)(e) do not apply where the assessee, not being a beneficial or registered shareholder, received loans from sister concerns in which the holding company has substantial interest. Both limbs of the section were found inapplicable as there was no evidence of funds being transferred to the holding company. Consequently, the addition under section 2(22)(e) was deleted. Regarding the addition under section 68 for an unsecured loan from a related party, the Tribunal accepted the assessee's evidence of genuineness and creditworthiness, including group affiliations, consistent bookkeeping, confirmation, and a favorable arbitration award. The AO's observations were insufficient to disprove the transaction's bona fides. The Tribunal affirmed the genuineness without remitting the matter, ruling in favor of the assessee and directing deletion of the impugned additions.
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TaxTMI 
TaxTMI 
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