TaxTMI 
TaxTMI 
2010 (10) TMI 605
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....t. Ltd., the lender company, was money lending and the loan was advanced during the ordinary course of said business and accordingly exemption in clause (ii) of sub section 2(22)(e) was available to the appellant company and the amount of loan was not taxable as deemed dividend in the hands of the appellant company. 2. That the order u/s 250 passed by the Ld.CIT(A)-IV, New Delhi is against law and facts on the file in as much as he was not justified to hold that the amount advanced by M/s MGS India Pvt. Ltd. is taxable as deemed dividend in the hands of the registered shareholders and hold that the AO is free to consider any action in the case of the registered shareholders after considering the facts of the case. 2. The....
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....ubmitted before us that though the addition had been deleted, the CIT(A) erred in not adjudicating the grievance of the assessee that a substantial part of the business carried on by M/s MGS India Pvt. Ltd., the lender company, was money lending and that the loan was advanced during the ordinary course of the said business, due to which, exemption u/s 2(22)(e)(ii) of the Act was available to the assessee company and the amount of loan was not taxable as deemed dividend in the hands of the assessee company. 5. The Ld.DR, on the other hand, has stated that there is no merit in the appeal of the assessee, since the addition stands deleted by the CIT(A). 6. We have heard the parties and have perused the material on record. S....
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....4, (and before the 1st day of April, 1965). (ii) any advance or loan made to a shareholder (or the said concern) by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company. 7. Thus, it is evident that as per section 2(22)(e)(ii), "dividend" does not include advance or loan made to a shareholder of a concern in which such shareholder, being a person who is the beneficial owner of the shares holding not less than 10% of the voting power, is a member or a partner and in which he has a substantial interest, by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company. 8. ....
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....vs. Ambassador Travel Pvt. Ltd.", 318 ITR 376 (Del.), wherein, it was observed that where the assessee was involved in the booking of resorts for the customers of the companies and entered into normal business transactions as a part of day-to-day business activities, the financial transactions could not be treated as loans or advances received by the assessee from the two concerns. 9. The CIT(A), it is seen, deleted the addition, following the ratios of Bhaumik Color (supra) and Hotel Hill Top (supra). He, however, did not deal with the above assertion on the part of the assessee regarding money lending being a substantial part of the business of M/s MGS India Pvt. Ltd., making available to the assessee company, exemption u/s 2(22....