2015 (2) TMI 731

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....uestion of law framed in ITA No.5 of 2014 is answered against the revenue, ITA Nos.601 and 762 of 2010 shall be rendered infructuous. Facts relevant for adjudication are being taken from ITA No.5 of 2014.           Counsel for the appellant submits that Section 2(22)(e) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') has to be construed strictly without any exception or consideration for the nature of the transaction between the assessee and the company in which the assessee holds a substantial share holding. Counsel for the appellant further submits that as it is admitted that the assessee obtained advances from the company in which he holds a substantial share hold....

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....         We have heard counsel for the parties and perused the impugned order.                A perusal of the order passed by the Assessing Officer reveals that the Assessing Officer made additions of advances made by M/s Nexo Products (India) to the assessee under Section 2(22)(e) of the Act on the premise that the assessee holds a substantial share holding in M/s Nexo Products (India). The CIT(Appeals) affirmed this addition. The Income Tax Appellate Tribunal after a detailed appraisal of Section 2(22)(e) of the Act held that Section 2(22)(e) of the Act comes into play only if the advance or loan paid by the company is for ind....

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....e provisions of Section 2(22)(e), could only mean such advance which carried with it an obligation of repayment. Likewise, the Hon'ble Mumbai High court in the case of Nagindass. M. Kapadia, similar view has been taken. The Hon'ble jurisdictional Bench of ITAT Chandigarh in the case of DCIT V Lakra Brothers reported in 106 TTJ 250, it has been held that the advance given during the ordinary course of business for business expediency could not be covered under the provisions of Section 2(22)(e) of the Act.                     From the above narrated facts, the business expediency is amply proved on record. It is also a fact that the agreement has not b....