TaxTMI 
TaxTMI 
2016 (10) TMI 1126
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....y were heard together and are being disposed of by this common order for the sake of convenience. 3. The common grievance of the revenue in both these appeals relates to the deletion of the addition made u/s. 2(22)(e) of the Act despite the fact that the assessee company had 22.3% share capital of SDBPL and had also availed loan along with several financial transaction with the said company during the year. 4. During the course of the assessment proceedings, the A.O. noticed that the assessee is holding substantial interest in Schutz Dishman Biotech Ltd. (SDBPL). The A.O. further found that the assessee company holds 22.3% share in SDBPL. While scrutinizing the statement of accounts, the A.O. found that the assessee has taken loan from SD....
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....uld not attract the provisions of section 2(22)(e) of the act. And accordingly there would not be any obligation to deduct tax under section 194 and therefore the assessee cannot be treated as the assessee in default within the meaning of section 201(1) of IT act. The relevant extract of the said appeal order in para-six is quoted below- "There is large number of debit and credit transactions. Meaning thereby, the appellant has given and received funds as and when required to and from its associate concern. It is not on account whereby loans and advances have been given to the associate concern. It is on account payments in the nature of current adjustment accommodation account wherein there is a movement of funds both ways, on the basis.....
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....nsactions also in these accounts. The movement of funds was not for any period but was frequent and in both ways. Respectfully following the decision of Id CIJ (appeal) in the case of associate concern holding that transactions are not in the nature of loan and also decisions of jurisdictional ITAJ relied upon by the appellant, the addition on account of deemed dividend cannot survive in this year." Facts relating to the financial transactions with SDBPL are identical to the aforesaid assessment year in which the issue is decided in favour of the appellant. In view of this, by following the appeal order in assessment year 2006-07, addition on account of deemed dividend in respect of financial transactions with SDBPL made by the assessing ....