2018 (4) TMI 1119

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Income Tax Act, 1961 without appreciating the fact and circumstances of the case and without considering the submissions made by the appellant during the course of proceedings. 2. That CIT(A) has erred in holding that Sec. 2(22)(e) of the Act does not differentiate between loans and advances received for business purposes or for any other purposes." 3. The brief facts of the case are that assessee has received advance of Rs. 10,37,000/- from M/s. Saamag Exim Pvt. Ltd. M/s. Saamag Exim Pvt. Ltd. has balance accumulated reserves of Rs. 17,77,791/-. Assessee has substantial shareholding of more than 10% or more in M/s. Saamag Exim Pvt. Ltd. (50%). Considering the above discussion, the amount of advance of Rs. 10,37,000/- received f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o participate in profits) holding not less than ten percent of voting power, or To a concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereinafter in this clause referred to as the said concern) or Any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits. But does not include It was submitted that the receipt of advances by the assessee are not transactions of pure lending and borrowing of monies. There is a purpose, albeit, business purpose/interest of M/s. Saamag Exim Pvt. Ltd. In this factual situation, i.e., lending and borrowing....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the other side of the money as loan: it generally carries an interest and there is an obligation of repayment. On the other hand, in its widest meaning the term 'advance' may or may not include lending. The word 'advance' if not found in the company of or in conjunction with a word 'loan' may or may not include the obligation of repayment. If it does, then it would be a loan. Thus, arises the conundrum as to what meaning one would attribute to the term 'advance'. The rule of construction to our minds which answers this conundrum is noscitur a sociis. The said rule had been explained both by the Privy Council in the case of Angus Robertson vs George Day [1879] 5 AC 63 by observing 'it is a legitimate rule of construction to construe words in....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... circumstances, the Tribunal came to the conclusion that since these transactions did not represent loans or advances, the provisions of section 2(22)(e) of the Act were not at all applicable." 12. We are of the view that the order passed by the Tribunal does not suffer from any error of law. It is quite clear that the assessee was a travel agency and the above two concerns that it had dealings with, that is, M/s. Holiday Resort (P) Ltd. and M/s. Ambassador Tours (I) (P) Ltd. were also in the tourism business. The assessee was involved in the booking of resorts for the customers of these companies and entered into normal business transactions as a part of its day to day business activities. The financial transactions cannot in any circum....