Transactions of receipt and payment on the same date cannot be treated as Deemed dividend u/s 2(22)(e)

Trade and commercial transactions are not covered in the definition of ‘loans and advances’ on which section 2(22)(e)  can be applied. When the company got back its funds on the same day, it could not fall into the definition of the deemed dividend.

M/s. N (P) Ltd. received Rs. 1 crore from M/s. S Ltd. and M/s. Northern Strips (P) Ltd. had advances an amount of Rs. 3 lacs to M/s. A Ltd.  Assessee was holding 48% of shares in N (P) Ltd. and further 20% shares in M/s. S Ltd. was holding 99% shares of M/s. A Ltd. and assessee held 0.05% shares of M/s. Allied Poles India Ltd. Therefore, AO held that by virtue of holding in M/s. S Ltd., the assessee holds substantial interest in Allied Poles India Ltd. and therefore, the provisions of section 2(22)(e) were applicable in the hands of the assessee. Assessee’s case was that there were transactions of receipt and payment on the same date itself by both the parties and by merely citing the provisions of section 2(22)(e) AO had attempted to tax income in the hands of assessee as deemed dividend.

 Held: Trade and commercial transactions are not covered in the definition of ‘loans and advances’ on which section 2(22)(e)  can be applied. When the company got back its funds on the same day, it could not fall into the definition of the deemed dividend.

Decision: In assessee’s favour.

Relied: CIT v. Pravin Bhimsi Chheda ITA No. 50 of 2012, dt. 17-6-2014.

IN THE ITAT, DELHI BENCH

H.S. SIDHU, J.M. & PRASHANT MAHARISHI, A.M.

ACIT v. Seema Devi Bansal

ITA No. 6462/DEL/2014

18 July, 2018

Department by: K. Tewari, Sr. Departmental Representative

Assessee by: Ved Jain, Advocate

H.S. Sidhu, J.M.

Revenue has filed this appeal against the Order, dt. 1-9-2014 for assessment year 2010-11 of the learned Commissioner (Appeals)-I, New Delhi relevant to assessment year 2010-11.

2. The Revenue has raised the following grounds :–

“(i) The order of learned Commissioner (Appeals) is not correct in law and facts.

(ii) On the facts and circumstances of the case the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 1,03,00,000 made by assessing officer on account of deemed dividend under section 2(22)(e) of the Income Tax Act, 1961.

(iii) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.

3. The brief facts of the case are that return declaring income of Rs. 7,19,410 was filed on 30-7-2010. The return was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act). The original assessment in this case was completed under section 143(3) of the Act on 14-11-2012 at returned income at Rs. 7,19,410. Notice under section 148 of the Act was issued on 24-1-2013, after recording reasons and objections were filed by the assessee were also disposed of vide Order, dt. 17-2-2013. Notice under section 142(1) of the Act alongwith questionnaire was issued on 20-12-2013. In response to the same, the Authorised Representative of the assessee attended the proceedings from time to time and filed the necessary details/clarifications. The assessing officer reassessed the income of the assessee Rs. 1,10,19,412 after making addition of Rs. 1,03,00,000 as deemed dividend under section 2(22)(e) of the Act vide his Order, dt. 11-3-2014 passed under section 148 of the Act. Against the reassessment Order, dt. 11-3-2014, the assessee appealed before the learned Commissioner (Appeals), who vide his impugned Order, dt. 1-9-2014 deleted the addition under section 2(22)(e) of the Act on the ground that the said amount was advanced for the business purposes and hence a commercial transaction not covered within the meaning of deemed dividend under section 2(22)(e) of the Act.

4. Aggrieved with the learned Commissioner (Appeals)’s order, the Revenue is in appeal and assessee has filed Cross Objection.

5. Learned Departmental Representative relied upon the order of the assessing officer and reiterated the contentions raised in the grounds of appeal. In support of his contention, he filed the Written Submission, which read as under :–

“Sub: Written Submission in the above case-reg.

In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to deemed dividend under section 2(22)(e) of Income Tax Act:–

1. Miss P. Sarada v. CIT (1998) 229 ITR 444 (SC) : 1998 TaxPub(DT) 1048 (SC)(where Hon’ble Supreme Court held that advances made by company to assessee would have to be treated as deemed dividends paid on dates when withdrawals were allowed to be made and subsequent adjustment of account made on very last day of accounting year would not alter position that assessee received notional dividends on various dates.

CIT v. Miss P. Sarada (1998) 229 ITR 444 (SC) : 1998 TaxPub(DT) 1048 (SC)where Hon’ble Madras High Court held that Amount of impugned excess withdrawals, even though adjusted against credit balance before close of year, was assessable as deemed dividend in assessee’s hands in terms of section 2(22)(e)

2. Gopal & Sons (HUF) v. CIT (2017) 391 ITR 1 (SC) : 2017 TaxPub(DT) 68 (SC)

where Hon’ble Supreme Court held that even if HUF is not a registered shareholder in lending company, advances/loans received by HUF is taxable as deemed dividend under section 2(22)(e) if Karta-shareholder has substantial interest in HUF.

3. CIT v. Mukundrav K. Shah (2007) 290 ITR 433 (SC) : 2007 TaxPub(DT) 1150 (SC)

A search conducted at assessee’s premises led to seizure of a diary, which contained purchasing of nine per cent RBI relief bonds by assessee from funds received from two firms ‘B’ and ‘C’ in which he was a partner. Tribunal after examination of cash flow statement held that two firms were used as conduits by assessee; that ‘A’ had made payments to ‘B’ and ‘C’ for benefit of assessee, which enabled him to buy nine per cent RBI Relief Bonds and upheld finding of assessing officer. Upheld addition under section 2(22(e) of Income Tax Act.

4. Puneet Bhaqat v. ITO (2016) 157 ITD 353 (Del-Trib) : 2016 TaxPub(DT) 1180 (Del-Trib)

Where Hon’ble ITAT Delhi held that deemed dividend-Loans and advances to share holders-Loans received by the company would be treated as deemed dividend in hands of P and S in proportion to their shareholdings.

5. Addl CIT v. Shri Chandrakant V Gosalia (ITA No. 104/Mum/2011, dt. 3-6-2015)

where Hon’ble ITAT Delhi held that mere repayment of money borrowed by the shareholder will not escape him from the provisions of section 2(22)(e), and thus, it can be treated as deemed dividend.

6. Sunil Kapoor v. CIT (2015) 235 Taxman 279 (Mad-HC) : 2015 TaxPub(DT) 2769 (Mad-HC)

where Hon’ble Madras High Court held that where assessee, holding 60 per cent shares of a company, took personal loan from accumulated surplus of said company, said amount would be treated as deemed dividend under section 2(22)(e), after reducing therefrom amount repaid by assessee during year

7. Shashi Pal Aqarwal v. CIT (2015) 229 Taxman 307 (Allahabad) : (2015) 370 ITR 720 (All-HC) : 2015 TaxPub(DT) 529 (All-HC)

where Hon’ble Allahabad High Court held that where lending of money was not part of business of lending companies, loan/advance given to assessee-shareholder would be treated as deemed dividend under section 2(22)(e)

8. Star Chemicals (P) Ltd. v. CIT (1993) 203 ITR 11 (Bom-HC) : 1993 TaxPub(DT) 1223 (Bom-HC)

where Hon’ble Bombay High Court held that provisions of section 2(22)(e) would apply to a company which had taken loan from its subsidiary.

9. CIT v. Sunil Chopra (2011) 201 Taxman 316 (Del-HC) : (2011) 242 CTR 498 (Del-HC) : 2011 TaxPub(DT) 1675 (Del-HC)

Tribunal deleted addition accepting assessee’s contention that said advances were received against sale of property under terms of agreement dated 18-9-2003 and, therefore, money was taken by assessee in line of his business of real estate. Hon’ble Delhi High Court held that there was great perversity and infirmity in findings and observations of Tribunal and, therefore, impugned order was to be set aside.

10. M. Amareswara Rao v. Dv. CIT (I.T.A. No. 308 to 310/Vizag/2011, dt. 8-1-2016)

where Hon’ble ITAT Vishakhapatnam held that deemed dividend-Loan-beneficial ownership of more than 10 per cent shares in a closely held company-Assessable as deemed dividend.”

6. On the contrary, learned Authorised Representative of the assessee relied upon the order of the learned Commissioner (Appeals) and filed the written synopsis, which read as under :–

“1. This is an appeal filed by the department against the Order, dt. 1-9-2014 passed by the learned Commissioner (Appeals), whereby the learned Commissioner (Appeals) has deleted the addition of Rs. 1,03,00,000 made by the assessing officer on account of deemed dividend under section 2(22)(e) of the Income Tax Act, 1961.

2. Assessee filed her return of income for the year under consideration on 30-7-2010, declaring an income of Rs. 7,19,410. The said return was assessed under section 143(3) of the Act and was completed on 14-11-2012

3. Thereafter, after recording reasons, the case of the assessee was reopened and notice under section 148 of the Act was issued to the assessee on 24-1-2013. Objection filed by the assessee was also disposed by a written Order, dt. 17-2-2013. The assessing officer reassessed the income of the assessee at Rs. 1,10,19,412,after making an addition of Rs. 1,03,00,000 under section 2(22)(e) of the Act. The assessing officer has discussed this issue at Page 2 onwards of the assessment order.

4. Pursuant to the order passed by the learned assessing officer, the assessee went into appeal before the Commissioner (Appeals)-I. The Commissioner (Appeals) allowed the appeal of the assessee vide Order, dt. 1-9-2014 and deleted the addition made by the assessing officer under section 2(22)(e) of the Act. He has deleted the addition on the grounds that the said amount was advanced for the business purposes and hence a commercial transaction not covered within the meaning of deemed dividend under section 2(22)(e) of the Act.

5. It was explained to the assessing officer that the companies have received the money for its business purposes and hence a commercial transaction. The assessing officer has quoted the explanation at Pg 10 para (g) and Pg 12 para (b) where records as under :–

Page 10

“(g) To Sum up M/s. Super Plastic Coats Ltd. had advanced (advance against Business transaction and Material amounting to Rs. 1.0 Crores) to Northern Strips Ltd. and M/s. Northern Strips Ltd. had advanced against business transactions amounting to Rs. 3.0 Lacs to Allied Poles India Ltd. and not the assessee whose case is supposed to be reassessed under section 147 read with section 148 of the Act. It may be placed on record that section 2(22)(e) of the Act provided the payment to the assessee who is registered Share holder not in the case of assessee who had not received the payment.”

Page 12

(b) It may be placed on record that M/s. Super Pastic Coats Private Ltd. and M/s. Northern Strips Ltd. are engaged in similar trade and activities. It had already been stated during assessment proceedings of both the Companies (the assessment proceedings in both the company case have been completed under section 143(3) of the Act and under your charge) that these amount was given as advance against material. The same fact was also confirmed and certified by the Statutory Auditors in their Report that the company had given advance as against material not Loan to companies in which directors are interested. The Company M/s. Northern Strips Ltd. is providing Goods transport services to M/s. Super Plastic Coats Private Ltd. “

The above explanation of the assessee has not been controverted by the assessing officer as in evident from the assessment order where assessing officer after quoting submission of the assessee has just referred to percentage of holding and various case laws from Pg 21 to 41.

Thus the fact that amount was for a commercial transaction has not been rebutted.

6. In this regard, the CBDT has also recently issued a Circular No. 19/2017, dt. 12-6-2017, whereby it has been clarified by the CBDT that the advances which are in the nature of commercial transactions would not fall within the ambit of the word ‘advance’ under section 2(22)(e) of the Act. The relevant extract of the Circular is reproduced hereunder for the sake of ready reference :–

“3. In view of the above it is, a settled position that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word ‘advance’ in section 2(22)(e) of the Act. Accordingly, henceforth, appeals may not be filed on this ground by Officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon.”

7. Therefore, in view of the facts of assessee’s case, the Circular issued recently by the CBDT in this regard, the addition made by the assessing officer is liable to be deleted.

8. Further, reliance is placed on the judgment of Hon’ble Jurisdictional High Court in the case of CIT v. Raj Kumar (2009) 318 ITR 462, where by the Hon’ble Court has held as under :–

“If the history and purpose with which the said provision was brought on to the statute book is kept in mind, it is clear that sub-clause (e) of section 2(22) which is pari materiawith clause (e) of section 2(6A) of the Indian Income Tax Act, 1922, plainly seeks to bring within the tax net accumulated profits which are distributed by closely held companies to its shareholders in the form of loans. The purpose being that persons, who manage such closely held companies, should not arrange their affairs in a manner that they assist the shareholders in avoiding the payment of taxes by having these companies pay or distribute, what would legitimately be dividend in the hands of the shareholders, money in the form of an advance or loan. (Para 10.4). Keeping the aforesaid rule in mind, the word ‘advance’, which appears in the company of the word ‘loan’, can only mean such advance which carries with it an obligation of repayment. Trade advance, which is in the nature of money transacted to give effect to a commercial transaction, would not fall within the ambit of the provision of section 2(22)(e). This interpretation would alloy the rule of purposive construction with noscitur a sociis.(Para 10.9)”

9. Further reliance in this regard is placed on the following judgments :–

–Delhi High Court in the case of CIT v. Sunil Sethi in ITA No. 569/2009, dt. 3-2-2010

After hearing the counsel for the appellant/revenue, we are unable to agree with her submission that the Tribunal had erred in deleting the said addition. This is so because we are of the view that the finding was one which was purely of fact. The Tribunal observed that the only basis on which the provisions of section 2(22)(e) were contested by the assessee was that the amount of Rs. 30 lakhs, which had been given by the company to the assessee, who was a director in the said company, was neither a loan or an advance and or was it for individual benefit of the said assessee. The Tribunal has accepted the factual position that the said sum of Rs. 30 lakhs was given to the assessee for the purposes of making advance in respect of certain land dealings which were proposed to be entered into by the company through the assessee. The Tribunal noted that no material had been brought on record to suggest that what was explained by the assessee was incorrect. The Tribunal also noted the fact that the said amount of Rs. 30 lakhs had been given to the assessee on 27-6-2003 and as the deal did not materialize, the same was returned by the assessee shortly thereafter, i.e., on 4-7-2003. In view of the clear finding returned by the Tribunal that since the amount of Rs. 30 lakhs which was given to the assessee was in the nature of imperest payment, the same could not be treated as deemed dividend under section 2(22)(e) of the said Act, we see no reason to interfere with the impugned order.

–Delhi High Court in the case of CIT v. Creative Dyeing & Printing (P) Ltd. (2009) 318 ITR 476 (Del-HC) : 2009 TaxPub(DT) 2060 (Del-HC)

Deemed Dividend–nature of advance payment for a commercial purpose to the assessee-company by its sister concern–held that–, the word ‘advance’ has to be read in conjunction with the word ‘loan’–Usually attributes of a loan are that it involves positive act of lending coupled with acceptance by 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–that the amounts advanced for business transaction between the parties was not such to fall within the definition of deemed dividend under section 2(22)(e).

–Delhi High Court in the case of CIT v. Arvind Kumar Jain in ITA No. 589 of 2011, dt. 30-9-2011

Deemed Dividend–Trading transaction–Treatment of unsecured loan given to shareholder of company (holding 50% of shares) as deemed Dividend–Held that:–the amount was not in the nature of ‘advance’ or ‘loan’ and in fact there was a business transaction between the assessee and company and the amount reflected running business relationship and there was a running account maintained by the assessee showing those transactions as in the books of accounts, though the amount was shown as “unsecured loan”.–It is trite law that mere nomenclature of entry in the books of accounts is not determinative of the true nature of transaction. See CIT v. India Discount Co. Ltd. in (I.T.A. No. 6462/DEL/2014, dt. 18-7-2018)

–the payment made were the result of trading transaction between the parties and the amount was not given by way of loan or advance.–Decided against the revenue.

–ITAT Agra Bench in the case of Shri Krishan Murari Lal Agarwal v. Dy. CIT in (ITA No. 295/Agra/ 2012, dt. 5-7-2013)

Deemed dividend under section 2(22)(e)–Disallowance under section 56 read with section 2(22)(e)–Commercial transaction versus loan or advances–Held that:–sub-clause (e) of section 2(22) lays down that dividend includes any payment by a closely held company of any sum by way of advance or loan to a shareholder who comes in the category described in that sub-clause or to a concern in which such shareholder has a substantial interest. Dividend under the sub-clause also includes any payment by such company on behalf or for the individual benefit, of any such shareholder. Deemed dividend under this sub-clause would be to the extent to the company in either case possesses accumulated profits. The shareholder referred to here should be beneficial owner of shares holding not less than 10% of the voting power but those shares should not be shares entitled to a fixed rate of dividend with or without a right to participate in profits For the purpose of Income Tax, one is to examine the nature of transaction in accordance with law. In the light of the facts, the same is to be decided in accordance with law. In the case under consideration as stated above, the assessee has demonstrated that the amount was received for the purpose of commercial transaction. As regards, the second objection, which is agreement and MOU as afterthought, in this regard, we are of the view that these documents are already on record and the Revenue did not point out any contrary material to these documents. Therefore, merely by stating that this is after thought, such argument of the revenue without supporting material/evidence is not sustainable, therefore, the same is rejected–amount of Rs. 1,00,00,000 received to the assessee is on account of commercial transaction, therefore, the section 2(22) (e) is not applicable–Decided in favour of assessee.

10. Without prejudice to the above, the Commissioner (Appeals) has given a finding that the amounts returned back within a days’ time & and no benefit as such accrued to the payee. In such circumstances also no addition of deemed dividend under section 2(22)(e) can be made even in the hands of the recipient.

11. Therefore, in view of the facts of assessee’s case, the Circular issued recently by the CBDT in this regard and the various judicial pronouncements, the addition made by the assessing officer which was deleted by the learned Commissioner (Appeals) against which the department is in appeal is liable to be dismissed.”

7. We have heard both the parties and perused the records, especially the impugned order passed by the revenue authorities as well as the written submissions/synopsis and the case laws relied upon from both sides. The brief facts of the case is that M/s. Northern Strips (P) Ltd. received Rs. 1 Crore from M/s. Super Plastic Coats Ltd. and M/s. Northern Strips (P) Ltd. had advance an amount of Rs. 3 lacs to M/s. Allied Poles India Ltd. during the assessment year. The Assessee is holding 47.86% of shares in Northern Strips (P) Ltd. and further 29.79% shares in M/s. Super Plastic Coats Ltd. M/s. Super Plastic Coats Ltd. is holding 99.40% shares of M/s. Allied Poles India Ltd. and Assessee holds 0.05% shares of M/s. Allied Poles India Ltd. Therefore, the assessing officer has held that by virtue of holding in M/s. Super Plastic Coats Ltd., the assessee holds substantial interest in Allied Poles India Ltd. and therefore, the provisions of section 2(22)(e) of the Act are applicable in the hands of the assessee of the loan of Rs. 1 Crore received by M/s. Northern Strips (P) Ltd. and Rs. 3 lacs by M/s. Allied Poles India Ltd. Looking at the brief nature of transaction, it is important to note that the amount of Rs. 1 Crore was received by M/s. Northern Strips (P) Ltd. from M/s. Super Plastic Coats Ltd. in its current account with Karnataka Bank Ltd. on 19-10-2009 and on the same date M/s. Northern Strips (P) Ltd. paid Rs. 1 Crore to M/s. Super Plastic Coats Ltd. This fact is evident by the amount credited in the bank account of M/s. Super Plastic Coats Ltd. on 20-10-2009. Therefore, it is apparent to note that on the same date there is a transaction of Rs. 1 Crore received from M/s. Northern Strips (P) Ltd. and on the same date M/s. Northern Strips (P) Ltd. paid Rs. 1 Crore to M/s. Super Plastic Coats Ltd. Therefore, the apparent fact shows that during the day itself i.e. on 19-10-2009 there is an exchange of cheques between M/s. Super Plastic Coats Ltd. as well as M/s. Northern Strips (P) Ltd. These cheques have infact been cleared in the bank account of respective parties. This fact has not been disputed by the Revenue. Therefore, it is not clear that whether M/s. Northern Strips (P) Ltd. paid the sum first to M/s. Super Plastic Coats Ltd. or M/s. Super Plastic Coats Ltd. paid the above sum first to M/s. Northern Strips (P) Ltd. In the books of M/s. Super Plastic Coats Ltd. there is a transaction of debit and credit and similarly there is a transaction of debit and credit on the same date in the case of M/s. Northern Strips (P) Ltd. Therefore, in the present case merely citing the provisions of setion 2(22)(e) of the Act, the assessing officer has attempted to tax the income in hands of the assessee as deemed dividend. Similarly, M/s. Allied Poles India Ltd. received Rs. 3 lacs on 13-8-2009 from M/s. Northern Strips (P) Ltd. by cheque of Karnataka Bank Ltd. and on the same date M/s. Allied Poles India Ltd. paid to M/s. Northern Strips (P) Ltd. the same amount which stands duly credited in the bank account of M/s. Northern Strips (P) Ltd. on 13-8-2009. In view of this it is apparent that there are transaction of receipt and payment on the same date itself by both the parties. Issue is whether such transaction is covered in the definition of deemed dividend in the hands of the assessee under section 2(22)(e) of the Act or not. The issue is squarely covered in favour of the Assessee by the decision of the Coordinate Bench in the case of Pravin Bhimsi Chheda Shivsadan v. DCIT 141 TTJ 58 against which the Hon’ble Bombay High Court in the case of CIT v. Pravin Bhimsi Chheda in (IT Appeal No. 50 of 2012, dt. 17-6-2014) has not admitted the appeal of the Revenue holding that when the Company got back its funds on the same day, it cannot fall into the definition of the deemed dividend. Therefore, the issue is squarely covered in favour of the Assessee by the above decision of the Hon’ble Bombay High Court confirming the views of the Coordinate Bench.

7.1 Learned Departmental Representative has heavily relied on the decision of Miss P. Sarada v. CIT 144 CTR 209 (SC) : 1998 TaxPub(DT) 1048 (SC). We have carefully gone through that decision and find that in that particular case the Hon’ble Supreme Court has held that when the loans are given to the parties on various dates and subsequently when adjustment of accounts was made on the last day of the accounting year would not alter the position that assessee received notional dividends on various dates and therefore, the Hon’ble Supreme Court held that the same is covered under the definition of deemed dividend. In that particular case the assessee has withdrawn a sum of Rs. 93,027 from 3-7-1972 to 22-3-1973. The letter dated 3-4-1972 was relied upon written by another party that the above amount given as a loan to that assessee may be debited to the extent of Rs. 1 lakh from his account and consequently there was no outstanding of the concerned assessee on the last day of the accounting year. The Hon’ble Supreme Court held that on each date of the withdrawal there was a debit balance in the account of the assessee which was ultimately squared up at the end of the accounting year and therefore, it cannot be said that advances were not given to the assessee. In the present case the transactions of Rs. 1 Crore and another transaction of Rs. 3 lacs were squared up on the same date. There was no outstanding balance of either party in the books of either party at the end of the day. In view of this the decision in the case of Miss P. Sarada v. CIT (supra) does not apply to the facts of the present case. The second decision relied upon in the case of Gopal and Sons (HUF) v. CIT 391 ITR 1 (SC) : 2017 TaxPub(DT) 68 (SC) of the Hon’ble Supreme Court, does not deal with the issue of taxability of the loan, but deals with the controversy of tax in the hands of HUF who is not a registered share holder. There is no such dispute in the present case before us. The decision of the Hon’ble Supreme Court in the case of CIT v. Mukundray K. Shah (2007) 290 ITR 433 (SC) also do not apply to the facts of the case. Here there is no allegation of any conduit introduced by the assessee. The other decisions relied upon also deal with other controversy which are not before us. In view of this the decision relied upon by the learned Departmental Representative are not applicable to the present case.

7.2 Further the claim of the assessee is that the transaction entered into by the two Companies are the business transactions. It is stated that both the parties are engaged in similar trade and activities and the above amount was given as advance against business transaction. The above facts were also confirmed by the Audited Accounts by the parties and M/s. Northern Strips (P) Ltd. is also providing goods transport services to M/s. Super Plastic Coats Ltd. The assessing officer did not controvert the above submissions of the assessee by making the further enquiry. He has merely rejected the above claim of the assessee without further adducing any evidence. The CBDT in its Circular No. 19 of 2017 has clarified that trade and commercial transactions are not covered in the definition of loans and advances on which provision of section 2(22)(e) of the Act can be applied. In view of this, respectfully following the Hon’ble Bombay High Court decision in the case of CIT v. Pravin Bhimsi Chheda (supra) and in view of the CBDT’s Circular (supra), we are of the view that learned Commissioner (Appeals) has dealt with the issue correctly and no interference is required, therefore, we confirm the finding of the learned Commissioner (Appeals) on the issue in dispute and reject the ground raised by the Revenue.

8. In the result, the Revenue’s appeal stands dismissed.