The ITO, Ward-8(1), Ahmedabad V. Seasons Hotels Pvt.Ltd., Ahmedabad

ITA 2502/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6266 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 11-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Assessee Lawyers: P D SHAH
• Keywords: Deemed dividend; Tax effect
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : AH MEDABAD ( BEFORE HONBLE SHRI T.K.SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) I.T.A.NO. 2502/AHD./2010 : ASSESSMENT YEAR 200 4-05 I.T.A.NO. 2503/AHD./2010 : ASSESSMENT YEAR 2 005-06 I.T.A.NO. 2504/AHD./2010 : ASSESSMENT YEAR 2 006-07 I.T.O., WARD-8(1), AHMEDABAD VS- SEASONS HOTELS PVT. LTD., AHMEDABAD (PAN : AAFCS 7065K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.P.TALATI, D.R. RESPONDENT BY: SHRI P.D.SHAH, A.R. O R D E R PER BENCH : THESE THREE APPEALS ARE FILED BY THE REVENUE AGAINS T THREE SEPARATE ORDERS ALL DATED 24.05.2010 OF LD. CIT(A)-XIV, AHMEDABAD DELET ING THE ADDITIONS OF RS.66,27,226/-, RS.6,47,631/- AND RS.13,77,710/- MA DE BY THE AO ON ACCOUNT OF DEEMED DIVIDEND INCOME UNDER SECTION 2(22)(E) OF TH E I.T. ACT, 1961 FOR THE ASSESSMENT YEARS 2004-2005, 2005-06 AND 2006-07 RES PECTIVELY. 2. ALL THE AFORESAID APPEALS INVOLVE ONLY ONE COMMO N ISSUE. THESE WERE HEARD ON THE SAME DAY AND ARGUED BY COMMON REPRESENTATIVE, T HEREFORE, THESE ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS RELATING TO THE CONTROVERSY INVOLVED I N THE ASSESSMENT YEAR 2004-05 ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED LOANS AND ADVANCES AMOUNTING TO RS.1,2 5,85,758/- FROM INDER HOTEL PVT. LTD. AND SHRI TAHILRAM PARIMAL AWTANI AND SHRI PRAT APRAI LACHHJMANDAS AWTANI WHO ARE THE COMMON DIRECTORS IN BOTH THE COMPANIES, I.E . INDER HOTELS PVT. LTD. AND SEASONS HOTEL PVT. LTD., HAVING SUBSTANTIAL INTERES T WITHIN THE MEANING OF THE PROVISIONS OF SEC. 2(22)(E) OF THE I.T. ACT., 1961. THE AO, VIDE HIS LETTER DATED 16.11.2009, ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY DIVIDEND INCOME OF ITA NO.2502 TO 2504/AHD/2010 2 RS.66,27,226/- SHOULD NOT BE ADDED IN ITS TOTAL INC OME. IN RESPONSE TO THIS, THE ASSESSEE, VIDE HIS REPLY DATED 27.11.2009, STATED A S UNDER: 1 ) INDER HOTELS PVT. LTD. HAS GIVEN INTER CORPORATE LOANS AND HAS ALSO MADE SUBSTANTIAL INVESTMENT AS SHAREHOLDER IN SEASONS HO TELS PVT. LTD., APART FROM HOTEL BUSINESS, INDER HOTELS P. LTD. IS ALSO ENGAGE D IN LENDING OF LOANS/INVESTMENTS. 2) DURING 2003-04 A SUM OF RS. 12492000/- WAS GIVEN BY INDER HOTELS P. LTD. TO SEASONS HOTELS P. LTD. ON WHICH INTEREST OF RS. 117934/- WAS CREDITED BY SEASONS HOTELS PVT. LTD. AND RS. 24176/- TDS WAS DE DUCTED. HENCE CLOSING BALANCE AS ON 31-3-04 COMES TO RS. 12585758. 3) SINCE IT IS INTER CORPORATE DEPOSIT IT SHOULD NO T BE TREATED AS DIVIDEND. 4) SEASONS HOTELS PVT. LTD. IS NOT A SHAREHOLDER IN M/S. INDER HOTELS PVT. LTD. 5) FOLLOWING JUDGMENT HAS BEEN GIVEN WHICH CLEARLY STATE THAT INTER CORPORATE LOAN SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND. ___________________________________________________ ______________ A CASE BOMBAY OIL INDUSTRIES LTD. VS. DY. CIT (20 09) 28 SOT 383 (MUM) JUDGMENT INTER CORPORATE DEPOSITS (ICDS) ARE DIFFE RENT FROM LOANS OR ADVANCES AND WOULD NOT COME WITHIN PURVIEW OF DEEMED DIVIDEN D U/S. 2(22)(E) B. CASE BHARAT C. GANDHI VS. ACIT (2009) 178 TAXM AN 83 (MUM) A.Y.2002-03 JUDGMENT ASSESSEE PROCURED LOAN FROM A COMPANY IN W HICH HE WAS DIRECTOR AND WAS HOLDING 50% EQUITY SHARES. THE SAID COMPANY WAS IN BUSINESS OF LENDING OF MONEY, AND ON AMOUNT GIVEN AS LOAN TO AS SESSEE IT CHARGED INTEREST. HELD, THAT SECTION 2(22)(E) CAN NOT BE ATTRACTED AS IT WAS A BUSINESS TRANSACTION OF THE COMPANY. C. CASE CIT VS. RAJKUMAR (2009) 23 DTR 304 (DE;) (A.Y. 1996-97) JUDGMENT TRADE ADVANCE WHICH ARE IN THE NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO COMMERCIAL TRANSACTION DO NOT FALL WITHIN THE AMBIT OF PROVISIONS OF SEC. 2(22)(E). CASE ITO V. USHA COMMERCIAL (P) LTD. (2009) 30 SOT 37 (KOL) (URO) JUDGMENT THE TRIBUNAL ACCEPTED ASSESSEE CONTENTION THAT BOTH THE COMPANIES WERE NON-BANKING COMPANIES AND THE AMOUNTS WERE GIV EN IN THE ORDINARY COURSE OF BUSINESS HENCE THE RECEIPT OF LO ANS AS DEEMED DIVIDEND CANNOT BE TAXED. CASE CIT VS. RAJKUMAR (2009)23 DTR 304 (2009) 181 TAXMAN 155 (DEL.) JUDGMENT WORD 'ADVANCE' WHICH APPEARS IN THE COMPAN Y OF THE WORD 'LOAN' IN ITA NO.2502 TO 2504/AHD/2010 3 SECTION 2(22)(E) COULD ONLY MEAN SUCH ADVANCES WHIC H CARRIES WITH IT AN OBLIGATION OF REPAYMENT. TRADE ADVANCES WHICH IS IN NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTI ON DOES NOT FALL WITHIN AMBIT OF PROVISIONS OF SECTION 2(22)(E). THE PAID UP SHARE CAPITAL OF M/S. SEASONS HOTELS PV T. LTD. AS ON 31-3-2004 WAS RS. 1 LAC DIVIDED INTO 10000 EQUITY SHARE OF RS. 10 EACH OUT OF WHICH 5000 SHARES OF RS. 10 EACH AGGREGATING TO RS.50000 EACH ARE HELD BY SHRI TAHILRAM P. AWTANI AND SHRI PRATAPRAI L. AWTANI. DURING THE YEAR COMPANY HAD NOT DONE ANY BUSINESS. MERELY BY HOLDING SHARE OF RS. 50000 ONE CANNOT JUD GE THAT YOU ARE A PERSON HAVING 50% SHARE CAPITAL OF THE COMPANY, WHICH WAS AT ITS INITIAL STAGE. HENCE CONSIDERING ALL THE ABOVE FACTS A SUM OF RS. 662722 6/- SHOULD NOT BE ADDED IN OUR TOTAL INCOME AS PER PROVISIONS OF SEC. 2(22)(E) OF THE I.T. ACT. THE ASSESSE HAS ALSO SUBMITTED ACCOUNT OF INDER HOT ELS P. LTD., IN THE BOOKS OF M/S. SEASONS HOTELS PVT. LTD FOR THE PERIOD 1-4-200 3 TO 31-3-2004, WHICH ARE INCORPORATED IN THE BODY OF ASST. ORDER. 3.1 THE AO HAS NOT ACCEPTED THE AFORESAID SUBMISSIO NS AND ADDED AN AMOUNT OF RS.66,27,226/- AS DEEMED DIVIDEND INCOME OF THE ASS ESSEE UNDER SECTION 2(22)(E) OF THE I.T. ACT, 1961. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE CO NTENDED THAT LENDER COMPANIES WERE HAVING SURPLUS FUNDS WITH THEM. IN ORDER TO EA RN INTEREST ON THE SURPLUS FUND, THE LENDER COMPANIES HAVE GIVEN INTER CORPORATE DEPOSIT TO THE ASSESSEE. THE ASSESSEE HAD PAID INTEREST ON THE INTER CORPORATE DEPOSIT TA KEN FROM THE LENDER COMPANIES ON WHICH TAX DEDUCTED AT SOURCE HAVE BEEN DEDUCTED AT SOURCE. SINCE THE AMOUNT RECEIVED IS INTER CORPORATE DEPOSIT, IT CANNOT BE TERMED AS DIVIDEND UNDER SECTION 2(22)(E) OF THE I.T. ACT. IN SUPPORT OF THIS, RELIANCE WAS PLAC ED ON THE DECISION OF BOMBAY OIL INDUSTRIES LTD. VS- DCIT (2009) 28 SOT 383 (MUM.), WHEREIN IT HAS BEEN HELD THAT INTER CORPORATE DEPOSITS (ICDS) ARE DIFFERENT FROM LOANS OR ADVANCES AND WOULD NOT COME WITHIN PURVIEW OF DEEMED DIVIDEND. 4.1 THE ASSESSEE ALSO CONTENDED THAT IT IS IN THE P ROCESS OF SETTING UP OF THE HOTEL AT UDAIPUR AND HAS PROCURED LOAN FROM A COMPANY IN WHI CH THE DIRECTORS ARE COMMON AND ARE HOLDING 50% EQUITY SHARES OF THE ASSESSEE C OMPANY AND THE DIRECTORS HOLD ITA NO.2502 TO 2504/AHD/2010 4 MAJOR SHAREHOLDING OF LENDER COMPANY. THE LENDER CO MPANY IS IN THE BUSINESS OF HOTEL INDUSTRIES AND LENDING OF MONEY FOR HOTEL INDUSTRIE S, AND ACCORDINGLY THE AMOUNT WAS GIVEN TO THE ASSESSEE AND ON WHICH LENDER HAS CHARG ED INTEREST AND ACCORDINGLY IT IS BUSINESS EXPEDIENCIES. ACCORDINGLY, SECTION 2(22)(E ) OF THE ACT CANNOT BE ATTRACTED AS IT WAS A BUSINESS TRANSACTION OF THE COMPANY. IN TH IS REGARD RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS: (I) DCIT-VS- LAKRA BROTHERS (CHAND) (2007) 106 TTJ 250 (II) CIT-VS- RAJKUMAR (2009) 23 DTR 304 (DEL) (III) BHARAT C.GANDHI VS- ACIT (2009) 178 TAXMAN 8 3 (MUMBAI), WHEREIN IT HAS BEEN CONCLUDED THAT ASSESSEE PROCURED LOAN FROM A COMPANY IN WHICH HE HAS A DIRECTOR AND WAS HOLDING 50% EQUITY SHARES. T HE SAID COMPANY WAS IN BUSINESS OF LENDING OF MONEY, AND ON AMOUNT GIVEN A S LOAN TO ASSESSEE IT CHARGED INTEREST. HELD, THAT SECTION 2(22)(E) CANNO T BE ATTRACTED AS IT WAS A BUSINESS TRANSACTION OF THE COMPANY. 4.2 IT WAS ALSO CONTENDED THAT COMPANY DOES NOT HAV E BALANCE OF ACCUMULATED PROFIT AND LOSS ACCOUNT AND THE NET PROFIT FOR THE YEAR ENDED ON 31 ST MARCH 2004 IS RS. 5,92,739/- AND THE OPENING BALANCE OF PROFIT IS RS. 60,33,205/-,WHICH HAS BEEN FULLY UTILIZED IN THE BUSINESS OF THE LENDER COMPANY. THE LENDER COMPANY HAS ALSO BORROWING FROM BANK AND UNSECURED LOANS FROM PRIVAT E PARTIES OF RS. 1,01,03,413/-. IN VIEW OF THE SAID FACTS, IT CANNOT BE SAID THAT T HE LENDER COMPANY POSSESSES ACCUMULATED PROFIT AND THEREFORE SECTION 2(22)(E) O F THE ACT IS NOT APPLICABLE AND THE ADVANCE GIVEN BY THE LENDERS IS TO EARN INTEREST AN D FOR WHICH SECURITY OF THE LENDERS HAS BEEN SECURED. 4.3 FINALLY, IT WAS SUBMITTED THAT THE AO HAS NOT M ADE THE CASE OF TAX AVOIDANCE AND THEREFORE SECTION 2(22)(E) OF THE ACT IS NOT AP PLICABLE. IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF HON'BLE ITAT IN THE CASE OF SEAMIST PROPERTIES (P) LIMITED VS ITO 95 TTJ 201(MUM). 4.4 WITHOUT PREJUDICE TO ABOVE, IT WAS ALSO CONTEN DED BEFORE THE LD. CIT(A) THAT THE ASSESSEE IS NOT A REGISTERED SHAREHOLDER OF THE LEN DER COMPANY AND THEREFORE THE ITA NO.2502 TO 2504/AHD/2010 5 ADDITION MADE IN THE HANDS OF THE COMPANY IS BAD IN LAW. IN THIS REGARD THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENT: - CIT VS BHAUMIK COLOUR P. LTD (2009) 118 ITD 1 (MUM. ) (SB) , WHEREIN FINALLY IT HAS BEEN CONCLUDED AS UNDER:- 41. IN THE LIGHT OF THE ABOVE DISCUSSION, THE QUEST IONS REFERRED TO THE SPECIAL BENCH ARE ANSWERED AS FOLLOWS: ON THE FIRST QUESTION : DEEMED DIVIDEND CAN BE ASSE SSED ONLY IN THE HANDS OF A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY A ND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER. ON THE SECOND QUESTION:- THE EXPRESSION SHAREHOLDE R REFERRED TO IN S. 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AN D BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDER BUT NOT THE BENE FICIAL SHAREHOLDER THEN THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. SIMILARLY , IF A PERSON IS A BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN A LSO THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. CIT VS- HOTEL HILLTIP (2009) 313 ITR 116 (RAJ) AMOUNT RECEIVED FROM A COMPANY AS SECURITY BY ASSE SSEE FIRM. ASSESSEE FIRM IS NOT REGISTERED SHAREHOLDER, HENCE AMOUNT RECEIVE D AS SECURITY NOT ASSESSABLE AS DEEMED DIVIDEND IN HANDS OF ASSESSEE FIRM. 5. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, THE LD. CIT(A), IN THE IMPUGNED ORDER, DELETED THE ADDITION OF RS.66,27,226/- BY AC CEPTING THAT THESE TRANSACTIONS ARE IN THE NATURE OF INTER CORPORATE DEPOSITS (ICDS) AND E XTENDED BY THE LENDER TO THE ASSESSEE COMPANY FOR BUSINESS EXPEDIENCY AND, THERE FORE, IS OUT OF THE PURVIEW OF SECTION 2(22)(E) OF THE I.T. ACT., 1961. 5.1 FOR THE OTHER REMAINING TWO ASSESSMENT YEARS, T HE FACTS ARE IDENTICAL AND THE LD. CIT(A) VIRTUALLY, FOLLOWING HIS ORDER FOR THE ASSES SMENT YEAR 2004-05, DELETED THE ADDITIONS MADE FOR BOTH THE ASSESSMENT YEARS 2005-0 6 AND 2006-07. 6. AGGRIEVED, THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, SHRI S.P.TALATI APPEARED AND DREW OUR ATTENTION TO PARA 4.1 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS STATED THAT THE ASSESSEE HAS RECEIVED LOANS AND ADVANCES AMOUNTING TO ITA NO.2502 TO 2504/AHD/2010 6 RS.1,25,85,758/- FROM INDER HOTEL PVT. LTD. AND SHR I TAHILRAM PARIMAL AWTANI AND SHRI PRATAPRAI LACHHJMANDAS AWTANI, WHO ARE COMMON DIRECTORS IN BOTH THE COMPANIES, I.E. INDER HOTELS PVT. LTD. AND SEASONS HOTEL PVT. LTD., HAVING SUBSTANTIAL INTEREST WITHIN THE MEANING OF THE PROVISIONS OF SE CTION 2(22)(E) OF THE I.T. ACT., 1961. IN THESE CIRCUMSTANCES, THE AO RIGHTLY HELD THAT IN COME BY WAY OF DIVIDEND OF RS.66,27,226/- TO THE EXTENT OF RESERVE AND SURPLUS OF INDER HOTELS PVT. LTD. AS ON 31.03.2004 IS DEEMED DIVIDEND UNDER SECTION 2(22)(E ) WHICH IS TAXABLE UNDER SECTION 56 OF THE I.T. ACT, 1961. THE LD. D.R. FURTHER SUBM ITTED THAT THESE TRANSACTIONS ARE NOT IN THE NATURE OF INTER-CORPORATE DEPOSITS (ICDS) EX TENDED BY THE LENDER TO THE ASSESSEE FOR BUSINESS EXPEDIENCY AND THEREFORE WITHIN THE PU RVIEW OF SECTION 2(22)(E) OF THE I.T. ACT, 1961. HE ACCORDINGLY CONTENDED THAT THE O RDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO TAXING THE DIVIDEND INCOME OF RS .66,27,226/- UNDER SECTION 2(22)(E) BE RESTORED. 8. ON THE OTHER HAND, SHRI P.D. SHAH, APPEARING ON BEHALF OF THE ASSESSEE, POINTED OUT THAT TAX EFFECT IN THE REVENUES APPEAL FOR THE ASSESSMENT YEAR 2002-03 IS LESS THAN RS. 3 LAKHS. THIS APPEAL IS NOT MAINTAINA BLE, IN VIEW OF THE INSTRUCTION NO.3 OF 2011 DATED 9 TH FEBRUARY, 2011. FOR THIS, RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS- ABHINASH GUPTA REPORTED IN 327 ITR 619 AND BOMBAY HIGH COURT IN THE CASE OF CIT-VS- MADHUKAR K. INAAMDAR (HUF) REPORTED IN 318 ITR 149, WHEREIN IT HAS BEEN HELD THAT CIRCULAR ISSUED BY THE CBDT WOULD BE APPLICABLE TO THE CASES PENDING BEFORE THE COURT EITHER FOR ADMISSION OR FOR FINAL DISPOSAL AN D THE SAID CIRCULAR IS BINDING ON THE REVENUE. 8.1 WITHOUT PREJUDICE TO ABOVE, THE COUNSEL OF THE ASSESSEE PRODUCED DETAILS OF HOLDING OF SHARES IN THE CASE OF INDER HOTELS PVT. LTD. FROM THIS, HE POINTED OUT THAT THE ASSESSEE IS NOT A REGISTERED SHARE-HOLDER OF IN DER HOTEL PVT. LTD. (LENDER COMPANY) AND THEREFORE, AS PER THE DECISION OF THE ITAT, SPE CIAL BENCH, MUMBAI IN THE CASE OF CIT-VS- BHAUMIK COLOUR P. LTD. REPORTED IN 118 ITD 1 (MUM.) ( SUPRA ), THE VIEW TAKEN BY THE LD. CIT(A), IN THIS REGARD, BE UPHELD. ITA NO.2502 TO 2504/AHD/2010 7 8.2 WITHOUT PREJUDICE TO ABOVE, THE COUNSEL OF THE ASSESSEE POINTED OUT THAT THE TRANSACTIONS OF THE ASSESSEE WITH THE LENDER COMPAN Y ARE IN THE NATURE OF INTER- CORPORATE DEPOSITS (ICDS) AND THESE WERE EXTENDED B Y THE LENDER TO THE ASSESSEE FOR BUSINESS EXPEDIENCY AND THEREFORE, WITHIN THE PURVI EW OF SECTION 2(22)(E) OF THE I.T.ACT, 1961. ON THIS GROUND ALSO, THE LD. CIT(A) RIGHTLY DELETED THE ADDITION OF RS.66,27,226/- MADE BY THE AO UNDER SECTION 2(22)(E ) OF THE I.T. ACT BE UPHELD. 9. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ITAT, MUMBAI SPECIAL BENCH IN THE CASE OF CIT-VS- BHAUMIK COLOUR P. LTD. ( SUPRA ) HELD THAT EXPRESSION SHAREHOLDER REFERRED TO IN S.2(22)(E) REFERS TO BOTH A REGISTER ED SHAREHOLDER AND BENEFICIAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDE R BUT NOT THE BENEFICIAL SHAREHOLDER THEN THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. SIMILARLY, IF A PERSON IS A BENEFICIAL SHAREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN A LSO THE PROVISIONS OF S. 2(22)(E) WILL NOT APPLY. ADMITTEDLY, THE ASSESSEE IS NOT A REGIST ERED SHAREHOLDER IN THE LENDER COMPANY, NAMELY, INDER HOTELS PVT. LTD. THEREFORE, THE PROVISIONS OF SECTION 2(22)(E) WILL NOT APPLY. ON THIS GROUND, WE HOLD THAT THE LD . CIT(A) RIGHTLY DELETED THE ADDITION OF RS.66,27,226/-. WE, THEREFORE, INCLINE TO UPHOLD THE ORDER OF THE LD. CIT(A). 9.1 WITHOUT PREJUDICE TO ABOVE, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 2(22)(E) ARE NOT APPLICABLE, IF THE TRANSACTIONS AR E FOR BUSINESS EXPEDIENCY AS HELD IN THE FOLLOWING CASES: DCIT VS- LAKRA BROS. REPORTED IN 106 TTJ 250 CIT-VS- RAJKUMAR REPORTED IN 23 DTR 304 BHARAT C. GANDHI VS- ACIT REPORTED IN 178 TAXMAN 83 IN THE IMPUGNED ORDER, THE LD. CIT(A) ALSO ACCEPTED THE PLEA OF THE ASSESSEE THAT THESE TRANSACTIONS ARE IN THE NATURE OF INTER-CORPORATE D EPOSITS (ICDS) WHICH WAS EXTENDED BY THE LENDER TO THE ASSESSEE FOR BUSINESS EXPEDIEN CY AND THEREFORE, WITHIN THE PURVIEW OF SECTION 2(22)(E) OF THE I.T. ACT, 1961. THIS VIEW ADOPTED BY THE LD. CIT(A) IS ALSO FAIR AND REASONABLE. THEREFORE, ON THIS GRO UND ALSO, IN OUR CONSIDERED OPINION, THE LD. CIT(A) RIGHTLY HELD THAT ADDITION CANNOT BE MADE FOR ALL THESE THREE ASSESSMENT ITA NO.2502 TO 2504/AHD/2010 8 YEARS. FOR THE AFORESAID REASONS, WE INCLINE TO UPH OLD THE ORDERS OF THE LD. CIT(A) IN ALL THE APPEALS FOR THE ASSESSMENT YEARS 2004-05, 2 005-06 AND 2006-07. RESULTANTLY, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 30.06.2011 SD/- SD/- (A.K.GARODIA) (T.K.SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30/06/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT 3) CIT(A) CONCERNED 4) CIT CONCERNED 5) D.R., ITAT, AHMEDABAD TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.