ASIAN BUSINESS CONECTION PVT. LTD.,BHOPAL vs. DCIT - 1(1), BHOPAL

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ITA 936/IND/2018Status: DisposedITAT Indore25 September 2019AY 2015-16102 pages
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What did the Tribunal hold?

The Tribunal held that the amount advanced was part of a business transaction and not a dividend, as it was given for strategic investment with an assured return and profit sharing. The Tribunal emphasized that businessmen should not be dictated on how to conduct their affairs, and the transaction was in the ordinary course of business.

What were the facts?

The assessee, Asian Business Connections Private Limited, received a substantial amount from its subsidiary, Advantage Overseas Pvt Ltd, which the Assessing Officer treated as deemed dividend under Section 2(22)(e). The assessee contended it was a strategic commercial transaction based on an MOU for investment and profit sharing.

What were the issues?

Whether advances received by a holding company from its subsidiary for strategic investment, with profit sharing, constitute deemed dividend under Section 2(22)(e) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD

For Appellant: Shri Sumit Nema, Sr. Adv. &
For Respondent: Smt. Ashima Gupta, CIT, Shri Sumit Nema, Sr. Adv. &
Hearing: 10.07.2019Pronounced: 25.09.2019

The order pronounced in the open Court on 25.09.2019.

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