COMMISSIONER OF INCOME TAX vs. AMBASSADOR TRAVELS P. LTD.

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 337/2008 . COMMISSIONER OF INCOME TAX DELHI I ..... Appellant Through Mrs. P.L. Bansal, Adv. . versus . AMBASSADOR TRAVELS P. LTD. ..... Respondent Through Mr. Prakash Kumar, Adv. . CORAM: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE MANMOHAN SINGH . O R D E R 23.04.2008 . The Revenue is aggrieved by an order dated 18th July, 2008 passed by the Income Tax Appellate Tribunal, Delhi Bench ??C?, New Delhi (the Tribunal) in ITA No. 3090/Del/2003 relevant for the Assessment Year 1998-99. The Assessee is engaged in the business of a travel agency. During the previous year relevant to the assessment year the Assessee had entered into certain business transactions with M/s Holiday Resort Pvt. Ltd. and M/s Ambassador Tours (I) Pvt. Ltd. . . As a result of these business transactions, there were some financial transactions but the Assessing Officer came to the conclusion that because ITA No. 337/2008 Page 1 of 3 of the share holding pattern, these financial transactions would fall in the category of ?deemed dividend? defined under Section 2(22)(e) of the Income Tax Act, 1961. This view was upheld by the Commissioner of Income Tax (Appeals). Feeling aggrieved, the Assessee preferred a further appeal before the Tribunal, which was allowed. The Tribunal was of the view that there is nothing on record to show that the amounts that considered by the Assessing Officer were in any manner advances or loans in the account of the Assessee. Being a travel agency, it had regular business dealings with the above two concerns dealing with holiday resorts and the tourism industry. Therefore, since the transactions were normal business transactions, which were carried out during the course of the relevant previous year, they cannot be described as advances or loans, which form a distinct category of financial transactions. Under the 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. 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 . ITA No. 337/2008 Page 2 of 3 . agency and the above two concerns that it had dealings with, that is, M/s Holiday Resort Pvt. Ltd. and M/s Ambassador Tours (I) Pvt. 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 circumstances be treated as loans or advances received by the Assessee from these two concerns. Consequently, the Tribunal was right in coming to the conclusion that the provisions of Section 2(22)(e) of the Act are not applicable. In our opinion, no substantial question of law arises. Dismissed. . MADAN B. LOKUR, J . . . MANMOHAN SINGH, J APRIL 23, 2008 vk . . . . . . . ITA No. 337/2008 Page 3 of 3 .