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The Delhi High Court in CIT v. Creative Dyeing & Printing (P) Ltd. (2009) 184TAX483 held that the amount advanced for business transaction would not fall within the definition of the deemed dividend under section 2(22)(e). In this case it was found that the amount advanced did not bear the characteristics of loans and advances and rather the amount had been paid by the lender in its own business interest since such amount were to be used to finance expansion and modernisation of plant and machinery at that would indirectly benefit the lender company which obtained job work service from the receiving company.

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