Loans from Subsidiary to Holding Company not Deemed Dividend u/s 2(22)(e) When Transactions are Part of Consistent Business Practice: ITAT

ITAT ruled that intercompany loans between subsidiary and holding companies aren't automatically deemed dividends under Section 2(22)(e) when part of consistent business practice. The tribunal examined 10 years of transactional patterns before concluding the ₹15 crore advances were genuine business loans, not disguised distributions. Key factors included: (1) arm's length interest charges, (2) proper documentation, and (3) reciprocal lending history. This provides clarity for corporate groups with legitimate treasury operations. The decision emphasizes that Section 2(22)(e) shouldn't be mechanically applied without examining commercial context. Taxpayers must maintain robust documentation of intercompany lending terms and business purposes to avail this protection during scrutiny assessments.