Inter-corporate Funding for Business Needs Cannot Trigger Deemed Dividend

Addpol Chemspecialities Private Limited Vs DCIT (ITAT Ahmedabad) ITAT Ahmedabad deleted the addition of ₹16,00,000 made by AO as deemed dividend u/s 2(22)(e). Assessee had received a short-term loan from Monachem Additives Pvt Ltd, a sister concern. Director Shri Dilip G Shah held 87.7% in the lending company & 50% in the borrower company. AO treated the inter-corporate loan as deemed dividend merely because of common shareholding & also disallowed interest expenditure. Tribunal held that 2(22)(e) applies only when the payment is made to a shareholder being a person or to a concern i...