Deemed dividend Law applies only to Accumulated Profits at start of relevant FY

Sri Srikanth Marru Hyderabad Vs ITO (ITAT Hyderabad) There is a nexus between the loan taken from the LIC and the premium paid for the Keyman Insurance Policy. Since the Keyman Insurance Policy is for the benefit to the assessee, it was held that the same is taxable as deemed dividend u/s 2(22)(e) of the Act. However, as rightly pointed out by the learned Counsel for the assessee, the provisions of section 2(22)(e) of the Act would be applicable only to the extent of accumulated profits of the company available at the beginning of the relevant financial year. FULL TEXT OF THE ITAT JUDGMENT Thi...