Issue before Court:
Whether provision of section 2 (22) (e) can be invoked when assessee is not a registered share holder.
Brief Facts:
- Assessee filed its return of income declaring income at Rs. 39,04,210/-. The AO Completed assessment at Rs. 8,98,94,480/-.
- The appellant company received loans of Rs. 23 lakhs and Rs. 4.01 crores from M/s Triangle Builders & Promoters Pvt. Ltd. and M/s Countrywide Promoters Pvt. Ltd. respectively. The appellant reflected these transactions in its balance sheet as loan received during the year.
- The Assessing Officer was of the opinion that these are covered by the scope of the provisions of Section 2(22)(e) of the Act to the extent of accumulated profits of Rs. 84,993/- and Rs.1,73,261/- respectively. The AO made additions of Rs. 84,993/- and Rs. 1,73,261/- on account of deemed dividend under Section 2(22)(e) of the Act.
- On appeal, the CIT(A) upheld the addition of a Rs.1,73,261/-, however, deleted the addition of Rs. 84,993/-.
- On further appeal to ITAT matter was remanded back to the file of AO for afresh consideration.
- AO in second round again made the same addition. CIT (A) dismissed appeal against the order u/s 143 (3) r.w.s. 254.
Contention of the revenue:
Assessee is liable to tax as deemed dividend an amount of Rs 1,73,262 being the accumulated profits of the concerned company, there is no error in considering the accumulated profits of Country Wide Promoters.
Contention of the assessee:
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