Deemed dividend not accrues on mere issue and cancellation of Cheque

CIT Vs. M/s Associated Metals Co. Ltd. (Allahabad High Court)

From the plain reading of Section 2(22)(e) it transpires the legislature seeks to tax certain payments made by specified persons as deemed dividend by treating such payments to be dividend payment on notional basis. Mere issuance of a cheque that was subsequently cancelled and returned without ever being ever presented for encashment and without any money having been paid against the same to the assessee it could never constitute payment of any sum. The assessee never came gain

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