Deemed dividend provision not invocable on recipient of loan not being shareholder in payer company

Pallava Resorts Private Limited Vs ITO (ITAT Chennai)

Held that provision of deemed dividend u/s 2(22)(e) cannot be invoked unless the recipient of loan is a shareholder of the company. If recipient of loan is not shareholder in a company from which loan is received, such loan cannot be assessed as deemed divided.

Facts-

During the course of reassessment, AO treated the loan received by the assessee from QNEI as ‘deemed dividend’ and

Please become a Premium member. If you are already a Premium member, login here to access the full content.