Repayment of Own Deposit ≠ Deemed Dividend; 2(22)(e) Not Attracted

Anang Kunjviharibhai Shah Vs ITO (ITAT Ahmedabad) The ITAT, Ahmedabad Bench held that repayment/withdrawal of a shareholder’s own deposit lying with the company cannot be treated as deemed dividend u/s 2(22)(e). In this case (AY 2015-16), the assessee—Managing Director holding 57% shares—had a credit balance of ₹4.04 crore in his deposit account with the company. On his instructions, the company paid ₹25 lakh towards political donation by debiting the assessee’s deposit account. The AO and CIT(A) treated the payment as deemed dividend, alleging that the assessee derived individual ...