Case Law Details
Brief of the Case
ITAT Bangalore held in the case M/s Jeans Knit Pvt. Ltd. vs. ACIT that it is clear that the balance in the reserve and surplus is only on account of security premium amount after reducing the loss incurred by the assessee for the earlier year as well as during the year under consideration. Therefore, there is no dispute about the fact that the reserve and surplus amount does not show any accumulated profit but the amount shown is only loss as well as premium on securities. Explanation 1 and 2 to sec.2 (22) (e) do not propose to include the premium on securities/shares in the expression ‘accumulated profit’. Hence share premium lying as reserve and surplus of the company is not income of the company and therefore, the provisions of sec.2 (22) (e) cannot be invoked.
Facts of the Case
Addition u/s 2(22) (e) on account of deemed dividend
In this case, AO noticed that the assessee has advanced an amount of Rs.23,08,94,447/- to concern in which the directors are interested and the same amount is shown as due. The AO proposed to consider the advance given to the concern in which the directors are interested as deemed dividend u/s 2(22) (e).
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