Section 2(22)(e)

Deemed Dividend – The Taxmen’s Arsenal

Income Tax - Deeming Provision - deem things to be what they are not or changing some term to mean something more (or less) with the intent of conferring an advantage upon the taxman. Under the Income-tax Act, 1961 section 2(22)(e) is one such deeming provision that has been the focus of much litigation ever since its enactment....

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Understanding Deemed Dividend – Section 2(22)(e)

Income Tax - “dividend” includes -(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of s...

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Deemed Dividend over Closely Held Private Companies

Income Tax - The concept of Deemed Dividend under the Income-tax Act, 1961 (the Act) is not new. However, time and again many closely held company assessees and their controlling shareholders, to their surprise and dismay, realise very late the importance of this powerful taxing tool in the hands of the Assessing Officer....

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Tax Treatment of Dividend Received From A Foreign Company

Income Tax - Article discusses about Meaning of dividend, Head of taxability and applicable tax rate, Relief from double taxation, Concessional rate of tax to dividends received from foreign specified company,...

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Section 2(22)(e) of Income Tax Act, 1961– Last word yet to be said

Income Tax - Author explains the intricacies and nuances of Section 2(22)(e) of the Income Tax Act, 1961 and the unsettled position on the controversy regarding the applicability of the provisions of deemed dividend....

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Deemed dividend U/s. 2(22)(e): Advance in normal course of business

Sri Ajay Kumar Khatore Vs DCIT (ITAT Ranchi) -  Since trade advances obtained by assessee from its sister concern were in the nature of commercial transactions, would not fall within the ambit of the word ‘advance’ in section 2(22)(e)....

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Sec. 2(22)(e) not applicable to inter banking transactions between group concerns

Neha Home Builders (P.) Ltd. Vs DCIT (ITAT Mumbai) - Since the transaction between assessee-company and other group concern were in the nature of current account and inter banking account containing both types of entries i.e., receipts and payments and assessee was neither the beneficial nor the registered shareholder of the company, therefore, the am...

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No Deemed dividend on Transactions of receipt & payment on same date

ACIT Vs Seema Devi Bansal (ITAT Delhi) - ACIT Vs Seema Devi Bansal (ITAT Delhi) Trade and commercial transactions are not covered in the definition of ‘loans and advances’ on which section 2(22)(e)  can be applied. When the company got back its funds on the same day, it could not fall into the definition of the deemed dividend. FULL T...

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Trade Advances in the course of business cannot be termed as deemed dividend

Nutan Malpani, Vs Asst. Commissioner of Income Tax (ITAT Hyderabad) - Nutan Malpani Vs ACIT (ITAT Hyderabad) We noticed that when the assessee is having a regular business connection with the company and in that process, assessee receives or pays certain advances, they can be considered as ‘trade advances’ and not otherwise. In the given case, certain transactions...

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Section 2(22)(e) not applicable on Flat Purchase by Company for its CMD

Aditya Jyot Eye Hospital Pvt. Ltd. Vs ITO (ITAT Mumbai) - Aditya Jyot Eye Hospital Pvt. Ltd. Vs ITO (ITAT Mumbai) The assessee purchased the flat bearing flat no.602, in the building namely Ornate Galaxy, located at L.T. Road, Dadar (E), Mumbai. No doubt, the assessee Dr. Natarajan is the CMD of hospital and is having 99% share of the assessee company. Th...

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No deemed dividend U/s. 2(22)(e) on trade advances in the nature of commercial transactions: CBDT

Circular No. 19/2017-Income Tax - (12/06/2017) - Section 2(22) clause (e) of the Income Tax Act, 1961 (the Act) provides that dividend includes any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares...

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Section 2(22)(e)’s Popular Posts

Recent Posts in "Section 2(22)(e)"

Deemed dividend U/s. 2(22)(e): Advance in normal course of business

Sri Ajay Kumar Khatore Vs DCIT (ITAT Ranchi)

 Since trade advances obtained by assessee from its sister concern were in the nature of commercial transactions, would not fall within the ambit of the word ‘advance’ in section 2(22)(e)....

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Sec. 2(22)(e) not applicable to inter banking transactions between group concerns

Neha Home Builders (P.) Ltd. Vs DCIT (ITAT Mumbai)

Since the transaction between assessee-company and other group concern were in the nature of current account and inter banking account containing both types of entries i.e., receipts and payments and assessee was neither the beneficial nor the registered shareholder of the company, therefore, the amount received from other group concern c...

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No Deemed dividend on Transactions of receipt & payment on same date

ACIT Vs Seema Devi Bansal (ITAT Delhi)

ACIT Vs Seema Devi Bansal (ITAT Delhi) Trade and commercial transactions are not covered in the definition of ‘loans and advances’ on which section 2(22)(e)  can be applied. When the company got back its funds on the same day, it could not fall into the definition of the deemed dividend. FULL TEXT OF THE ITAT […]...

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Deemed Dividend – The Taxmen’s Arsenal

Deeming Provision - deem things to be what they are not or changing some term to mean something more (or less) with the intent of conferring an advantage upon the taxman. Under the Income-tax Act, 1961 section 2(22)(e) is one such deeming provision that has been the focus of much litigation ever since its enactment....

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Trade Advances in the course of business cannot be termed as deemed dividend

Nutan Malpani, Vs Asst. Commissioner of Income Tax (ITAT Hyderabad)

Nutan Malpani Vs ACIT (ITAT Hyderabad) We noticed that when the assessee is having a regular business connection with the company and in that process, assessee receives or pays certain advances, they can be considered as ‘trade advances’ and not otherwise. In the given case, certain transactions which were treated by the Assessing Off...

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Section 2(22)(e) not applicable on Flat Purchase by Company for its CMD

Aditya Jyot Eye Hospital Pvt. Ltd. Vs ITO (ITAT Mumbai)

Aditya Jyot Eye Hospital Pvt. Ltd. Vs ITO (ITAT Mumbai) The assessee purchased the flat bearing flat no.602, in the building namely Ornate Galaxy, located at L.T. Road, Dadar (E), Mumbai. No doubt, the assessee Dr. Natarajan is the CMD of hospital and is having 99% share of the assessee company. The flat is near to […]...

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Advance rent & security deposit cannot be treated as deemed dividend

Shri Jinendra Kumar Jain Vs ACIT (ITAT Delhi)

Shri Jinendra Kumar Jain Vs ACIT (ITAT Delhi) It is, therefore, clear from the evidence on record that assessee in fact, has let-out the joint property to the tenant company and has received advance as well as security deposit of the aforesaid amounts. The authorities below rejected the claim of assessee because the amount of […]...

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Deemed dividend provisions not applies if assessee was neither beneficial nor registered shareholder

M/s. Neha Home Builders Pvt. Ltd. Vs DCIT – 13(1)(1)(ITAT Mumbai)

M/s. Neha Home Builders Pvt. Ltd. Vs DCIT (ITAT Mumbai) Since assessee was neither the beneficial nor the registered shareholder of the company, the amount so received is not liable to be taxed as deemed dividend. Moreover, the transaction between two group concerns were in the nature of current account and inter banking account containin...

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Proportionate addition of deemed dividend considering percentage of shareholding in borrowing company

Sahir Sami Khatib Vs. ITO (Bombay High Court)

Delhi ITAT has allowed the proportionate allocation of deemed dividend on the basis of the shareholding of the borrowing company. We find this Judgment to be wholly inapplicable to the facts of the present case as in the facts of this decision, both the shareholders were holding more than 10% in the lending company and more than 46% in bo...

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Deemed dividend Law applies only to Accumulated Profits at start of relevant FY

Sri Srikanth Marru Vs ITO (ITAT Hyderabad)

Sri Srikanth Marru Hyderabad Vs ITO (ITAT Hyderabad) There is a nexus between the loan taken from the LIC and the premium paid for the Keyman Insurance Policy. Since the Keyman Insurance Policy is for the benefit to the assessee, it was held that the same is taxable as deemed dividend u/s 2(22)(e) of the […]...

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