Section 2(22)(e)

Taxability of Dividend under new tax regime

Income Tax - A. Existing Provisions relating to dividend taxation: (i) Tax implication in the hands of company: Under the existing laws, even though dividend constituted income in the hands of the shareholders, the tax on such dividend was payable by the company which declared dividend, @ 15% of the gross dividend under section 115-O (plus surcharge a...

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No Deemed Dividend on Business transactions via current A/c

Income Tax - Transactions carried out through current account for business purposes would not fall within the definition of Deemed Dividend.  Therefore provisions of Section 2(22)(e) of the I.T. Act, 1961, would not apply....

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Impact of Removal of Dividend Distribution Tax by Finance Act, 2020

Income Tax - Removal of DDT (Dividend Distribution Tax) by Finance Act, 2020 (FA 2020) and its impact on other provisions of Income Tax Act, 1961 Existing Provisions (before amendment): Section 115-O provides that, in addition to the income-tax chargeable in respect of the total income of a domestic company, any amount declared, distributed or paid by...

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Is Levying Tax on Deemed Dividend u/s 2(22)(e), Results in Double Taxation??

Income Tax - The Finance Bill 2018, has proposed to cover deemed dividend u/s 2(22)(e) of Income Tax Act, also for levy of dividend distribution tax @ 30%, u/s 115-O of Income Tax Act, in the hands of a closely held company paying such deemed dividends. Apprehensions have been raised in some quarters as to whether the proposed amendment will result in...

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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) Deeming fiction cannot be applied on mere suspicion

ACIT Vs Shri Gurdeep Singh (ITAT Chandigarh) - ACIT Vs Shri Gurdeep Singh (ITAT Chandigarh) The intention behind enacting provisions of section 2(22) (e) are that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits wo...

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No Deemed Dividend on Business transactions via current A/c

Exotica Housing & Infrastructure Company Pvt. Ltd. Vs ITO (ITAT Delhi) - Transactions carried out through current account for business purposes would not fall within the definition of Deemed Dividend.  Therefore provisions of Section 2(22)(e) of the I.T. Act, 1961, would not apply....

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No Section 2(22)(e) deemed dividend addition if lending was substantial part of business of company

PCIT Vs Mohan Bhagwatprasad Agrawal (Gujarat High Court) - No addition could be made by way of deemed dividend in case advances or loan made to a share holder by the Company in the ordinary course of business where lending of money was a substantial part of the business of the Company. ...

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Section Sec. 2(22)(e) not applicable to reimbursement of expenditure

Rajesh Rajkumar Nagpal Vs ACIT (ITAT Mumbai) - Rajesh Rajkumar Nagpal Vs ACIT (ITAT Mumbai) Provisions of 2(22)(e) were not applicable since the payment was mere reimbursement of expenditure. Ld. CIT(A) proceeded on wrong footing that the same would be personal expenditure and hence, disallowable completely overlooking the fact that the said exp...

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Sum received by father for transfer of mining lease right | Deemed dividend | Section 2(22)(e)

CIT Vs Basant Poddar (Karnataka High Court) - It was held that Amount received by assessee from his father out of  sum received by father for transfer of mining lease right to a Company in which assessee was shareholder cannot be treated as deemed dividend income of the assessee under section 2(22)(e) as sum was not received on behalf of Asses...

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

Taxability of Dividend under new tax regime

A. Existing Provisions relating to dividend taxation: (i) Tax implication in the hands of company: Under the existing laws, even though dividend constituted income in the hands of the shareholders, the tax on such dividend was payable by the company which declared dividend, @ 15% of the gross dividend under section 115-O (plus surcharge a...

Read More
Posted Under: Income Tax |

Section 2(22)(e) Deeming fiction cannot be applied on mere suspicion

ACIT Vs Shri Gurdeep Singh (ITAT Chandigarh)

ACIT Vs Shri Gurdeep Singh (ITAT Chandigarh) The intention behind enacting provisions of section 2(22) (e) are that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits would not distribute such profit as divide...

Read More

No Deemed Dividend on Business transactions via current A/c

Exotica Housing & Infrastructure Company Pvt. Ltd. Vs ITO (ITAT Delhi)

Transactions carried out through current account for business purposes would not fall within the definition of Deemed Dividend.  Therefore provisions of Section 2(22)(e) of the I.T. Act, 1961, would not apply....

Read More

Impact of Removal of Dividend Distribution Tax by Finance Act, 2020

Removal of DDT (Dividend Distribution Tax) by Finance Act, 2020 (FA 2020) and its impact on other provisions of Income Tax Act, 1961 Existing Provisions (before amendment): Section 115-O provides that, in addition to the income-tax chargeable in respect of the total income of a domestic company, any amount declared, distributed or paid by...

Read More
Posted Under: Income Tax |

No Section 2(22)(e) deemed dividend addition if lending was substantial part of business of company

PCIT Vs Mohan Bhagwatprasad Agrawal (Gujarat High Court)

No addition could be made by way of deemed dividend in case advances or loan made to a share holder by the Company in the ordinary course of business where lending of money was a substantial part of the business of the Company. ...

Read More

Section Sec. 2(22)(e) not applicable to reimbursement of expenditure

Rajesh Rajkumar Nagpal Vs ACIT (ITAT Mumbai)

Rajesh Rajkumar Nagpal Vs ACIT (ITAT Mumbai) Provisions of 2(22)(e) were not applicable since the payment was mere reimbursement of expenditure. Ld. CIT(A) proceeded on wrong footing that the same would be personal expenditure and hence, disallowable completely overlooking the fact that the said expenditure has never been claimed by the a...

Read More

Sum received by father for transfer of mining lease right | Deemed dividend | Section 2(22)(e)

CIT Vs Basant Poddar (Karnataka High Court)

It was held that Amount received by assessee from his father out of  sum received by father for transfer of mining lease right to a Company in which assessee was shareholder cannot be treated as deemed dividend income of the assessee under section 2(22)(e) as sum was not received on behalf of Assessee and it was for a commercial transact...

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Deemed dividend provisions not applicable on Normal Business Advances

ACIT Vs Shri Anumod Sharma (ITAT Delhi)

Receipts of advance against sale of commercial space is not a receipt in the nature of loan or advance as contemplated in section 2(22)(e) of the Income tax Act, 1961 which attracts the provisions of in that section as the said advance is in the nature of business advance which did not fall within the ambit of provisions of section 2(22)...

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Is Levying Tax on Deemed Dividend u/s 2(22)(e), Results in Double Taxation??

The Finance Bill 2018, has proposed to cover deemed dividend u/s 2(22)(e) of Income Tax Act, also for levy of dividend distribution tax @ 30%, u/s 115-O of Income Tax Act, in the hands of a closely held company paying such deemed dividends. Apprehensions have been raised in some quarters as to whether the proposed amendment will result in...

Read More
Posted Under: Income Tax |

Addition U/s. 2(22)(e) not sustainable if transaction is not of loan or advance

Shravan Choudhary Vs ACIT (ITAT Jaipur)

Shravan Choudhary Vs ACIT (ITAT Jaipur) If the transaction is a business transaction between the parties then the amount received under the said transaction cannot be held as loan or advance to be treated as deemed dividend under section 2(22)(e) of the Act. The assessee explained the facts regarding the loan given by the assessee [&helli...

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