Section 2(22)(e)

Snippet on taxability of capital reduction

Income Tax - Capital reduction is a commonly adopted tool by companies for re-engineering their capital structure. The need for reducing share capital may arise owing to a number of reasons, such as returning excess funds to the shareholders, adjustment of accumulated losses, minority squeeze out, improving EPS, producing a more efficient capital stru...

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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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Deemed Dividend u/s 2(22)(e) of Income Tax Act, 1961 – an illustrative analysis

Income Tax - In terms of Section 2(22)(e) of the Income Tax Act, 1961, dividend" includes 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:...

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Tax Planning w.r.t dividend u/s 2(22)(e)

Income Tax - Friends, as you all are aware that if any loan or advance is given by any closely held company (Private Company) to: A shareholder who is having equal to or more than 10% of share capital in that company or; Any concern (ex. XYZ Pvt. Ltd.) in which such shareholder is having shareholding of equal […]...

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

Income Tax -  – Section 2(22)(e) of the IT Act’1961 deals with the issue of “deemed dividend.” –  Provisions of Section 2(22)(e) are as under: “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 ...

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Deemed Dividend- Shares held by Subsidiary Co. is irrelevant

D.C.I.T Vs M/s. The Hooghly Mills Co.Ltd. (ITAT Kolkata) - In DCIT v. M/s. The Hooghly Mills Co.Ltd, the ITAT Kolkata held that shareholding by Subsidiary Company is irrelevant while considering ‘deemed dividend’ liability of Holding Company under section 2(22)(e) of the Income Tax Act....

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Deemed Dividend cannot be assessed in the hands of Company issuing shares

Principal Commissioner of Income Tax Vs M/s. Ennore Cargo Container Terminal P. Ltd. (Madras High Court) - Though, advance received by assessee company may have been for the benefit of the aforementioned registered shareholders, it could only be assessed in the hands of those registered shareholders and not in the hands of the assseeee-company....

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sec. 2(22)(e) covers only those transactions which benefit shareholder alone

Deputy Commissioner of Income-tax Vs M/s. The Hooghly Mills Co. Ltd. (ITAT Kolkata) - Thus, section 2(22)( e) of the Act covers only such situations, where the shareholder alone benefits from the loan. In the instant case the company benefits from the said transaction, it will take the character of a commercial transaction and hence will not qualify to be dividend. ...

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Loan / advances received by HUF could be treated as deemed dividend

Gopal and Sons (HUF) Vs CIT (Supreme Court of India) - As HUF cannot be a registered shareholder in a company and hence could not have been both registered and beneficial shareholder, loan/advances received by HUF could be deemed as dividend within the meaning of Section 2(22)(e) of Income Tax Act,...

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Preference shares Redemption not taxable as deemed dividend

Shri Uday K. Pradhan Vs ITO (ITAT Mumbai) - Since redemption of preference shares does not result in reduction of share capital as per Sec 80 of the Companies Act,1956 , the redemption value cannot be taxed as deemed dividend as the distribution of profits if at all there may be is not resulting in reduction of capital....

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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)"

Snippet on taxability of capital reduction

Capital reduction is a commonly adopted tool by companies for re-engineering their capital structure. The need for reducing share capital may arise owing to a number of reasons, such as returning excess funds to the shareholders, adjustment of accumulated losses, minority squeeze out, improving EPS, producing a more efficient capital stru...

Read More
Posted Under: Income Tax |

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...

Read More

Deemed Dividend- Shares held by Subsidiary Co. is irrelevant

D.C.I.T Vs M/s. The Hooghly Mills Co.Ltd. (ITAT Kolkata)

In DCIT v. M/s. The Hooghly Mills Co.Ltd, the ITAT Kolkata held that shareholding by Subsidiary Company is irrelevant while considering ‘deemed dividend’ liability of Holding Company under section 2(22)(e) of the Income Tax Act....

Read More

Deemed Dividend cannot be assessed in the hands of Company issuing shares

Principal Commissioner of Income Tax Vs M/s. Ennore Cargo Container Terminal P. Ltd. (Madras High Court)

Though, advance received by assessee company may have been for the benefit of the aforementioned registered shareholders, it could only be assessed in the hands of those registered shareholders and not in the hands of the assseeee-company....

Read More

sec. 2(22)(e) covers only those transactions which benefit shareholder alone

Deputy Commissioner of Income-tax Vs M/s. The Hooghly Mills Co. Ltd. (ITAT Kolkata)

Thus, section 2(22)( e) of the Act covers only such situations, where the shareholder alone benefits from the loan. In the instant case the company benefits from the said transaction, it will take the character of a commercial transaction and hence will not qualify to be dividend. ...

Read More

Loan / advances received by HUF could be treated as deemed dividend

Gopal and Sons (HUF) Vs CIT (Supreme Court of India)

As HUF cannot be a registered shareholder in a company and hence could not have been both registered and beneficial shareholder, loan/advances received by HUF could be deemed as dividend within the meaning of Section 2(22)(e) of Income Tax Act,...

Read More

Tax Treatment of Dividend Received From A Foreign Company

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,...

Read More
Posted Under: Income Tax |

Preference shares Redemption not taxable as deemed dividend

Shri Uday K. Pradhan Vs ITO (ITAT Mumbai)

Since redemption of preference shares does not result in reduction of share capital as per Sec 80 of the Companies Act,1956 , the redemption value cannot be taxed as deemed dividend as the distribution of profits if at all there may be is not resulting in reduction of capital....

Read More

Adjustment entries being not in nature of loan or advances are outside the purview of deemed dividend u/s 2(22)(e)

CIT (TDS) Vs Schutz Dishman Bio-Tech Pvt. Ltd. (Gujarat High Court)

Gujarat High Court held In the case of CIT (TDS) vs. Schutz Dishman Bio-Tech Pvt. Ltd. that there are large number of adjustment entries between the corporates. Unlike transactions of loans and advances, in this kind of adjustment entries, the movement of funds is both ways and the same is more in the nature of current account rather than...

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AO not permitted to make additions beyond revision order issued u/s 263: ITAT

Sri Manoj Murarka Vs ACIT (ITAT Kolkata)

Kolkata ITAT held In the case of Sri Manoj Murarka vs. ACIT that the AO had travelled beyond the jurisdiction vested on him by the order of the CIT u/s 263 by treating the amounts overdrawn by the son and daughter of the assessee thereby bringing the same to tax as deemed dividend....

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