Section 2(22)(e)

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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Settled Law of Deemed Dividend Again Unsettled

Income Tax - The Income Tax Act, 1961 contains various provisions either expressly or impliedly. There are many deeming fiction provisions in the Act viz. section 50C, 43CA, 56(2)(x), etc. One such section is section 2(22)(e) of the Act which provides that an amount of loan or advance given to a shareholder directly or indirectly shall be treated as d...

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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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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 regardin...

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Section 2(22)(e): ITAT restricts overall addition to amount of loan

Shri V. Ramesh Vs ACIT (ITAT Chennai) - Hence it would be an appropriate analogy that the entire amount which is liable to be treated as deemed dividend has to be apportioned between both the shareholders in whose cases the conditions stipulated for attracting the provisions of Section 2(22)(e) of the Act are satisfied. Therefore as plead...

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No Deemed Dividend if Assessee was not a Shareholder when amount been advanced

ACIT Vs M/s. Bhaawani Shankar Ginning Factory (ITAT Pune) - ACIT Vs M/s. Bhaawani Shankar Ginning Factory (ITAT Pune)  The issue in the present ground is with respect to addition u/s 2(22)(e) of the Act. It is an undisputed fact that assessee had received loan from Mahesh Ginning Pvt. Ltd., in which both the partners of the assessee also held 18.19% shares ...

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Loan received from company not deemed dividend U/s. 2(22)(e) if assessee was not a member/shareholder of concerned company

CIT Vs Prem Motors (Madhya Pradesh HC) - Where assessee was not a member/shareholder of the concerned company, therefore, loan/advance received from such company was not deemed dividend under section 2(22)(e)....

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Inter-corporate deposit cannot be termed as loan for section 2(22)(e)

KIIC Investment Company Vs DCIT (IT) (ITAT Mumbai) - Amount advanced by Portescap to Videojet in which assessee was a common shareholder holding substantial shareholding could not be termed as loan falling within the purview of sec. 2(22)(e) as the same was shown in the balance-sheet of Portescap as well as Videojet as inter-corporate deposit (ICD)....

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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)"

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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Section 2(22)(e): ITAT restricts overall addition to amount of loan

Shri V. Ramesh Vs ACIT (ITAT Chennai)

Hence it would be an appropriate analogy that the entire amount which is liable to be treated as deemed dividend has to be apportioned between both the shareholders in whose cases the conditions stipulated for attracting the provisions of Section 2(22)(e) of the Act are satisfied. Therefore as pleaded by the Ld.AR, it would be judicious t...

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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 | ,

No Deemed Dividend if Assessee was not a Shareholder when amount been advanced

ACIT Vs M/s. Bhaawani Shankar Ginning Factory (ITAT Pune)

ACIT Vs M/s. Bhaawani Shankar Ginning Factory (ITAT Pune)  The issue in the present ground is with respect to addition u/s 2(22)(e) of the Act. It is an undisputed fact that assessee had received loan from Mahesh Ginning Pvt. Ltd., in which both the partners of the assessee also held 18.19% shares each. We find […]...

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Loan received from company not deemed dividend U/s. 2(22)(e) if assessee was not a member/shareholder of concerned company

CIT Vs Prem Motors (Madhya Pradesh HC)

Where assessee was not a member/shareholder of the concerned company, therefore, loan/advance received from such company was not deemed dividend under section 2(22)(e)....

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Settled Law of Deemed Dividend Again Unsettled

The Income Tax Act, 1961 contains various provisions either expressly or impliedly. There are many deeming fiction provisions in the Act viz. section 50C, 43CA, 56(2)(x), etc. One such section is section 2(22)(e) of the Act which provides that an amount of loan or advance given to a shareholder directly or indirectly shall be treated as d...

Read More
Posted Under: Income Tax |

Inter-corporate deposit cannot be termed as loan for section 2(22)(e)

KIIC Investment Company Vs DCIT (IT) (ITAT Mumbai)

Amount advanced by Portescap to Videojet in which assessee was a common shareholder holding substantial shareholding could not be termed as loan falling within the purview of sec. 2(22)(e) as the same was shown in the balance-sheet of Portescap as well as Videojet as inter-corporate deposit (ICD)....

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A firm not being shareholder cannot be Taxed for Deemed Dividend

Modern Impex Vs Assistant Commissioner of Income-tax (ITAT Kolkata)

Firm being not a shareholder of the Pvt. Ltd. company which lent the money cannot be taxed by applying sec. 2(22)(e) of the Act. So, the addition is deleted....

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