Section 2(22)(e)

Clouds on deemed dividend provisions now cleared

Income Tax - The important aspect while planning restructuring proposals is the applicability of deemed dividend provisions that was under the controversial route which is now put to rest with the latest ruling by the Apex Court. The muddle of taxability under deemed dividend as per section 2(22)(e) is now cleared by the latest ruling of the Apex Cou...

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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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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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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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Deemed dividend not accrues on mere issue and cancellation of Cheque

The Commissioner Of Income Tax Bareilly And Another Respondent Vs. M/s Associated Metals Co. Ltd. (Allahabad High Court) - A division bench of the Allahabad High Court recently ruled that the provisions of deemed dividend would not attract in case of mere issuance of a cheque that was subsequently cancelled and returned. While quashing a departmental appeal against the order of ITAT, the bench clarified that payment of ...

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Advance to Director for Sale of Land cannot be treated as Deemed Dividend

Jitendra Kumar Gupta Vs. ACIT (ITAT Delhi) - Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that advance given by a company to its Director/ substantial shareholder cannot be considered as deemed dividend for the purpose of section 2(22)(e) of the Income Tax Act. ...

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Section 2(22)(e) not attracted if appellant has given his personal properties as collateral security to bank for loan

I.T.O. Vs. Sri Siddhartha Paul (ITAT Kolkata) - The fact that the assessee had given his personal property as collateral security for enabling M/s. Palsons Drugs Pvt. Ltd to obtain loan and other credit facilities is not in dispute. Under the circumstances the proposition of law as laid down by the Jurisdictional High Court in the case of ‘Pra...

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Amount received pursuant to non-existing agreement is Deemed dividend U/s. 2(22)(e)

Kapil N. Shah Vs. ITO (ITAT Mumbai) - Amount received by assessee form a closely held company in the guise of an agreement having no existence in the eyes of law, was to be assessed as deemed dividend under section 2(22)(e) in assessee’s hands on account of his substantial shareholding....

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Camouflaging of Loan to Director as commercial transaction: Invocation of s. 2(22)(e) justified

Shri Hemanth Kumar Bothra Vs. The Asst. Commissioner of Income-tax (ITAT Bangalore) - In the instant case, as mentioned earlier, the amounts received by assessee is nothing but loan / advance from NIPL and assessee is camouflaging the same as a commercial transaction relating to sale of property in order to get over the provisions of Section 2(22)(e) of the Income-tax Act....

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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 not accrues on mere issue and cancellation of Cheque

The Commissioner Of Income Tax Bareilly And Another Respondent Vs. M/s Associated Metals Co. Ltd. (Allahabad High Court)

A division bench of the Allahabad High Court recently ruled that the provisions of deemed dividend would not attract in case of mere issuance of a cheque that was subsequently cancelled and returned. While quashing a departmental appeal against the order of ITAT, the bench clarified that payment of any sum is necessary to constitute deeme...

Read More

Clouds on deemed dividend provisions now cleared

The important aspect while planning restructuring proposals is the applicability of deemed dividend provisions that was under the controversial route which is now put to rest with the latest ruling by the Apex Court. The muddle of taxability under deemed dividend as per section 2(22)(e) is now cleared by the latest ruling of the Apex Cou...

Read More
Posted Under: Income Tax |

Advance to Director for Sale of Land cannot be treated as Deemed Dividend

Jitendra Kumar Gupta Vs. ACIT (ITAT Delhi)

Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that advance given by a company to its Director/ substantial shareholder cannot be considered as deemed dividend for the purpose of section 2(22)(e) of the Income Tax Act. ...

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Section 2(22)(e) not attracted if appellant has given his personal properties as collateral security to bank for loan

I.T.O. Vs. Sri Siddhartha Paul (ITAT Kolkata)

The fact that the assessee had given his personal property as collateral security for enabling M/s. Palsons Drugs Pvt. Ltd to obtain loan and other credit facilities is not in dispute. Under the circumstances the proposition of law as laid down by the Jurisdictional High Court in the case of ‘Pradip Kumar Malhotra vs CIT’ (supra) squ...

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Amount received pursuant to non-existing agreement is Deemed dividend U/s. 2(22)(e)

Kapil N. Shah Vs. ITO (ITAT Mumbai)

Amount received by assessee form a closely held company in the guise of an agreement having no existence in the eyes of law, was to be assessed as deemed dividend under section 2(22)(e) in assessee’s hands on account of his substantial shareholding....

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 |

Camouflaging of Loan to Director as commercial transaction: Invocation of s. 2(22)(e) justified

Shri Hemanth Kumar Bothra Vs. The Asst. Commissioner of Income-tax (ITAT Bangalore)

In the instant case, as mentioned earlier, the amounts received by assessee is nothing but loan / advance from NIPL and assessee is camouflaging the same as a commercial transaction relating to sale of property in order to get over the provisions of Section 2(22)(e) of the Income-tax Act....

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Advance to Directors for Land Purchase cannot be treated as Deemed Dividend

D.L.V. Sridhar Vs. DCIT, Circle-2(1) (ITAT Visakhapatnam)

The Income Tax Appellate Tribunal, Visakhapatnam, recently ruled that advances given to the directors of a Company for purchase of land cannot be treated as deemed dividend Under section 2(22)(e) of the Income Tax Act, 1961 since the land is transferred to the company within time....

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Deemed Dividend’ not attracted in case of Normal Business Transactions

Shri Deven Chachra Vs. Deputy Commissioner of Income Tax (ITAT Delhi)

In Circular No. 19/2017, paragraph 3, the CBDT has also held that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word advance in Section 2(22)(e) of the Act....

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Section 2(22)(e) does not extend to, or broaden concept of, a shareholder

CIT Vs. Madhur Housing And Development Company (Supreme Court of India)

CIT Vs. Madhur Housing And Development Co (Supreme Court) The impugned judgment and order dated 11.05.2011 has relied upon a judgment of the same date by a Division Bench of the High Court of Delhi in ITA No. 462 of 2009 in the case of CIT Vs. Ankitech Pvt Ltd . Having perused the judgment […]...

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