Section 2(22)(e)

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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Is Proposed Amendment in Finance Bill 2018 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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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 ass...

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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 acc...

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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...

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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) o...

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AO cannot set-off of brought forward loss before allowing remuneration to partner

Rajmal Lakhichand Vs JCIT (ITAT Pune) - Computation of book profit is as per section 40(b) and remuneration to partner is based on current year’s "Book Profits", while set-off of brought forward losses is to be granted in terms of section 72. Therefore, while arriving at business income, deduction of section 40(b) is to be given first a...

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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)"

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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AO cannot set-off of brought forward loss before allowing remuneration to partner

Rajmal Lakhichand Vs JCIT (ITAT Pune)

Computation of book profit is as per section 40(b) and remuneration to partner is based on current year’s "Book Profits", while set-off of brought forward losses is to be granted in terms of section 72. Therefore, while arriving at business income, deduction of section 40(b) is to be given first and then if at all there remains positive...

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Deemed dividend provisions not applicable if Assessee is neither registered nor beneficial shareholder of payer company

DCIT Vs M/s. Gilbarco Veeder Root India Pvt. Ltd. (ITAT Mumbai)

DCIT  Vs Gilbarco Veeder Root India Pvt. Ltd (ITAT Mumbai) The appellant before us is a company which has received a sum of Rs.90 crores from other concern, i.e. Portescap. The assessee-company as well as the other concern, i.e. Portescap, have common shareholders inasmuch as the entire shareholding of the assessee-company as well as tha...

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ITAT can direct AO for fresh enquiry into aspects of subject matter of appeal

M/s. Fidelity Business Services India Pvt. Ltd. Vs Assistant Commissioner of Income- tax (Karnataka High Court)

M/s. Fidelity Business Services India Pvt. Ltd. Vs ACIT (Karnataka High Court) Issue- Whether the Income Tax Appellate Tribunal has power under Section 254 of the Income Tax Act, 1961, to give directions for fresh enquiry into the aspects of the subject matter of appeal filed before it either suo motu or on any grounds […]...

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Trade advances cannot be treated as Deemed dividend U/s. 2(22)(e)

Pr. CIT Vs Prakashkumar Bhagchandbhai Khatri (Gujarat High Court)

Pr. CIT Vs Prakashkumar Bhagchandbhai Khatri (Gujarat High Court) Where assessee, in terms of agreement with company for development and consideration of land owned by assessee, had received trade advances, the same were not loans, therefore, section 2(22)(e) was not attracted. The Tribunal while confirming the view of CIT(A) opined that ...

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In absence of accumulated profit, section 2(22)(e) cannot be invoked

ACIT Vs Sanjay Passi (ITAT Delhi)

ACIT Vs Sanjay Passi (ITAT Delhi) We are of the considered view that Ld. CIT(A) has rightly observed that AO has wrongly made the addition u/s. 2(22)(e) by holding that there are accumulated profits in the hands of M/s Robin Software Pvt. Ltd. Ld. CIT(A) has also noticed that the AO has completed the assessment […]...

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

“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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