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Section 2(22)(e)

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Conceptual clarity on Deemed dividend

Income Tax : Gain insights on Deemed Dividends under the Income Tax Act: Understand taxability, TDS applicability, and key exemptions for optim...

March 9, 2024 930 Views 0 comment Print

Deemed Dividend Taxation in India

CA, CS, CMA : Explore intricacies of deemed dividends in India. Understand definitions, applicable transactions, and tax implications. Uncover i...

January 4, 2024 1599 Views 0 comment Print

Taxability of Deemed Dividend under Section 2(22)(e) of Income Tax Act

Income Tax : The dividend income received by non-resident individuals, including Foreign Portfolio Investors (FPIs) and Non-Resident Indian cit...

May 27, 2023 26871 Views 1 comment Print

Some Significant Cases Related To Deemed Dividends

Income Tax : Understand the tax implications of bonus shares in deemed dividends. Explore the case of PCIT vs. Dr. Ranjan Pai and its impact on...

May 25, 2022 4920 Views 0 comment Print

Meaning of expression ‘substantial part of business’ for Section 2(22)(e)

Income Tax : The meaning of the expression ‘substantial part of business’ for the purpose of Section 2(22)(e) Introduction Section ...

January 11, 2022 3687 Views 0 comment Print


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

November 8, 2017 3258 Views 0 comment Print

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.

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

November 3, 2017 1104 Views 0 comment Print

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.

Snippet on taxability of capital reduction

July 28, 2017 17307 Views 0 comment Print

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 structure, etc. In this article we have analysed the importance to understand the key tax aspects related to capital reduction.

No deemed dividend U/s. 2(22)(e) on trade advances in the nature of commercial transactions: CBDT

June 12, 2017 5745 Views 0 comment Print

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

Deemed Dividend- Shares held by Subsidiary Co. is irrelevant

June 10, 2017 2979 Views 0 comment Print

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.

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

April 19, 2017 1704 Views 0 comment Print

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.

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

March 10, 2017 2370 Views 0 comment Print

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.

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

January 7, 2017 10687 Views 0 comment Print

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,

Preference shares Redemption not taxable as deemed dividend

June 12, 2016 17278 Views 0 comment Print

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.

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

January 22, 2016 1433 Views 0 comment Print

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 a loan account.