“deemed dividend”

Special Rate ProvisionsSection 2(22)(e)Section 2(22)(e)749 judgments

The decision most relied on for deemed dividend is CIT v. Ankitech (P) Ltd. (340 ITR 14), cited in 202 judgments on BharatTax.

Leading authorities on deemed dividend

CIT v. Ankitech (P) Ltd.

340 ITR 14 · 2012 · High Court

202

citing judgments

Deemed dividend under section 2(22)(e) cannot be taxed in the hands of a non-shareholder. The Supreme Court confirmed this view, affirming the Delhi High Court's decision in Ankitech.

Pradip Kumar Malhotra v. CIT

338 ITR 538 · 2011 · High Court

152

citing judgments

Section 2(22)(e) of the Income Tax Act, which addresses deemed dividends, does not apply to loans or advances provided by a company to its shareholders if these transactions occur in the normal course of business, are driven by business expediency, or are made in consideration of a benefit conferred upon the company by the shareholder. Conversely, gratuitous loans or advances given to shareholders fall within the purview of this section.

CIT v. Creative Dyeing & Printing Pvt. Ltd.

318 ITR 476 · 2009 · High Court

119

citing judgments

Genuine trade advances or amounts advanced for bona fide business transactions, driven by commercial expediency, do not fall within the definition of deemed dividend under section 2(22)(e) of the Income-tax Act.

CIT v. Raj Kumar

318 ITR 462 · 2009 · High Court

119

citing judgments

Genuine trade advances made by a company in the ordinary course of business to a shareholder do not fall within the definition of deemed dividend under Section 2(22)(e) of the Income-tax Act.

CIT v. Universal Medicare Pvt. Ltd.

324 ITR 263 · 2010 · High Court

111

citing judgments

Deemed dividend under section 2(22)(e) is assessable only in the hands of the beneficial shareholder who receives the benefit of the loan or advance, and not in the hands of the company receiving the loan.

CIT v. Mukundray K. Shah

290 ITR 433 · 2007 · Supreme Court

citing judgments

For Section 2(22)(e) to apply, a payment by a company must be in the nature of a loan or advance, and the company must have accumulated profits. Such payments to a concern in which a shareholder, holding more than 10% voting power, has a substantial interest are deemed dividends if the shareholder ultimately benefits, even if routed through different modes or concerns.

Bagmane Constructions (P) Ltd. v. CIT & Anr.

318 ITR 376 · 2009 · High Court

citing judgments

The provisions of Section 2(22)(e) regarding deemed dividends do not apply to transactions between a shareholder and a company that create mutual benefits and obligations, such as trade advances in the nature of commercial transactions.

Miss P. Sarada v. CIT

229 ITR 444 · 1998 · Supreme Court

citing judgments

A loan or advance from a closely held company to a shareholder is a deemed dividend under Section 2(22)(e) upon receipt, unaffected by subsequent repayment or adjustment.

Judgments citing deemed dividend

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Circle-3(2), Hyderabad

Appeals are dismissed in terms of our aforesaid observations

ITA 147/HYD/2025[2011-2012]Status: DisposedITAT Hyderabad28 Apr 2025AY 2011-2012

Bench: Us:

Section 133ASection 143(1)Section 144Section 147Section 148Section 159Section 2(22)(e)Section 251

holding a conviction that the amount received by the assessee was liable to be brought to tax in his hands as a “deemed dividend” under the provisions of Section 2(22)(e) of the Act, initiated proceedings u/s 147 of the Act. Notice u/s 148 of the Act was issued ... framed the assessment vide his order passed u/s 144 r.w.s. 147 of the Act, dated 27.02.2021, wherein he made an addition of “deemed dividend” of Rs. 4,05,95,758/- u/s 2(22)(e) of the Act and assessed the income of the assessee at Rs.5

Cobol Technologies P.Ltd, New Delhi vs. ACIT, Central Circle-18, New Delhi

In the result, appeal of the Revenue is dismissed and CO of the assessee is allowed

ITA 5505/DEL/2018[2014-15]Status: DisposedITAT Delhi25 Apr 2025AY 2014-15

Bench: Shri Vikas Awasthy & Shri S Rifaur Rahmanआअसं.1977/धिल्ली/2013(नि.व. 2009-10) Sahara India Commercial Corporation Ltd., Sahara India Sadan, 2A, Shakespeare Sarani, Kolkata 700071 ...... अपीलार्थी/Appellant Pan: Aadcs-6118-F बिाम Vs. Deputy Commissioner Of Income Tax, Central Circle-6, R. No. 334, E-2, Ara, ..... प्रनिवादी/Respondent Centre Jhandewalan Extn. New Delhi आअसं.4728, 2795, 4729, 4730 और 4731/धिल्ली/2017(नि.व. 2010-11 से 2014-15)

Section 142

Other Appeals ground no. 1 of appeal. Consequently, the corresponding ground raised by the Revenue in its appeal in ground no. 17 is dismissed. Deemed Dividend u/s.2(22)(e) of the Act:- 54. The AO made addition of Rs.70,61,83,347/- u/s.2(22)(e) of the Act in respect ... from Sahra India Financial Corporation Ltd. (SIFCL). The AO held that the amount received by the assessee from SIFCL was chargeable to tax as Deemed Dividend u/s.2(22)(e) of the Act as Mr. Subrata Roy held majority share holding in both the companies. The CIT(A) deleted the addition

Sudesh Gupta, New Delhi vs. ACIT, Circle- 5(1), New Delhi

Appeal is allowed

ITA 7647/DEL/2017[2013-14]Status: DisposedITAT Delhi25 Apr 2025AY 2013-14

Bench: Shri Satbeer Singh Godara & Shri M. Balaganeshassessment Year: 2013-14 Sh. Sudesh Gupta, Vs. Acit, B-15, Kalindi Colony, Circle-5(1), Opp. Maharani Bagh, New Delhi New Delhi Pan: Aahpg5645G (Appellant) (Respondent) Assessee By None Department By Shri Sahil Kumar Bansal, Sr. Dr Date Of Hearing 07.04.2025 Date Of Pronouncement 25.04.2025 Order

Section 147Section 2(22)(e)

that the sole substantive issue between the parties herein is that of correctness of the learned lower authorities’ action making section 2(22)(e) deemed dividend addition amounting to Rs. 1,29,53,126/-; in the course of assessment framed on 24.11.2016 and upheld in the lower appellate discussion

Assistant Commissioner of Income Tax, Chennai vs. Reji Abraham, Chennai

In the result, CO of the assessee vide CO-53/Chny/2024 is dismissed

ITA 1762/CHNY/2024[2011-12]Status: DisposedITAT Chennai23 Apr 2025AY 2011-12

Bench: Shri Aby T Varkey & Shri Amitabh Shuklaआयकर अपील सं./Ita-1762 / Chny/2024, Assessment Years-2011-12 आयकर अपील सं./Co-53 / Chny/2024, Assessment Years-2011-12 Assistant Commissioner Of Income Reji Abraham, Tax, Corp-Circle-1(1) No.113, Janapriya Crest, Chennai. Pantheon Road, Egmore, Chennai – 600 008. [Pan: Adqpr6864A] आयकर अपील सं./Co-53 / Chny/2024, Assessment Years-2011-12 Reji Abraham, Assistant Commissioner Of Income No.113, Janapriya Crest, Tax, Corp-Circle-1(1) Pantheon Road, Chennai. Egmore, Chennai – 600 008. [Pan: Adqpr6864A] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee By : Mr. N.Arjun Raj, Advocate. प्रत्यर्थी की ओर से /Revenue By : Mr.Nathala Ravi Babu, Cit सुनवाई की तारीख/Date Of Hearing : 28.02.2025 घोषणा की तारीख /Date Of Pronouncement : 23.04.2025 आदेश / O R D E R Per Amitabh Shukla, A.M : The Below Mentioned Appeals Have Been Filed By The Revenue For Ay-2011-12 & Ay-2011-12 Contesting The Order Of Ld. First Appellate Authority Indicated Column-E, Herein Below:-

For Appellant: Mr. N.Arjun Raj, AdvocateFor Respondent: Mr.Nathala Ravi Babu, CIT

Section 2(22)

jurisdictional High Court in the case of CIT V/s L.Alagusundaram Chettiyar [1977] 109 ITR 508(Mds.). The assessee should have offered Rs.16.5 Crs as deemed dividend as te accumulated profits in the company, M/s.Aban Investments Ltd. was Rs.478623697/-, but the assessee has not offered the same for taxation. Page

Dy. Commissioner of Income Tax, Agra vs. Mohammad Ashraf Qureshi, Agra

The appeal stand dismissed

ITA 137/AGR/2024[2014-15]Status: DisposedITAT Agra22 Apr 2025AY 2014-15

Bench: HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Sh. Deependra Mohan, CA – Ld. ARFor Respondent: Sh. Shailender Shrivastava – Ld. Sr. DR

Section 144Section 148Section 2(22)(e)

viii) to (xi), the appellant has challenged addition of Rs. 5 crores u/s 2(22)(e) of IT Act by considering the same as deemed dividend. The appellant submits that the said amount was given for the business purpose. He further submits that this amount was partly on account ... given to the appellant did not tantamount to being a loan or advance, so as to be covered under section 2(22)(e) as deemed dividend as this was purely a commercial transaction. 7.8 In this regard in CIT vs. N.S. Narendra 129 taxmann.com 335 (Karnataka), Hon'ble Karnataka High

Deputy Commissioner of Income-Tax, Coimbatore vs. Ms.Promethean Media Private Limited, Coimbatore

In the result, the appeal filed by the Revenue is dismissed

ITA 2532/CHNY/2024[2015-16]Status: DisposedITAT Chennai22 Apr 2025AY 2015-16

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.2532/Chny/2024 िनधा9रण वष9 /Assessment Year: 2015-16 The Dy. Commissioner Of M/S. Promethean Media Pvt. Ltd., Income Tax, Vs. 53 Ganesh Nagar, Corporate Circle-1, Gn Mill Post, Coimbatore. Coimbatore – 641 029. [Pan: Aahcp 6412H]

For Appellant: Shri R.K.V. Sundar, AdvocateFor Respondent: Ms. Gouthami Manivasagam, JCIT

Section 143(3)Section 2(22)(e)

uphold the same. 4. Grounds No.4 & 5 are relating to deleting the addition made by A.O u/s. 2(22)(e) of the Act on deemed dividend of Rs. 1,18,82,523/-. 4.1 The A.O has made the addition of trade advance of Rs.1,18,82,523/- made ... sister concern M/s. Chromaprint India Pvt. Ltd. as deemed dividend u/s. 2(22)(e) of the Act . The AO has made the addition for the reason that M/s. Chromaprint India Pvt. Ltd. is not appearing in the list of trade creditor and the said advance is appearing under the head

Ajay Bakliwal, Kota vs. ACIT, Central Circle, Kota

In the result, the appeal of the assessee is allowed

ITA 1275/JPR/2024[2012-13]Status: DisposedITAT Jaipur11 Apr 2025AY 2012-13

For Appellant: Sh. Rajendra Sisodia, AdvFor Respondent: Mrs. Anita Rinesh, JCIT-DR

Section 129Section 132(1)Section 139Section 142Section 143(2)Section 143(3)Section 147Section 148Section 153ASection 2(22)(e)

Rs.2,72,26,500/- (6,76,000 + 2,65,50,500) requires to be added in the total income of the assessee as deemed dividend as per provision of section 2(22)(e) of the Act. 4. Feeling dissatisfied with that order of assessment the assessee preferred an appeal before ... considered in the assessment completed u/s 143(3) on 31.03.2015. On perusal of the assessment order, it is observed that the issue related to deemed dividend was not examined by the AO. The information which was available with the AO was made available by the audit party in the case

Shaji Ayyapan, Ernakulam vs. ITO Corporate Ward-2(2), Kochi

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 645/COCH/2024[2015-16]Status: DisposedITAT Cochin08 Apr 2025AY 2015-16

Bench: Shri George George K, Vice- & Shri Inturi Rama Rao

For Appellant: Ms.Krishna K, AdvocataeFor Respondent: Smt.Leena Lal, Sr.AR

Section 143(3)Section 2(22)(e)Section 250

also observed that the said company has got accumulated profit of Rs.1,49,98,596, therefore, the AO considered it as deemed dividend u/s.2(22)(e) and accordingly, the same was assessed to tax. 3. Being aggrieved by the assessment order, appellant filed an appeal before

Joseph Mathew Kunnathettu, Mumbai vs. The Assistant Commissioner of Income Tax, Circle-3, Kalyan

In the result, the appeal is accordingly allowed in the above terms

ITA 899/MUM/2024[2012-13]Status: DisposedITAT Mumbai04 Apr 2025AY 2012-13

Bench: Ms. Padmavathy S & Shri Raj Kumar Chauhanjoseph Mathew Kunnathettu Vs. Acit Circle 3, 14, Trimurthi Apartment, Gandhi 2Nd Floor, Rani Mansion, Nagar, Dombivili (E), Maharashtra – Murbad Road Kalyan, 421 201 Maharashtra – 421 301 Pan: Ailpk9660M (Appellant) (Respondent)

Section 142(1)Section 148Section 2(22)(e)Section 250Section 271(1)(c)Section 68Section 69A

deal was executed in the next year and in this regard has enclosed copy of the agreement. Therefore, assessee submitted that the provision of deemed dividend u/s 2(22)(e) is not attracted in his case. The AO did not agree with the contentions of the assessee and made addition

M/S. Bhushan Steel Ltd., New Delhi vs. ACIT, New Delhi

In the result, the appeal of the assessee for AY 2017-18 is partly allowed

ITA 1336/DEL/2016[2009-10]Status: DisposedITAT Delhi02 Apr 2025AY 2009-10

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharma

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Dayainder Singh Sidhu, CIT DR

Section 132Section 143(2)Section 153A

absence of any explanation offered by the assessee and not satisfied with the submissions of the assessee, the AO treated the same as deemed dividend u/s 2(22)(e) of the Act. 47. Ld. DR of the Revenue brought to our notice findings of the ld. CIT (A)that assessee ... assessee’s appeal: These grounds relate to the total addition of Rs. 6,21,30,00/- made u/s 2(22)(e) on account of deemed dividend. Ld. CIT(A) has rightly deleted the amount of Rs. 4,60,75,106/-/- for which department is in appeal

Vikas Gupta, Indore vs. Pr. Commissioner of Income Tax (Central), Nagpur

In the result, assessee’s appeal stands allowed

ITA 186/NAG/2024[2016-17]Status: DisposedITAT Nagpur21 Mar 2025AY 2016-17

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Ms. Neha JainFor Respondent: Shri Sandipkumar Salunke

Section 132Section 139(1)Section 143(3)Section 153ASection 263

Thereafter search was carried out under section 132 of the Income Tax Act on 15.11.2007. The revenue sought to make addition on account of deemed dividend under section 2(22)(e) of the Income Tax Act. 19. The Hon‟ble Delhi High Court after considering host of decisions propounded following

Dy. C.I.T. Central Cir.-2(2), Nagpur vs. M/S Mansa Agro Food Processing Pvt. Ltd., Nagpur

ITA 375/NAG/2016[2010-11]Status: DisposedITAT Nagpur21 Mar 2025AY 2010-11

Bench: Shri V. Durga Rao, Hon'Ble & Shri K.M. Roy, Hon'Ble

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER AND SHRI