“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

Maxport India Private Limited, Chandigarh vs. Dy. Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 582/CHANDI/2023[2014-15]Status: DisposedITAT Chandigarh03 Mar 2025AY 2014-15

Section 127Section 132Section 153ASection 153D

under : ITA No. 489/Chandi/2023 (Sanjeev Aggarwal, AY 2017-18) (Assessee's Appeal) 1. Ground No. 1 – General in nature. 2. Ground no. 2 – Deemed dividend on account of credits exceeding remuneration / payments received from SEPL. 3. Ground no. 3 - Deemed dividend on account of credits exceeding remuneration / payments received from ... Ground no. 6 – General in nature. ITA No. 505/Chandi/2023 Sanjeev Aggarwal, AY 2017-18 (Appeal by Department) 1. Ground No. 1 – Deemed dividend u/s 2(22)(e) on account of credit credits exceeding remuneration / payments. 2. Ground no. 2 – General in nature. ITA No. 480/Chandi/2023 Sanjeev Aggarwal

DCIT, Chandigarh vs. Sanjeev Aggarwal, Chandigarh

ITA 506/CHANDI/2023[2018-19]Status: DisposedITAT Chandigarh03 Mar 2025AY 2018-19

Section 127Section 132Section 153ASection 153D

under : ITA No. 489/Chandi/2023 (Sanjeev Aggarwal, AY 2017-18) (Assessee’s Appeal) 1. Ground No. 1 – General in nature. 2. Ground no. 2 – Deemed dividend on account of credits exceeding remuneration / payments received from SEPL. 3. Ground no. 3 - Deemed dividend on account of credits exceeding remuneration / payments received from ... Ground no. 6 – General in nature. ITA No. 505/Chandi/2023 Sanjeev Aggarwal, AY 2017-18 (Appeal by Department) 1. Ground No. 1 – Deemed dividend u/s 2(22)(e) on account of credit credits exceeding remuneration / payments. 2. Ground no. 2 – General in nature. ITA No. 480/Chandi/2023 Sanjeev Aggarwal

DCIT, CC 1, Chandigarh vs. Sanjeev Aggarwal, Chandigarh

The appeals of the revenue are treated as dismissed

ITA 505/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18

Section 127Section 153DSection 2

under : 5 ITA No. 489/Chandi/2023 (Sanjeev Aggarwal, AY 2017-18) (Assessee’s Appeal) 1. Ground No. 1 – General in nature. 2. Ground no. 2 – Deemed dividend on account of credits exceeding remuneration / payments received from SEPL. 3. Ground no. 3 - Deemed dividend on account of credits exceeding remuneration / payments received ... Ground no. 6 – General in nature. ITA No. 505/Chandi/2023 Sanjeev Aggarwal, AY 2017-18 (Appeal by Department) 1. Ground No. 1 – Deemed dividend u/s 2(22)(e) on account of credit credits exceeding remuneration / payments. 2. Ground no. 2 – General in nature. ITA No. 480/Chandi/2023 Sanjeev Aggarwal

Sanjeev Aggarwal, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 489/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18

Section 127Section 132Section 153ASection 153D

Sanjeev Aggarwal, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 480/CHANDI/2023[2018-19]Status: DisposedITAT Chandigarh03 Mar 2025AY 2018-19

Section 127Section 132Section 153ASection 153DSection 2(22)(e)

Ramji Harakchand Shah, Mumbai vs. ACIT 30(3), Mumbai

In the result, appeal of the assessee is allowed

ITA 5362/MUM/2024[2013-14]Status: DisposedITAT Mumbai28 Feb 2025AY 2013-14

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 2(22)(e)Section 271(1)(c)Section 273B

outstanding debit balance wherein assessee has paid amount of Rs.57,50,000/- and received Rs.1,26,75,000/-, the difference has been treated as deemed dividend. Not only that he has worked out some peak debit balance in the ledger of company and has added further amount of Rs.10

M/S. Linde India Ltd(Formerly Boc India Ltd), Kolkata vs. PCIT, Kol, Kolkata

In the result, the appeal of assessee is allowed

ITA 510/KOL/2023[2016-17]Status: DisposedITAT Kolkata26 Feb 2025AY 2016-17

Bench: Shri George Mathan & Shri Rakesh Mishraassessment Year: 2016-17

For Appellant: Shri Ketan Ved, AR & Shri Alpesh Gupta, ARFor Respondent: Shri Praveen Kishore, CIT, DR

Section 143(3)Section 2(22)(e)Section 263

assessee from M/s. LEIPL and M/s. Linde India Ltd. (M/s. LIL) being fellow subsidiary of the holding company M/s. Linde AG (Germany) was deemed dividend. It was submitted by the Ld. AR that as per the decision of the Special Bench of the ITAT in the case of ACIT ... Bhaumik Colour (P) Ltd. 118 ITD 1 (Mum. SB), deemed dividend was liable to be taxed only when the lendee is the shareholder of the lender company. It was a submission that in the present case the assessee is not a shareholder of M/s. LEIPL. It was thus submitted that

Sumitkumar Devchandbhai Savaliya, Bodakdev vs. DCIT, Circle-4(1)(1), Ahmedabad

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 964/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad25 Feb 2025AY 2017-18

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Vivek Chavda, A.RFor Respondent: Smt. Mamta Singh, Sr. DR

Section 147Section 2(22)(e)Section 250

time. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.34,65,000 being deemed dividend u/s 2(22)(e) r.W.S. 56(2). 3.2 That the Ld. CIT(A) ought not to have upheld addition of Rs.34,65,000 being ... deemed dividend u/s 2(22)(e) r.w.s. 56(2). 3.3 The Ld. CIT(A) has failed to appreciate that the appellant had received the funds back which was given previously to the impugned company. The Ld. CIT(A) has also failed to appreciate that the appellant had utilized those funds

Lodha Foundation, Jaipur vs. CIT(Exemption), Jaipur

In the result, appeal of the Revenue is dismissed

ITA 12/JPR/2025[2025-26]Status: DisposedITAT Jaipur21 Feb 2025AY 2025-26

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalm/S. Kaizen Enterprises Pvt. Ltd., Opera Hospital Road, S-67-68, Indra Vihar, Kota- 324005 Pan No.: Aabck 7751L ...... Appellant Vs. Acit, Central Circle, Kota ...... Respondent Acit, Circle-2, Kota ...... Appellant Vs. M/S. Kaizen Enterprises Pvt. Ltd., Opera Hospital Road, S-67-68, Indra Vihar, Kota- 324005 Pan No.: Aabck7751L ...... Respondent

For Appellant: Mr. Mahendra Gargieya, Adv. &For Respondent: Ms. Alka Gautam, CIT-DR, Ld. DR

Section 132Section 143(3)Section 153ASection 250

r.w.s. 153A Non Deduction 23,750/- Jaipur dt.19.03.2015 of TDS Addition Excess interest 6,66,129/- deleted by paid on loan CIT(A) Jaipur Deemed dividend u/s 2,37,340/- ACIT Central u/s 143(3) Addition 2(22)(e) 2009-10 Circle-3 r.w.s. 153A deleted by Late fees paid ... Jaipur dt.19.03.2015 CIT(A) Jaipur to development 35,407/- authority Deemed dividend u/s 1,95,385/- ACIT Central u/s 143(3) Addition 2(22)(e) 2008-09 Circle-3 r.w.s. 153A deleted by Jaipur dt.19.03.2015 CIT(A) Jaipur Misc. Exp w/o 29,666/- Deemed dividend u/s 2,08,366/- ACIT

Lodha Foundation, Jaipur vs. CIT (Exemption), Jaipur

In the result, appeal of the Revenue is dismissed

ITA 11/JPR/2025[2025-26]Status: DisposedITAT Jaipur21 Feb 2025AY 2025-26

For Appellant: Mr. Mahendra Gargieya, Adv. &For Respondent: Ms. Alka Gautam, CIT-DR, Ld. DR

Section 132Section 143(3)Section 153ASection 250

Assistant Commissioner of Income Tax, Circle-2, Kota vs. Kaizen Enterprises Pvt. Ltd., Kota

In the result, appeal of the Revenue is dismissed

ITA 390/JPR/2024[2017-18]Status: DisposedITAT Jaipur18 Feb 2025AY 2017-18

For Appellant: Mr. Mahendra Gargieya, Adv. &For Respondent: Ms. Alka Gautam, CIT-DR, Ld. DR

Section 132Section 143(3)Section 153ASection 250

Kaizen Entreprises Pvt. Ltd., Kota vs. ACIT-DCIT, Central Circle, Kota

In the result, appeal of the Revenue is dismissed

ITA 156/JPR/2024[2013-14]Status: DisposedITAT Jaipur18 Feb 2025AY 2013-14

For Appellant: Mr. Mahendra Gargieya, Adv. &For Respondent: Ms. Alka Gautam, CIT-DR, Ld. DR

Section 132Section 143(3)Section 153ASection 250

Alcom Investment Pvt Ltd, Mumbai vs. Income Tax Officer, Kolkata

The appeal of the assessee is allowed for statistical purposes

ITA 1366/KOL/2024[2017-2018]Status: DisposedITAT Kolkata13 Feb 2025AY 2017-2018

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishrai.T.A. No.1366/Kol/2024 Assessment Year: 2017-18 Alcom Investment Pvt. Ltd..………………………………………..….……….Appellant 10Th Floor, Gold Crest, Ns Road No.10, Jvpd Scheme, Vile Parle (W), Mumbai-400049. [Pan: Aaccg1658B] Vs. Ito, Ward-12(1), Kolkata………................................……........……...…..…..Respondent Appearances By: Shri Deepak Shaha, Ar, Appeared On Behalf Of The Assessee. Shri Archana Gupta, Addl. Cit- Sr. Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : February 12, 2025 Date Of Pronouncing The Order : February 13, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 29.05.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Company Is Engaged In The Business Of Trading In Shares & Financing Loans. The Assessee Has Filed Its Return Of Income For Assessment Year 2017-18 On 03.11.2017 Declaring Income Of Rs.15,16,410/-. The Case Of The Assessee Was Selected For Scrutiny & During The Assessment Proceedings, It Was Observed That The Assessee Had Received An Advance Of Rs.20,00,000/- From M/S Mars Fincom Pvt. Ltd. In The Financial Year 2016-17. It Was Noted By The Assessing Officer That The Lender Was A Sister Concern Of Assessee & Held 16.21% Shares In It. Several Notices Were Issued To The Assessee During The Assessment Proceedings But There Was No Proper

Section 143(2)Section 144Section 147Section 2(22)(e)Section 250

Assessment Year: 2017-18 Alcom Investment Pvt. Ltd response from the assessee’s side. Based on this, the Assessing Officer treated the transaction as deemed dividend u/s 2(22)(e) of the Act and made an addition of Rs.20,00,000/- in the hands of the assessee by completing assessment

ACIT 2(1)(1), Agra vs. Madhukar Kapur, Agra

Appeal is dismissed

ITA 376/AGR/2015[2010-11]Status: DisposedITAT Agra12 Feb 2025AY 2010-11

Bench: Shri Satbeer Singh Godara & Shri Manoj Kumar Aggarwalacit, Vs. Shri Madhukar Kapur Circle-2(1)(1) 64-Surya Nagar, Agra Agra "ायीलेखासं./जीआइआरसं./Pan/Gir No: Acnpk8849G Appellant .. Respondent

For Appellant: Sh. Anurag Sinha, AdvFor Respondent: Sh. Shailender Shrivastava, Sr. DR

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

erred in law and on facts in deleting the addition of Rs. 1,94,70,000/- made on account of deemed dividend P a g e | 2 Shri Madhukar Kapur particularly on the basis of report of the ROC, without appreciating the facts of the case, especially that the case ... page 3 onwards has quoted earlier order in the assessee’s case itself for preceding assessment 2009-10 deleting identical Section 2(22)(e) deemed dividend addition relating to buy-back of shares, forming subject matter of adjudication herein. 4. We make it clear that although the learned departmental representative

M/S Yum Restaurants (India) Pvt. Ltd., Gurgaon vs. ITO, New Delhi

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

ITA 2369/DEL/2016[1999-00]Status: DisposedITAT Delhi11 Feb 2025AY 1999-00

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

Subramaniam Swaminathan Iyer, Bhilai, Durg vs. Deputy Commissioner of Income Tax-1(1), Bhilai, Durg

In the result, appeal of the assessee is partly allowed/partly allowed for statistical purposes in terms of our aforesaid observations

ITA 71/RPR/2023[2012-13]Status: DisposedITAT Raipur10 Feb 2025AY 2012-13

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No.71/Rpr/2023 "नधा"रण वष" / Assessment Year : 2012-13 Subramaniam Swaminathan Iyer 12-A/7, Nehru Nagar, Bhilai (C.G.)-490 020 Pan: Anwps2381P

For Appellant: S/shri Milind Bhusari, AdvocateFor Respondent: Shri S.L Anuragi, CIT-DR

Section 143(2)Section 143(3)Section 14ASection 2(22)(e)Section 68

justified. 4. Ld. CIT(A) erred in confirming the addition of Rs.1,45,75,000/- made by the A.O on account of deemed dividend u/s.2(22)(e) without appreciating the facts/evidences. The addition made by the A.O and confirmed by the Ld. CIT(A) is arbitrary, illegal and not justified ... Rs.1,35,00,000/-; and (ii) loan of Rs.10,75,000/-, therefore, the A.O made an addition of the same by treating it as “deemed dividend” u/s.2(22)(e) of the Act. Also, the A.O disallowed the assessee’s claim for donation of Rs.15,000/-. 8 Subramaniam Swaminathan Iyer

Manjit Singh, Mumbai vs. ITO 11(1)(1), Mumbai

In the result, appeal of the assessee is allowed for statistical purposes

ITA 6534/MUM/2024[2015-2016]Status: DisposedITAT Mumbai07 Feb 2025AY 2015-2016

Bench: Shri Rahul Chaudhary & Shri Girish Agrawalassessment Year: 2015-16

For Appellant: Shri K. Gopal, AdvocateFor Respondent: Shri R.R. Makwana, Addl. CIT

Section 143(3)Section 2(22)(e)Section 54Section 54FSection 68

order dated 25/08/2023 is passed in breach of principles of natural justice and the same is bad in law. II. Merit B. Addition as Deemed Dividend u/s 2(22)(e) 3. The Ld. NFAC erred in confirming the addition of Rs.64,01,819/- made by the AO invoking provisions ... cannot be treated as advances or loan in the hands of the Appellant. Thus, addition of Rs. 64,01,819/- treating the same as deemed dividend under section 2(22)(e) of the Act is not at all justified and the same may be deleted. 4. The Ld. NFAC

Deputy Commissioner of Income Tax Circle -2, Nagpur vs. Shri Rohan Jagdale, Nagpur

In the result, appeal of the Revenue dismissed

ITA 85/NAG/2020[2014-15]Status: DisposedITAT Nagpur06 Feb 2025AY 2014-15

Bench: Shri V. Durga Rao & Shri Khettra Mohan Roy

For Appellant: Shri K.P. Dewani, AdvocateFor Respondent: Shri Abhay Y. Marathe, Sr. DR

Section 143(2)Section 143(3)Section 2(22)(e)Section 68

u/sec.2(22)(e) of the Act by accepting the arguments of the assessee that the accumulated profits having already been subjected to tax as deemed dividend u/sec.2(22)(e) of the Act there remains no accumulated profit which can be considered the assessing deemed income in the hands of assessee ... Airan Consultants Pvt. Ltd., Therefore, the Assessing Officer has rightly made the addition of 6 ITA.No.85/NAG./2020 Rs.1,47,57,806/- as deemed dividend u/sec.2(22)(e) of the Act. He further submitted that the Assessing Officer assessed the rental income of Rs.3,36,000/- after giving standard deduction

M/S. Merino Industries Limited, Kolkata vs. DCIT, Circle - 12(1), Kolkata

In the result, the appeal of the revenue is hereby dismissed

ITA 292/KOL/2019[2014-15]Status: DisposedITAT Kolkata06 Feb 2025AY 2014-15

Bench: Shri Sanjay Garg & Shri Sanjay Awasthii.T.A No.174/Kol/2019 Assessment Year: 2014-15 Dcit, Circle-12(1), Kolkata…………………….................................……Revenue Vs. M/S Merino Industries Ltd.…………....................................……...…..…..Assessee 5, Alexandra Court, 60/1, Chowringhee Road, Kolkata – 700020. [Pan: Aaacc9186C] I.T.A No.292/Kol/2019 Assessment Year: 2014-15 M/S Merino Industries Ltd …………………….…….......................…… Assessee 5, Alexandra Court, 60/1, Chowringhee Road, Kolkata – 700020. [Pan: Aaacc9186C] Vs. Dcit, Circle-12(1), Kolkata.…….................................……....…........….. Revenue Appearances By: Shri Shyam Sundar Jha, Ar, Appeared On Behalf Of The Assessee. Shri Prakash Nath Barnwal, Cit-Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : December 12, 2024 Date Of Pronouncing The Order : February 06, 2025 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Captioned Are Cross-Appeals, One By The Assessee & The Other By The Revenue Against The Common Order Dated 09.10.2018 Of The Commissioner Of Income Tax (Appeals)-4, Kolkata [Hereinafter Referred To As The ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). Since The Facts & Issued Involved In Both The Appeals Are Identical & Both The Appeals Are Arising Out Of The Same

Section 2(22)Section 250Section 801A

presumption that the fresh loan taken by Merino Industries Limited after repayment therefore the higher pick balance of loan account should be considered as deemed dividend in the hand of the assessee for the financial transaction between the assessee and its subsidiary company. 2. On the fact and circumstances ... erred in invoking of section 2(22) (e) of the Act on the ground that the higher pick balance should be considered as deemed dividend for the transaction which is not in nature of loan & advances. The learned CIT(A) ignored to consider fully that repayment of loan was made

DCIT, Circle - 12(1), Kolkata vs. M/S. Merino Industries Limited, Kolkata

In the result, the appeal of the revenue is hereby dismissed

ITA 174/KOL/2019[2014-15]Status: DisposedITAT Kolkata06 Feb 2025AY 2014-15

Bench: Shri Sanjay Garg & Shri Sanjay Awasthi

Section 2(22)Section 250Section 801A