“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

ACIT-27(3), Mumbai vs. Surjit Singh Amrik Singh Saini, Mumbai

ITA 4029/MUM/2024[2016-17]Status: DisposedITAT Mumbai05 Feb 2025AY 2016-17

Bench: Shri B.R. Baskaran & Shri Raj Kumar Chauhan

For Appellant: Shri Suchek Anchaliya, CA &For Respondent: Dr. Kishor Dhule, CIT-DR

Section 142(1)Section 143(3)Section 147Section 148Section 2(22)(e)

surplus of Rs.45.18 crores. Hence, the AO took the view that the loan taken by the assessee is required to be assessed as “deemed dividend" u/s 2(22)(e) of the Act. Accordingly, he entertained the belief that the income has escaped assessment in the hands of the assessee ... incomplete. Accordingly, the AO held that the loan taken by the assessee from the above said company has to be assessed as deemed dividend u/s 2(22)(e) of the Act. However, in terms of sec.2(22)(e) of the Act, he restricted the amount of deemed dividend

ACIT., Central Circle-2(4), Hyderabad vs. M/S. Maithri Laboratories Private Limited, Hyderabad

ITA 1124/HYD/2024[2020-21]Status: DisposedITAT Hyderabad04 Feb 2025AY 2020-21

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon'Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 143(3)Section 153ASection 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... basis at 10% of the expenditure incurred against unaccounted receipts from sale of spent solvent / scrap and dismissed the addition made on account of deemed dividend in the hands of the appellant. 4.1. Aggrieved by the order of LD.CIT(A), the assessee is now in appeal before the Tribunal

ACIT., Central Circle-2(4), Hyderabad vs. M/S. Msn Life Sciences Pvt. Ltd., Hyderabad

ITA 1123/HYD/2024[2020-21]Status: DisposedITAT Hyderabad04 Feb 2025AY 2020-21

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

ACIT., Central Circle-2(4), Hyderabad vs. Msn Pharmachem Pvt. Ltd., Hyderabad

In the result, the appeal of assessee in ITA No

ITA 1122/HYD/2024[2019-20]Status: DisposedITAT Hyderabad04 Feb 2025AY 2019-20

Bench: Hon’Bleand

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... assessee’s appeal and ground nos.4 and 5 of Revenue’s appeal for A.Y. 2019-20 is the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course of search operation at the premises of MSN Group Companies, books of accounts

Msn Life Sciences Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

ITA 1072/HYD/2024[2020-21]Status: DisposedITAT Hyderabad04 Feb 2025AY 2020-21

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

Msn Life Sciences Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

ITA 1071/HYD/2024[2019-20]Status: DisposedITAT Hyderabad04 Feb 2025AY 2019-20

Section 132Section 143(2)Section 153ASection 153A(1)Section 2(22)(e)

Msn Life Sciences Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

In the result, the appeal of assessee in ITA No

ITA 1068/HYD/2024[2014-15]Status: DisposedITAT Hyderabad04 Feb 2025AY 2014-15

Bench: Hon’Bleand

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... assessee’s appeal and ground nos.4 and 5 of Revenue’s appeal for A.Y. 2019-20 is the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course of search operation at the premises of MSN Group Companies, books of accounts

Msn Life Sciences Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

ITA 1067/HYD/2024[2013-14]Status: DisposedITAT Hyderabad04 Feb 2025AY 2013-14

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

Maithri Laboratories Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

ITA 1059/HYD/2024[2020-21]Status: DisposedITAT Hyderabad04 Feb 2025AY 2020-21

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon'Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 143(3)Section 153ASection 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... basis at 10% of the expenditure incurred against unaccounted receipts from sale of spent solvent / scrap and dismissed the addition made on account of deemed dividend in the hands of the appellant. 4. 1. Aggrieved by the order of LD.CIT(A), the assessee is now in appeal before the Tribunal

Msn Pharmachem Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

Appeal are dismissed

ITA 1053/HYD/2024[2014-15]Status: DisposedITAT Hyderabad04 Feb 2025AY 2014-15

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... APPEAL for A.Y. 2019-20 29. The ground nos. 4 and 5 of Revenue’s appeal pertains to the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course 38 ITA Nos.1050 to 1053/Hyd/2024 and ITA 1122/Hyd/2024 of search operation

Msn Pharmachem Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

Appeal are dismissed

ITA 1052/HYD/2024[2013-14]Status: DisposedITAT Hyderabad04 Feb 2025AY 2013-14

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. and Shri K.S. Rajendra KumarFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... APPEAL for A.Y. 2019-20 29. The ground nos. 4 and 5 of Revenue’s appeal pertains to the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course A/MSN/Off/HD3. On verification, the AO found that there was a substantial amount

Msn Pharmachem Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

Appeal are dismissed

ITA 1051/HYD/2024[2012-13]Status: DisposedITAT Hyderabad04 Feb 2025AY 2012-13

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. andFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... APPEAL for A.Y. 2019-20 29. The ground nos. 4 and 5 of Revenue’s appeal pertains to the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course 38 ITA Nos.1050 to 1053/Hyd/2024 and ITA 1122/Hyd/2024 of search operation

Msn Pharmachem Private Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

Appeal are dismissed

ITA 1050/HYD/2024[2011-12]Status: DisposedITAT Hyderabad04 Feb 2025AY 2011-12

Bench: Shri Laliet Kumar, Hon’Ble & Shri G. Manjunatha, Hon’Ble

For Appellant: Shri M.V. Prasad, C.A. and Shri K.S. Rajendra KumarFor Respondent: Shri B. Bala Krishna, CIT-DR

Section 132Section 153ASection 153A(1)Section 2(22)(e)

trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend. 5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance ... APPEAL for A.Y. 2019-20 29. The ground nos. 4 and 5 of Revenue’s appeal pertains to the addition made on account of deemed dividend (dividend distribution tax in the hands of the appellant). During the course A/MSN/Off/HD3. On verification, the AO found that there was a substantial amount

Assistant Commissioner of Income Tax, Circle - 7.1, Kolkata vs. Ms. Soyuz Trading Company Limited, Kolkata

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

ITA 336/KOL/2024[2014-2015]Status: DisposedITAT Kolkata17 Jan 2025AY 2014-2015

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 142(1)Section 143(2)Section 14ASection 2(22)Section 2(22)(e)

Counsel further submits that CBDT circular No. 495 dated 22.09.1987 issued in respect of amounting provision of Finance Act, 19987 to the effect the deemed dividend would be taxed in the hands of source where the company makes the payment by way of loan / advances where a member ... PCIT vs. Suprabha Industries Ltd. (supra), Hon’ble High Court has held thus: “Section 2(22)(e) of the Income tax Act, 1961- Deemed Dividend (loans and advances to share holders)- Assessment year 2012-13 – Assessee company received unsecured loan from its group companies during relevant assessment y ear- Assessing

M/S Lighthouse Developers Private Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle 3(2)(1), Mumbai

In the result, the appeal of the assessee bearing ITA No

ITA 4759/MUM/2024[2015-16]Status: DisposedITAT Mumbai17 Jan 2025AY 2015-16

Bench: Shri.Narendra Kumar Billaiya & Shri Anikesh Banerjee

For Appellant: Shri Kapil SanghviFor Respondent: Shri Ram Krishn Kedia (SR DR)

Section 143(3)Section 2(22)(e)Section 250Section 68

29/12/2017, determining a total income of Rs. 18,98,78,394/-. The ld. A O made following additions which are in dispute before usrelated deemed dividend under section 2(22)(e) of the Act amount to Rs. 12,00,53,000/-; unexplained cash credit under section

Arup Kumar Bhowmick, Kolkata vs. I.T.O., Ward - 1(1), Burdwan

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

ITA 1513/KOL/2024[2010-2011]Status: DisposedITAT Kolkata16 Jan 2025AY 2010-2011

Bench: Sri Sanjay Garg & Sri Rakesh Mishra

Section 143(3)Section 250

assessee amounting to Rs. 3,41,05,000/-. The Ld. AO also added an amount of Rs. 15,45,004/- on account of deemed dividend u/s. 2(22)(e) of the Act. The assessee preferred an appeal before the Ld. CIT(A), Asansol, who confirmed the addition

Mustasq Ahmad, Chennai vs. ITO, Intl Tax Ward 1(1), Chennai

In the result, appeal filed by the assessee is allowed

ITA 1351/CHNY/2023[2013-14]Status: DisposedITAT Chennai13 Jan 2025AY 2013-14

Bench: Hon’Ble Shri Manu Kumar Giri & Hon’Ble Shri S.R. Raghunathaआयकर अपील सं./Ita No.1351/Chny/2023 िनधा"रण वष"/Assessment Year: 2013-2014. Mustaq Ahmad, The Income Tax Officer, No.160, Mustafa Centre, Vs. International Taxation, Usman Road, Ward 1(1) T. Nagar, Chennai. Chennai 600 017. Pan: Adepa 1181B (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Ms. Lekha, C.A, ""यथ" क" ओर से/Respondent By : Mr. Nilay Baran Som, Cit. सुनवाई क" तारीख/Date Of Hearing : 30.10.2024 घोषणा क" तारीख/Date Of Pronouncement : 13.01.2025 आदेश /O R D E R Per Manu Kumar Giri () This Appeal Filed By The Assessee Is Directed Against The Order Of The Commissioner Of Income Tax (A), Chennai-16 [‘Cit(A)’ Short] Dated 27.09.2023 For Assessment Year 2013-14. 2. In This Appeal, The Assessee Has Raised Five (5) Grounds Of Appeal. However, The Counsel For The Assessee Has Vehemently Pressed A Ground No.2 That There Was No Fresh Material On Which The Ao Has Issued Notice Dated 31.03.2021 U/S 148 Of The Income Tax Act, 1961 (‘Act’ In Short). G.No.2 Is As Under: ‘’2. At The Outset, The Ao Has No Jurisdiction To Reopen The Assessment, As All The Material Facts Were With The Ao Even At The Time Of Completing The Original Assessment & There Was No Fresh Material On Which The Ao Has Issued Notice. The Notice Issued By The Ao U/S.148 Of The Act Is Ab Initio Void & On This Ground Alone The Reassessment Deserves To Be Cancelled’’.

For Appellant: Ms. Lekha, C.AFor Respondent: Mr. Nilay Baran Som, CIT

Section 143(3)Section 147Section 148Section 2(22)(e)

Rs.2,16,08,171/-. As such, the money advanced by the company to the assessee during the year has to be treated as deemed dividend since the provisions of Sec.2(22)(e) of the Act are very much attracted. Upon due consideration of the above facts, the case was taken ... against the said order. Therefore the assessment is completed by treating the money advanced by the company to the assessee during the year as deemed dividend as per the provisions of Sec.2(22)(e) of the Act. Since, as për the balance sheet of M/s. Adampur Distributors

Akhil Taneja, New Delhi vs. ITO Ward 1(1), Gurgaon

In the result, the appeal of the Revenue is dismissed

ITA 3560/DEL/2023[A.Y. 2013-14]Status: DisposedITAT Delhi07 Jan 2025

Bench: Shri Mahavir Singh & Shri Amitabh Shukla[Assessment Year : 2010-11] Dcit Vs M/S. Gen X Commodities (P) Ltd., Central Circle-29 Fa-45, Shivaji Enclave New Delhi New Delhi-110027 Pan-Aaaca2303H Appellant Respondent Shri Jitender Singh, Cit Dr Revenue By Assessee By Shri Ved Jain, Adv. & Shri Ayush Garg, Ca Date Of Hearing 26.06.2025 Date Of Pronouncement 25.07.2025

Section 14ASection 2(22)(e)Section 250(6)

erred in law and on facts by deleting the addition of Rs. 60,40,87,544/- made on account of deemed dividend u/s 2(22)(e) of the Act. f) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred ... ground no. (d) raised by the Revenue. 15. Ground Nos.(e) & (f) raised by the Revenue concerns addition under s. 2(22)(e) towards deemed dividend amounting to INR 60,40,87,544/-. 16. The submissions made by the assessee before the CIT(A) reads as under:- 10.2 “During

Iswar Chand Dubey, Delhi vs. ITO, Ward-68 (1), Delhi

ITA 2985/DEL/2023[2017-18]Status: DisposedITAT Delhi07 Jan 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri Brajesh Kumar Singh

Section 147Section 151Section 2(22)(e)

erred on facts and in law in treating the entire amount paid by Optic Electronic India (P) Limited ("Optic") to Raas as deemed dividend in the hands of the appellant, rather than restricting the addition to the amount proportionate to the shareholding of the appellant in Optic as held ... Electronics Pvt. Ltd. and Raas Intratech Pvt. Ltd., as per standard business practices. It is not a loan or advance account. No addition towards deemed dividend is to be made for credits in the current account. The addition of Rs.3,90,00,000/- erroneously made be deleted. 7. Incorrect interpretation

Punit Kumar Aggarwal, Delhi vs. ITO, Ward-36(2), Delhi

ITA 2983/DEL/2023[2017-18]Status: DisposedITAT Delhi07 Jan 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri Brajesh Kumar Singh

Section 147Section 151Section 2(22)(e)