“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

Faiz Zakir Vali, Nagpur vs. Assistant Commissioner of Income Tax Central Circle-2(1), Nagpur

In the result, appeal filed by the assessee is allowed

ITA 65/NAG/2021[2010-11]Status: DisposedITAT Nagpur06 Aug 2024AY 2010-11

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

For Appellant: Smt. Veen AgrawalFor Respondent: Shri Kailash C. Kanojiya

Section 10Section 132(4)Section 139Section 139(4)Section 143(2)Section 153ASection 2(22)(e)

justified in law as well as fact in treating advance of Rs.82,00,000/- given by the company to the appellant as deemed dividend under Sec 2(22)(e) of the Income Tax Act. (4). Whether the Ld. CIT(A) is justified in law and facts in holding that ... determining total income as ` 3,79,89,230, after making addition of ` 82,00,000, on account of Faiz Zakir Vali ITA no.65/Nag./2021 deemed dividend under section 2(22)(e) of the Act and ` 2,55,00,000, on account of short term capital gains on sale of land

M/S. Shri Rang Infrastructure Pvt. Ltd., Gandhinagar vs. DCIT, Gandhinagar Circle, Gandhinagar

In the result, appeal of the assessee is partly allowed

ITA 666/AHD/2019[2013-14]Status: DisposedITAT Ahmedabad30 Jul 2024AY 2013-14

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaassessment Year: 2013-14

Section 129Section 142(1)Section 143(1)Section 143(2)Section 44A

shares of the company. After taking cognisance of the assessee’s submissions, the Assessing Officer held that Section 2(22)(e) of the Act, deemed dividend amounting to Rs.1,04,78,866/- and Rs.41,64,532/- which is restricted to the accumulated profit of the assessee needs to be taxed ... Patel respectively. The assessee company was liable to pay dividend distribution tax of Rs.21,96,510/- i.e. 15% of Rs.1,46,43,398/-, on deemed dividend as applicable as per Income Tax Act. 5. Being aggrieved by the Assessment Order, the assessee filed appeal before

Pp Jewellers Private Limited, Delhi vs. Assistant Commissioner of Income Tax, CC-25, Delhi

ITA 2449/DEL/2024[2012-13]Status: DisposedITAT Delhi29 Jul 2024AY 2012-13

Bench: Shri Shamim Yahya & Shri Vimal Kumarpp Jewellers Private Ltd., Vs. Acit, Cc – 25, H-05, Pp Tower, Delhi. Netaji Subhash Place, Pitampura, Delhi – 110 034. (Pan : Aaacp0874G) (Appellant) (Respondent) Assessee By : Shri Ss Nagar, Advocate Shri Gaurav Sachdeva, Ca Revenue By : Shri Brij Mohan Singh, Sr. Dr Date Of Hearing : 24.07.2024 Date Of Order : 29.07.2024 Order Per Shamim Yahyathis Appeal By The Assessee Is Directed Against The Order Of The Ld. Cit (Appeals)- 29, New Delhi Dated 19.03.2024 For The Assessment Year 2012-13. 2. Grounds Of Appeal Taken By The Assessee Read As Under :- “1. That On The Facts & In The Circumstances Of The Case, The Disallowance, Imposition Of Tax & Interest With Reference Thereto, The Quantification Of Taxable Income & The Tax Liability, Has Been Grossly Unjustified, Erroneous & Unsustainable & Necessary Direction Be Given To The Ao To Give Appropriate Relief In Accordance With Law. 2. That On The Facts & In The Circumstances Of The Case, The Ld. Cit- (A) Was Not Justified & Grossly Erred In Dismissing The Appeal On Account

For Appellant: Shri SS Nagar, AdvocateFor Respondent: Shri Brij Mohan Singh, Sr. DR

Section 2(22)(c)

erred in upholding the order of the Ld. AO added amount taken by appellant from its subsidiary in ordinary course of business as deemed dividend u/s 2(22)(c) of the Act while computing tax liability under the normal provisions of the Act.” 3. Assessing Officer made addition for deemed

Shreekant Ray, Kolkata vs. ITO, Ward-61(3), Kolkata

In the result, the appeal of the assessee is partly allowed

ITA 824/KOL/2024[2018-19]Status: DisposedITAT Kolkata26 Jul 2024AY 2018-19

Bench: Shri Sonjoy Sharma & Shri Rakesh Mishraassessment Year: 2018-19

For Appellant: Shri Nitish Bhandary, AdvocateFor Respondent: Ms. Amuldeep Kaur, Additional CIT

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

justified in upholding the action of the A.O. in making the addition of Rs. 94,14,477/- on account of deemed dividend u/s 2(22)(e) of the Income Tax Act. (b) Without prejudice to the above, Ld. CIT(A) ought to have restricted the addition ... total income of Rs. 1,05,46,917/- by making an addition of Rs. 94,14,477/- on account of deemed dividend under Section 2(22)(e) of the Act. The Ld. CIT(A) examined the finding of the AO and also observed that despite granting several opportunities as mentioned

DCIT, Central Circle-1, Gurgaon vs. K.S.Chawla & Sons (HUF), New Delhi

In the result, the appeal preferred by the Revenue is found to be devoid of any merit and thus dismissed and the C

ITA 6974/DEL/2018[2013-14]Status: DisposedITAT Delhi24 Jul 2024AY 2013-14

Bench: Shri G. S. Pannu & Ms. Madhumita Royi.T.A. No. 6974/Del/2018 (Assessment Year : 2013-14) Acit Vs. K. S. Chawla & Sons (Huf) 7Th Floor, Hsiidc Building, Central Circle – I, Gurugram Udyog Vihar, Phase-5, Gurugram Pan: Aadhk 7622 M

For Appellant: Shri Parikshi Aggarwal, C.AFor Respondent: Ms. Rishpal Bedi, CIT-D.R

Section 132Section 132(4)Section 148Section 153ASection 250

also not applicable as the applicant company has not declared any dividend and cash payment(as noted above) have not been treated as deemed dividend'. As regards the objection of the department that cash, to the extent of indicated in the cash flow, was not discovered during the search

DCIT Circle-1(1), Hyderabad vs. Krishna Murthy Ella, Hyderabad

In the result, appeal filed by the Revenue is dismissed

ITA 610/HYD/2023[2013-14]Status: DisposedITAT Hyderabad16 Jul 2024AY 2013-14

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita No.610/Hyd/2023 (िनधा"रण वष"/Assessment Year: 2013-14) Dy. C.I.T Vs. Shri Krishna Murthy Ella Circle 1(1) Hyderabad Hyderabad Pan:Aacpe6389G (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri P Murali Mohan Rao, Ca राज" व "ारा/Revenue By:: Smt. Sheetal Sarin, Dr सुनवाई की तारीख/Date Of Hearing: 16/07/2024 घोषणा की तारीख/Pronouncement: 16/07/2024 आदेश/Order

For Appellant: Shri P Murali Mohan Rao, CAFor Respondent: : Smt. Sheetal Sarin, DR

Section 143(1)Section 147Section 2(22)Section 2(22)(e)

lending to its director, who is also a beneficial shareholder, Page 1 of 8 ITA No.610 of 2023 Krishna Murthy Ella does not constitute deemed dividend u/s 2(22)€ of the I.T. Act, 1961. 2. Whether the learned CIT (A) is correct in holding that granting of housing loan ... reasons recorded as per which, income chargeable to tax has been escaped assessment on account of under assessment of deemed dividend u/s 2(22)(e) of the I.T. Act, 1961. The case was selected for scrutiny and during the course of assessement proceedings, the Assessing Officer called upon the assessee

Samit Ray, Kolkata vs. DCIT, Cen. Cir. 3(4), Kolkata

In the result, all the appeals of the assessees are allowed

ITA 780/KOL/2024[2014-15]Status: DisposedITAT Kolkata10 Jul 2024AY 2014-15

Bench: Shri Rajpal Yadav, Vice-(Kz) & Shri Sanjay Awasthii.T.A. No. 778/Kol/2024 Assessment Year: 2014-2015 Arati Ray,………………………………..……………Appellant 11/1, Dishari Bhawan, B.T. Road, Belghoria, Kolkata-700056 [Pan:Adopr8465R] -Vs.- Deputy Commissioner Of Income Tax,…..…Respondent Central Circle-3(4), Kolkata, Aayakar Bhawan Poorva, 110, Shanti Pally, 5Th Floor, Kolkata-700107 & I.T.A. No. 779/Kol/2024 Assessment Year: 2014-2015 Mallika Roy,…………………………..……………Appellant 11/1, Dishari Bhawan, B.T. Road, Belghoria, Kolkata-700056 [Pan:Acgpr7888F] -Vs.- Deputy Commissioner Of Income Tax,…..…Respondent Central Circle-3(4), Kolkata, Aayakar Bhawan Poorva, 110, Shanti Pally, 5Th Floor, Kolkata-700107 & I.T.A. No. 780/Kol/2024 Assessment Year: 2014-2015 1

Section 139(1)Section 144Section 153ASection 153DSection 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

Malika Roy, Kolkata vs. DCIT, Cen. Cir. 3(4), Kolkata

In the result, all the appeals of the assessees are allowed

ITA 779/KOL/2024[2014-15]Status: DisposedITAT Kolkata10 Jul 2024AY 2014-15

Section 139(1)Section 144Section 153ASection 153DSection 263

Arati Ray, Kolkata vs. DCIT, Cen. Cir. -3(4), Kolkata

In the result, all the appeals of the assessees are allowed

ITA 778/KOL/2024[2014-15]Status: DisposedITAT Kolkata10 Jul 2024AY 2014-15

Section 139(1)Section 144Section 153ASection 153DSection 263

Assistant Commissioner of Income Tax -1(2)(1)Mumbai, Mumbai vs. Madhusudhan Babubhai Kocha, Mumbai

Appeal is dismissed in above terms

ITA 3516/MUM/2023[2013-14]Status: DisposedITAT Mumbai10 Jul 2024AY 2013-14

Bench: Shri Satbeer Singh Godara (Jm) & Shri Girish Agrawal (Am)

Section 143(3)Section 2(22)(e)Section 2(32)

that the learned CIT(A)/NFAC herein has erred in law and on facts in reversing the assessment findings making section 2(22)(e) deemed dividend addition of Rs. 310,25,993/- vide following lower appellate discussion:- 2 Madhusudhan Babubhai Kocha “6. I have considered the submission of the appellant ... Dilip Kumar & Co. (2018) 9 SCC 1 (Supreme Court) to conclude that the learned Commissioner’s lower appellate findings deleting the deeming dividend addition herein deserve to be upheld. Order accordingly. 7. This Revenue’s appeal is dismissed in above terms. Order pronounced in the open court on 10th July

The DCIT, Gandhinagar Circle, Gandhinagar vs. Shri Jayantibhai S Patel, Ahmedbad

In the result, appeal preferred by the Revenue is dismissed

ITA 1093/AHD/2019[2010-11]Status: DisposedITAT Ahmedabad05 Jul 2024AY 2010-11

Bench: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinhaआयकर अपील सं./I.T.A. No. 1093/Ahd/2019 ("नधा"रण वष" / Assessment Years : 2010-11) Dy.Cit Shri Jayantibhai S. Patel बनाम/ Gandhinagar Circle, 48, Shankar Society, Part- Vs. Gandhinagar 1, Ahmedabad, Gujarat - 382424 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Adgpp8465R (Appellant) .. (Respondent) Shri Atul Pandey, Sr. Dr अपीलाथ" ओर से /Appellant By : ""यथ" क" ओर से/Respondent By : Shri M. K. Patel, Ar 24/06/2024 Date Of Hearing Date Of Pronouncement 05/07/2024 O R D E R Per Shri Narendra Prasad Sinha, Am: The Present Appeal Is Filed By The Revenue Against The Order Of The Commissioner Of Income Tax (Appeals), Gandhinagar, (In Short ‘The Cit(A)’) Dated 02.04.2019 For The Assessment Year 2010-11. 2. This Appeal Is Against Third Round Of Assessment Completed Under Section 143(3) R.W.S. 147 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) In This Case. The Brief Facts Of The Case Are That The Return Of Income For A.Y.2010-11 Was Filed By

For Respondent: Shri M. K. Patel, AR

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

holding more than 10% shares of this company. Therefore, the loan given by the Company to the assessee was to be treated as deemed dividend under Section 2(22)(e) of the Act. The second re-assessment was completed under Section 143(3) r.w.s ... before the First Appellate Authority which was decided vide the impugned order and the ld. CIT(A) had restricted the addition on account of deemed dividend under Section 2(22)(e) of the Act to the extent of accumulated profit of the company. Now, the Revenue is in appeal before

Smt. Rinku Chakraborthy, Bangalore vs. Deputy Commissioner of Income-Tax, Central Circle-1(1), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 1474/BANG/2004[1995-96]Status: DisposedITAT Bangalore02 Jul 2024AY 1995-96

Bench: Shri Waseem Ahmed & Shri Soundararajan Kassessment Years : 1995-96

For Appellant: Shri Shambu Sharma, H, C.AFor Respondent: Shri Subramanian S, CIT (DR)

Section 2(22)(e)

wherein it was alleged that the ld. CIT(A) erred in confirming the order of the AO by sustaining the addition on account of deemed dividend u/s 2(22)(e) of the Act, whereas the transaction between the assessee and shareholder was in the nature of commercial transactions. Page ... advances was given by the company for commercial purposes and, therefore, the same cannot be made subject to the addition on account of deemed dividend u/s 2(22)(e) of the Act. However, the AO disagreed with the contention of the assessee on the reasoning that there was no agreement

Pankaj Kakrania, Kolkata vs. DCIT, CC 2(1), Kolkata

In the result, both the appeals of the assessee are allowed

ITA 480/KOL/2024[2011-12]Status: DisposedITAT Kolkata27 Jun 2024AY 2011-12

Bench: Shri Pradip Kumar Choubey & Shri Sanjay Awasthi

For Appellant: Shri Manish Bajoria, FCAFor Respondent: Shri Amitava Sen, Addl. CIT, DR

Section 132Section 153ASection 2(22)(e)Section 250

sole issue involved in both the appeals are sustaining the AYs: 2010-11 & 2011-12 addition to the total income of the assessee as deemed dividend u/s. 2(22)(e) of the Act. 3. Brief facts of the case of the assessee are that the assessee being an individual engaged ... were issued. Ld. AO completed the assessment and added Rs.1,30,34,471/- to the total income of the assessee as deemed dividend. The said order was challenged by the assessee before the Ld. CIT(A) wherein also case of the assessee had been partly allowed and confirmed the order

Pankaj Kakrania, Kolkata vs. DCIT, C.C.-2(1), Kolkata

In the result, both the appeals of the assessee are allowed

ITA 479/KOL/2024[2010-11]Status: DisposedITAT Kolkata27 Jun 2024AY 2010-11

Bench: Shri Pradip Kumar Choubey & Shri Sanjay Awasthi

For Appellant: Shri Manish Bajoria, FCAFor Respondent: Shri Amitava Sen, Addl. CIT, DR

Section 132Section 153ASection 2(22)(e)Section 250

Late Mr. Deven Jaysukhlal Shah (Thru Legal Heir- Atit Deven Shah), Mumbai vs. DCIT, Circle 22(1), Mumbai

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

ITA 523/MUM/2024[2013-14]Status: DisposedITAT Mumbai26 Jun 2024AY 2013-14

Bench: Ms. Kavitha Rajagopal, Judicialmember & Shri Girish Agrawalassessment Year: 2013-14

For Appellant: Shri S.M. Bandi, CAFor Respondent: Smt. Mahita Nair, Sr. DR

Section 143(3)Section 2(22)(e)Section 69A

Bank. 3. On the facts and circumstance of the case and in law, the Ld. CIT(A) erred in confirming the addition of deemed Dividend u/s 2(22)(e) Rs. 75,69,881/-, being a portion of the Advance by Ambika Realtors and Developers Pvt. Ltd. to the Appellant ... Cosmos Co-operative Bank of Rs.21,80,000/-. ii. Advances received for construction of residential projects amounting to Rs.1,07,00,940/- iii. Deemed dividend u/s.2(22)(e) towards un-secured loans from Ambika Realtors and Developers Pvt. Ltd. of Rs.75,69,881/-. 5.1. On the three issues, Ld. Assessing

M/S Hindustan Information Technology Pvt. Ltd., New Delhi vs. ITO, New Delhi

In the result, the appeal of the assessee is allowed

ITA 759/DEL/2011[2005-06]Status: DisposedITAT Delhi21 Jun 2024AY 2005-06

Bench: Dr. B. R. R. Kumar, Sh. Anubhav Sharma

For Appellant: Sh. Tarun, AdvFor Respondent: Ms. Parul Singh, CIT-DR

Section 143(3)Section 37(1)

business income. 4. The appellant has quoted Hon'ble ITAT's order for subsequent assessment year A.Y. 2008-09 which is related to deemed dividend under sec. 2(22)(e) and has no relevance in this year.” 6. We find that the employee’s salary expenses have not been disputed

Krishna Sheet Processors Private Limited, Mumbai vs. Deputy Commissioner of Income Tax -4(3)(1), Mumbai

In the result, the appeal filed by the assessee is dismissed as barred by limitation

ITA 1454/MUM/2024[2013-14]Status: DisposedITAT Mumbai20 Jun 2024AY 2013-14

Bench: Shri Anikesh Banerjeeand Shri Gagan Goyal

For Appellant: S.M.BandiFor Respondent: Shri P.D. Chougule (Addl.CIT) SR DR

Section 143(3)Section 14ASection 2(22)(e)Section 250

grossly erred in law as well as on facts in treating the sum of Rs. 2,33,71,927/- as Deemed Dividend u/s. 2(22)(e) of the I.T. Act. 2. The Id. A.O. has grossly erred in law as well as on facts in making a Disallowance

Nilsan Nishotech System Private Limited, Mumbai vs. DCIT 15(1)(22), Mumbai

Appeal is allowed for statistical

ITA 470/MUM/2024[2010-11]Status: DisposedITAT Mumbai29 May 2024AY 2010-11

Bench: SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Shubham ShahFor Respondent: Shri Ashok Kumar Ambastha

Section 143(3)(ii)

liable to be set-aside. 2. On given facts, circumstances and judicial pronouncements Hon. CIT (Appeals) erred in making addition on account of Deemed Dividend, even though the said issue was not set- aside by Hon. Income Tax Appellate Tribunal. Such addition is bad in law and liable to deleted ... Without prejudice to the above, On given facts, circumstances and judicial pronouncements Hon. CIT (Appeals) erred in making addition on account of Deemed Dividend, even though the same was allowed by Hon. CIT Appeals in the first round of Appeal. Such confirmation of addition is bad in law and liable

Deputy Commissioner of Income Tax, Central Circle-19, New Delhi., Delhi vs. Sandeep Bajaj, Delhi

In the result, the Cross Objection filed by the assessee is

ITA 2993/DEL/2023[2014-15]Status: DisposedITAT Delhi29 May 2024AY 2014-15

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 147Section 148Section 151Section 2(22)(e)Section 56

erred in deleting the addition made u/s 56 of the Income Tax Act, 1961 of Rs. 2,96,61,877/-on account of deemed dividend u/s 2(22)(e) of the LT. Act, even when Shri Sandeep Bajaj is common shareholder of M/s Jupiter Laminators Pvt. Ltd. As well

Dcitcc-2(3), Mumbai vs. Avinash Constructions, Pune

In the result, appeal filed by the revenue is dismissed

ITA 841/MUM/2024[2014]Status: DisposedITAT Mumbai28 May 2024

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Sandeep Singh Karhail, Hon'Bledcit-Cc-2(3) V. Avinash Constructions Room No. 803, 8Th Floor Abil House 2, Ganesh Khind Road Old Cgo Annexe Building Range, Hill Corner, Pune -411007 M. K. Road, Marine Lines Pune, Maharashtra Mumbai- 400020 Pan: Aaefa6358H (Appellant) (Respondent) Assessee Represented By : Shri Vijay Mehta Department Represented By : Shri Ajay Chandra

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

AVINASH CONSTRUCTIONS 2. The grievance of the revenue read as under: - i. The Ld.CIT(A) erred in deleting Rs.15,26,99,918/- disallowed as deemed dividend under the provisions of section 2(22)(e) of the Income Tax Act, 1961, being an advance received by M/s. Avinash Construction, a partnership ... state that, the advance received by M/s. Avinash Construction a partnership Firm from M/s. Atmaja Developers Pvt. Ltd. has been treated as "deemed dividend" u/s. 2(22)(e) of the Income Tax Act, 1961. 3. Briefly stated the facts of the case are that the, assessee filed its original return