“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

Shri Jigar Kishor Mehta, Mumbai vs. ITO Ward 41(4)(2), Mumbai

In the result, the appeal of the assessee is partly allowed for In the result, the appeal of the assessee is partly allowed for In the result, the appeal of the assessee is partly allowed for stati...

ITA 107/MUM/2025[2013-14]Status: DisposedITAT Mumbai22 Sept 2025AY 2013-14

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan () Assessment Year: 2013-14 Shri Jigar Kishor Mehta, The Ito-41(4)(2), 50/5, Dhanji Street, 1St Agairy Kautilya Bhavan, Bandra Kurla Lane, Masjid Bunder, Vs. Complex, Bandra (East), Mumbai-400 003. Mumbai-400051. Pan No. Afopm 9328 Q Appellant Respondent

For Appellant: Ms. Kavita Kaushik, Sr. DRFor Respondent: Mr. Abhishek Khandelwal, Adv

Section 2(22)(e)

circumstances of the case and in present law, the Ld. CIT (A) has erred in deleting the addition of Rs.88,26,000/-being deemed dividend u/s.2(22)(e) of the Income Tax Act, 1961. Jigar Kishor Mehta 2. At the outset, the Ld. counsel for the assessee submitted that ... which the assessee was having substantial shareholding. The which the assessee was having substantial shareholding. The Jigar Kishor Mehta Rs.88,26,000/- as deemed dividend u/s 2(22)(e) of the Income as deemed dividend u/s 2(22)(e) of the Income as deemed dividend

Megnanapuram Paccs, Tiruchendur vs. PCIT, Madurai

ITA 895/CHNY/2025[2018-19]Status: DisposedITAT Chennai19 Sept 2025AY 2018-19

Bench: Shri Manu Kumar Giri & Shri S.R.Raghunathaआयकर अपील सं./Ita No.:895/Chny/2025 निर्धारण वर्ष / Assessment Year: 2018-19 Megnanapuram Primary Agricultural Co-Operative Credit Society 4/40, Megnanapuram Tiruchendur Road, Tiruchendur Thoothukudi – 628 210. [Pan: Aabam-9847-M] (अपीलार्थी/Appellant) Pcit Vs. Madurai - I (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/Appellant By : Shri. N. Arjun Raj, Advocate प्रत्यर्थी की ओर से/Respondent By : Shri. Shiva Srinivas, Cit सुनवाई की तारीख/Date Of Hearing : 24.06.2025 घोषणा की तारीख/Date Of Pronouncement : 19.09.2025 आदेश /Order Per S. R. Raghunatha, Am : This Appeal By The Assessee Is Filed Against The Order Of The Commissioner Of Income Tax (Appeals), Pcit, Madurai - 1, For The Assessment Year 2018-19, Vide Order Dated 17.03.2025. 2. The Grounds Raised By The Assessee Are As Follows: :-2-:

For Appellant: Shri. N. Arjun Raj, AdvocateFor Respondent: Shri. Shiva Srinivas, CIT

Section 147Section 148Section 263Section 80P

आयकर अपीलीय अधिकरण, 'बी' न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI श्री मनु कुमार गिरि, न्यायिक

Kesar Buildcon Private Limited, Banaskantha vs. The PCIT, Ahmedabad-3, Ahmedabad

Accordingly, we set aside the order passed by the PCIT and restore the assessment order passed by the Assessing Officer. The appeal of the assessee is thus allowed

ITA 790/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad08 Sept 2025AY 2021-22

Bench: S/Shri Sanjay Garg & Makarand V.Mahadeokarasstt.Year : 2021-2028 Kesar Buildcon Pvt. Ltd. The Ld.Pr.Cit 1St Floor Shri Kesar Cold Vs. Ahmedabad-3 Storage Plot No.B-2 To 9, Rev Survey No.85/2 Paiki Near Hotel Jyoti Vil Banaskantha. Pan : Aabck 4923 E (Applicant) (Responent) : Shri Hem Chhajed, Ar Assessee By : Shri Rignesh Das, Cit-Dr Revenue By सुनवाई क" तारीख/Date Of Hearing : 03/09/2025 घोषणा क" तारीख /Date Of Pronouncement: 08/09/2025

For Appellant: Shri Rignesh Das, CIT-DR

Section 142(1)Section 143(2)Section 143(3)Section 2(22)(e)Section 263Section 269S

received was out of accumulated profits of the lending company, and whether the provisions of section 2(22)(e) of the Act, relating to deemed dividend, were attracted. It was noted that the loan amount of Rs. 1.35 crore remained unexplained and not examined for the purpose of section ... shares in the lending company, the transaction of loan of Rs. 1.35 crore received by the assessee squarely fell within the definition of deemed dividend under 4 section 2(22)(e) of the Act. It was further held that the Assessing Officer had failed to conduct necessary inquiries and verification

Yarlagadda Venkanna Choudary, Visakhapatnam vs. Assistant Commissioner of Income Tax, Central Circle-1, Visakhapatnam

In the result, appeal of the revenue is dismissed

ITA 364/VIZ/2025[2021-22]Status: DisposedITAT Visakhapatnam04 Sept 2025AY 2021-22

Bench: Shri Duvvuru Rl Reddy, Hon’Ble&

Section 132Section 133Section 143(3)

Rs.4,58,91,320/- as unexplained expenditure in the hands of the assessee. Further, he also added an amount of Rs.34,39,566/- as deemed Dividend under section 2(22)(e) of the Act with respect to advance taken by the assessee from M/s. Sardar Projects Private Limited ... interest @12% on the funds / loans provided to the third parties. He also deleted the addition made by the Ld. AO on account of deemed dividend under section 2(22)(e) of the Act and thereby partly allowed the appeal of the assessee. 4. On being aggrieved by the order

Deputy Commissioner of Income-Tax Central Circle-1, Visakhapatnam vs. Venkanna Choudary Yarlagadda, Visakhapatnam

In the result, appeal of the revenue is dismissed

ITA 349/VIZ/2025[2021-22]Status: DisposedITAT Visakhapatnam04 Sept 2025AY 2021-22

Bench: Shri Duvvuru Rl Reddy, Hon'Ble&**

Section 132Section 133Section 143(3)

Bees Infracon Private Limited, Ahmedabad vs. Income Tax Officer, Ward1(1)(2), Ahmedabad

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

ITA 1283/AHD/2024[2013-14]Status: DisposedITAT Ahmedabad02 Sept 2025AY 2013-14

Bench: DR. BRR Kumar (Vice President), Shri T. R. Senthil Kumar (Judicial Member)

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

accumulated profit of Rs.80,75,996/=. Therefore, the loans and advances given to the assessee is required to be treated as deemed dividend chargeable u/s.2[22][e] of the Act which has escaped assessment and therefore a notice u/s.148 of the Act was issued on the assessee ... part of the loan also repaid during the year under consideration along with interest of Rs.6,16,800/=, hence no question of invoking deemed dividend u/s.2[22][e] of the Act and requested to drop the reassessment proceedings. But the AO held that since the assessee is holding 10.71% shares

Priyanka Communications India Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 6(1), Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 836/MUM/2025[2019-20]Status: DisposedITAT Mumbai29 Aug 2025AY 2019-20

Bench: Shri Narender Kumar Choudhry & Smt. Renu Jauhriआयकर अपील सं./Ita Nos. 834 To 836/Mum/2025 (निर्धारण वर्ा / Assessment Year :2016-17, 2018-19 & 2019-20)

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

Shri Manish Agarwal, Director of the appellant company. Therefore, the AO proposed substantive addition of Rs. 92,25,000/- being cash received back as deemed dividend u/s.2(22)(e) of the Act in the hands of Shri Manish Agarwal. The AO made protective addition of Rs.92,25,000/- u/s.69A

Priynaka Communications India Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 6(1), Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 835/MUM/2025[2018-19]Status: DisposedITAT Mumbai29 Aug 2025AY 2018-19

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

Priyanka Communications India Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 6(1), Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 834/MUM/2025[2016-17]Status: DisposedITAT Mumbai29 Aug 2025AY 2016-17

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

M/S. Ajk Investments Private Limited, Mumbai vs. Assistant Commissioner of Income Tax -1(1)(1), Mumbai

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

ITA 4362/MUM/2025[2014-15]Status: DisposedITAT Mumbai29 Aug 2025AY 2014-15

Bench: MS. KAVITHA RAJAGOPAL (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)

For Appellant: Shri Prakash JotwaniFor Respondent: Shri Pitamber Kumar, Addl. CIT

Section 115Section 143(1)Section 143(2)Section 143(3)Section 2(22)Section 2(22)(a)Section 250Section 250(6)

ABOVE-MENTIONED GROUND OF APPEAL- (a) 3. The Ld. CIT(A) erred in confirming a protective addition of ₹2,04,33,430 as deemed dividend under Section 2(22) of the Income Tax Act, 1961, without proper appreciation of facts and applicable laws. 4. A) The Ld. CIT(A) erred

DCIT- CC-6 (1), Mumbai, Bkc vs. Priyanka Communications India Private Limited, Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 1495/MUM/2025[2019-20]Status: DisposedITAT Mumbai29 Aug 2025AY 2019-20

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

DCIT-CC-6(1), Mumbai, Bkc vs. Priyanka Communications India Private Limited, Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 1494/MUM/2025[2018-19]Status: DisposedITAT Mumbai29 Aug 2025AY 2018-19

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

DCIT-CC-6(1), Mumbai, Bkc vs. Priyanka Communications India Private Limited, Mumbai

In the result, all the three appeals filed by the assessee are allowed and appeals filed by the revenue are dismissed

ITA 1493/MUM/2025[2016-17]Status: DisposedITAT Mumbai29 Aug 2025AY 2016-17

For Appellant: Shri M. M. AgarwalFor Respondent: Shri R. A. Dhyani (CIT DR) & Shri

Section 250Section 69C

Amar Vithaldas Gandhi, Mumbai vs. DCIT Circle 42(2)(1), Mumbai

In the result, the appeal of the assessee is dismissed

ITA 3107/MUM/2025[2015-16]Status: DisposedITAT Mumbai28 Aug 2025AY 2015-16

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2015-16 Amar Vithaldas Gandhi, Dy. Cit Circle 35(1), 203, Panorama Apartments, Kautilya Bhavan, Jaisukhlal Mehta Road, Santacruz Vs. Mumbai. West, Mumbai-400054. Pan No. Aefpg 2142 G Appellant Respondent

For Respondent: Mr. Fenil Bhat

Section 2(22)(e)

Rs.1,40,00,000/ (i) treating loan of Rs.1,40,00,000/- received from M/s Taurrus received from M/s Taurrus Finsec Pvt. Ltd. as deemed dividend u/s 2(22)(e) of the Act; and (ii) Finsec Pvt. Ltd. as deemed dividend ... Finsec Pvt. Ltd. as deemed dividend u/s 2(22)(e) of the Act; and (ii) disallowance of expenses of Rs.16,87,356/ disallowance of expenses of Rs.16,87,356/- against consultancy against consultancy income of Rs.26,05,000/ income of Rs.26,05,000/-. On appeal, the learned CIT(A) upheld

Yelamarthi Satya Anand, Chennai vs. Deputy Commissioner of Income Tax, Centrat Circle - 2(2), Chennai

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

ITA 74/CHNY/2025[2020-21]Status: DisposedITAT Chennai22 Aug 2025AY 2020-21

Bench: Shri Manu Kumar Giri & Shri S.R. Raghunatha

For Appellant: Shri R. Venkata Raman, CAFor Respondent: Ms. Anitha, Addl.CIT

Section 10(34)Section 115Section 132Section 142(1)Section 143(2)Section 143(3)Section 2(22)Section 2(22)(e)

took a view that the advance of Rs.1 crore received by the appellant from Intex towards the sale of office building is a deemed dividend taxable u/s. 2(22) (e) of the Act and accordingly selected the case of the appellant for compulsory scrutiny by issuance of a notice u/s.143 ... treated the property advance of Rs.1,00,00,000/-received by the appellant from Intex towards the sale of office building as deemed dividend taxable under the provisions of section 2(22)(e) of the Act. The following are the observations of the AO in making an addition u/s.2

Mithlesh Kumar Tripathi, Delhi vs. ITO, Ward-24(4), Delhi

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

ITA 4955/DEL/2024[2012-13]Status: DisposedITAT Delhi22 Aug 2025AY 2012-13

Bench: Shri Yogesh Kumar U.S. & Shri Avdhesh Kumar Mishra

Section 143(3)Section 147Section 148Section 2(22)Section 2(22)(e)Section 271(1)(c)

These amounts were reimbursements of expenses incurred by the appellant on behalf of the companies, and hence, do not fall within the ambit of "deemed dividends." 4. Ignoring Circulars and Precedents: 4.1 That the learned CIT(A) failed to appreciate the applicability of Circular No. 19/2017 dated 12 June ... ACPL), had taken loans/advances from the said company, which according to the provisions of section 2(22)(e) of the Act was income being deemed dividend. The assessee filed submissions mentioning that the amount received from ACPL and Yashita Finance Private Limited amounting to Rs.15,73,770/- and Rs.30

JCIT(OSD) I/C. of DCIT -1(3)(1), Mumbai vs. Zt Systems India Private Limited, Mumbai

In the result, appeal of the revenue is dismissed as per our aforesaid observations

ITA 1729/MUM/2025[2016-17]Status: DisposedITAT Mumbai19 Aug 2025AY 2016-17

Bench: Shri Amit Shukla & Shri Arun Khodpiaआयकर अपील सं. / Ita No.1729/Mum/2025 "नधा"रण वष" / Assessment Year :2016-17 The Jt. Commissioner Of Income Tax (Osd), I/C. Dcit-1(3)(1), Mumbai (M.H.)

For Appellant: Shri Ajit JainFor Respondent: Shri Aditya Rai, Sr. DR

Section 115Section 115ASection 143(3)Section 2(22)(a)Section 201Section 206C(7)Section 92C

provided by the learned AO while rejecting the rectification application of the Appellant was that "Addition has been made u/s. 2(22)(e), being deemed dividend and rightly taxed at 33.06%. Therefore, order u/s. 154 of the Act is being passed rejecting the assessee's claim." 6.8 While going through ... short recovery of share premium of INR 6,39,60,000 is deleted. Accordingly, the consequential grounds taken by the Appellant in relation to deemed dividend does not require adjudication.” With the aforesaid observation, the appeal of the assessee has been partly allowed. 5. Aggrieved with the aforesaid relief provided

Mahesh Mittal, Lucknow vs. ACIT, Range-5, Lucknow

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

ITA 73/LKW/2023[2014-15]Status: DisposedITAT Lucknow14 Aug 2025AY 2014-15

Bench: Shri Kul Bharat & Shri Anadee Nath Misshramahesh Mittal V. Acit, Range-5 1/16, Vinay Khand Gomti Income Tax Office Ashok Nagar, Lucknow-226010. Marg, Lucknow-226001. Pan:Acqpm4459B (Appellant) (Respondent) Appellant By: Shri Akshay Agarwal, Adv Respondent By: Shri Amit Singh Chauhan, Cit(Dr) O R D E R

For Appellant: Shri Akshay Agarwal, AdvFor Respondent: Shri Amit Singh Chauhan, CIT(DR)

Section 10(38)Section 68

genuineness of the transaction. We are expressing no opinion on whether this additional layer was an artificial device aimed at bypassing/evading the provisions regarding deemed dividend under section 2(22)(e) of I.T. Act. However, in the absence of any Explanation from the assessee’s side

Harmander Singh Sran, New Delhi vs. ACIT, CC- 29, New Delhi

ITA 4018/DEL/2017[2012-13]Status: DisposedITAT Delhi14 Aug 2025AY 2012-13

Bench: Shri Mahavir Singh & Shri Manish Agarwal

Section 10(34)Section 115Section 139(1)Section 147Section 148Section 2(22)(e)Section 250

M/s.HBN Homes Colonizers Pvt. Ltd. and since the assessee is having substantial interest in both the companies, therefore, such loan is assessed to be deemed dividend in terms of provision of section 2(22)(e) of the Act in the hands of the assessee. AO also observed that company ... advance given during the year upto 04.11.2011 totaling to INR 28,14,70,430/- has to be treated the income of the assessee as deemed dividend. Accordingly, he recorded the reasons and initiated the reassessment proceedings u/s 148 of the Act by issue of notice on 27.07.2016. In response, assessee

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

ITA 395/HYD/2025[2021-22]Status: DisposedITAT Hyderabad08 Aug 2025AY 2021-22

Bench: Us:

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

Section 131Section 132Section 143(2)Section 143(3)Section 2(22)(e)

erred in granting relief to the assessee without considering the fact that while arriving at the quantum of deemed dividend u/s 2(22)(e) of the Act, set-off to the extent of 150% of purchases had already been granted towards trade advances in view of CBDT circular 19/2017 ... assessee company to explain as to why the advances so received be not treated as, and brought to tax in its hands as, deemed dividend under Section 2(22)(e) of the Act. 7. In reply, the assessee company, based on its multi-faceted contentions and drawing support from