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“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
99
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
81
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
64
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

Uday Anant Kamat, Panaji vs. Assistant Commissioner of Income Tax, Circle -1(1), Panaji

ITA 140/PAN/2024[2012-13]Status: DisposedITAT Panaji30 Jun 2025AY 2012-13

Bench: Hon’Ble Shri Pavan Kumar Gadale & Shri G. D. Padmahshalisr

For Appellant: Mr Nishant Thakkar [‘Ld. AR’]For Respondent: Mr Capt. Pradeep Arya [‘Ld. DR’]
Section 153CSection 250Section 251Section 253(1)Section 271A

framed. Pursuant thereto a penalty proceedings u/s 271AAA of the Act in relation to addition made on account of ‘deemed dividend’ was initiated. The said penalty proceedings by order dt. 30/10/2017 ultimately culminated where a penalty @10% of undisclosed amount was levied. 6. Aggrieved by aforestated imposition of penalty

Uday Anant Kamat, Panaji vs. Assistant Commissioner of Income Tax, Circle - 1(1), Panaji

ITA 139/PAN/2024[2011-12]Status: DisposedITAT Panaji30 Jun 2025AY 2011-12

Bench: Hon’Ble Shri Pavan Kumar Gadale & Shri G. D. Padmahshalisr

For Appellant: Mr Nishant Thakkar [‘Ld. AR’]For Respondent: Mr Capt. Pradeep Arya [‘Ld. DR’]
Section 153CSection 250Section 251Section 253(1)Section 271A

framed. Pursuant thereto a penalty proceedings u/s 271AAA of the Act in relation to addition made on account of ‘deemed dividend’ was initiated. The said penalty proceedings by order dt. 30/10/2017 ultimately culminated where a penalty @10% of undisclosed amount was levied. 6. Aggrieved by aforestated imposition of penalty

ACIT., Central Circle-2(4), Hyderabad vs. Satyanarayana Reddy Manne, Hydreabad

ITA 472/HYD/2025[2017-18]Status: DisposedITAT Hyderabad30 Jun 2025AY 2017-18

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

For Appellant: CA M.V. Prasad andFor Respondent: Shri B. Bala Krishna, CIT-DR
Section 143(3)Section 153ASection 251(1)(a)

ought to have considered the fact that 150% of purchases were treated as trade advances while arriving at outstanding debit balances while calculating deemed dividend u/s 2(22)(e) of the Act? 2. Whether on the facts and in the circumstances of the case ... have appreciated the fact that the assessee is a common substantial shareholder in the hands of lending entities and borrowing entities and thereby deemed dividend provisions are attracted u/s 2(22)(e) in the hands of the assessee? 3. Whether on the facts and in the circumstances of the case

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

In the result, ITA.No.396/Hyd

ITA 396/HYD/2025[2017-18]Status: DisposedITAT Hyderabad30 Jun 2025AY 2017-18

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

For Appellant: CA MV Prasad And Shri KS Rajendra KumarFor Respondent: Shri B Bala Krishna, CIT-DR
Section 132Section 143(3)Section 153ASection 2(22)(e)

determined the total income at Rs.145,49,64,238/- by making addition of Rs.124,99,93,874/-, on protective basis towards deemed dividend u/sec.2(22)(e) of the Act, because, substantive addition has been made in the case of Shri M. Satyanarayana Reddy, Managing Director of the Appellant- Company ... assessee-company preferred appeal before the learned CIT(A) and challenged the additions made by the 4 ITA.Nos.394 & 396/Hyd./2025 Assessing Officer towards deemed dividend u/sec.2(22)(e) of the Act and contended that, payments made by one group company to another group company cannot be treated as deemed

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

In the result, ITA.No.396/Hyd

ITA 394/HYD/2025[2017-18]Status: DisposedITAT Hyderabad30 Jun 2025AY 2017-18

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

For Appellant: CA MV Prasad And Shri KS Rajendra KumarFor Respondent: Shri B Bala Krishna, CIT-DR
Section 132Section 143(3)Section 153ASection 2(22)(e)

determined the total income at Rs.145,49,64,238/- by making addition of Rs.124,99,93,874/-, on protective basis towards deemed dividend u/sec.2(22)(e) of the Act, because, substantive addition has been made in the case of Shri M. Satyanarayana Reddy, Managing Director of the Appellant- Company ... assessee-company preferred appeal before the learned CIT(A) and challenged the additions made by the 4 ITA.Nos.394 & 396/Hyd./2025 Assessing Officer towards deemed dividend u/sec.2(22)(e) of the Act and contended that, payments made by one group company to another group company cannot be treated as deemed

Satyanarayana Reddy Manne, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

In the result, appeal filed by the Assessee is allowed and appeal filed by the Revenue is dismissed

ITA 382/HYD/2025[2017-18]Status: DisposedITAT Hyderabad30 Jun 2025AY 2017-18

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

For Appellant: CA M.V. Prasad and Shri K.S. Rajendra KumarFor Respondent: Shri B. Bala Krishna, CIT-DR
Section 143(3)Section 153ASection 251(1)(a)

ought to have considered the fact that 150% of purchases were treated as trade advances while arriving at outstanding debit balances while calculating deemed dividend u/s 2(22)(e) of the Act? 2. Whether on the facts and in the circumstances of the case ... have appreciated the fact that the assessee is a common substantial shareholder in the hands of lending entities and borrowing entities and thereby deemed dividend provisions are attracted u/s 2(22)(e) in the hands of the assessee? 3. Whether on the facts and in the circumstances of the case

Mr. 3 Sigma Global Fund, Mumbai vs. Assistant Commissioner of Income Tax Int Tax Circle 4(2)(1), Mumbai

Accordingly we hold that the gain arising from the transfer of Derivatives cannot be taxed in India and the addition made in this regard stands deleted. Ground No. 1 raised by the assessee is hereb...

ITA 1130/MUM/2025[2022-23]Status: DisposedITAT Mumbai30 Jun 2025AY 2022-23

Bench: Ms Padmavathy S, Am & Shri Raj Kumar Chauhan, Jm

For Appellant: Bhaumik Goda, ARFor Respondent: Shri Krishna Kumar, Sr. DR
Section 143(3)

creates a fiction to make UTI as a deemed company and distribution of the income received by the unitholder as deemed dividend, by virtue of these deeming provisions it cannot be said that it a/so makes the unit of UTI a deemed share. A deeming provision of this nature

Binoy John, Trivandrum vs. Principal Commissioner of Income Tax (Central), Cochin, Cochin/Kochi

In the result, the appeal filed by the assessee is dismissed on grounds of delay and latches

ITA 855/COCH/2024[2016-2017]Status: DisposedITAT Cochin27 Jun 2025AY 2016-2017

Bench: Shri Inturi Rama Rao, Am & Shri Prakash Chand Yadav, Jm Assessment Year: 2016-17 Binoy John .......... Appellant Tc 2/391, Puthnveetil, Ulloor, Medical College P.O., Thiruvananthapuram 695011 [Pan: Acppj3562K] Vs. Pr. Commissioner Of Income Tax .......... Respondent Central, Cochin Appellant By: Shri R. Krishnan, Ca Respondent By: Shri Sundarasan S., Cit-Dr Date Of Hearing: 21.05.2025 Date Of Pronouncement: 27.06.2025 O R D E R Per: Inturi Rama Rao, Am This Appeal Filed By The Assessee Is Directed Against The Order Of The Principal Commissioner Of Income Tax (Central), Cochin (Pr. Cit) Dated 25.03.2024 For Assessment Year (Ay) 2016-17. 2. Brief Facts Of The Case Are That The Appellant Is A Doctor Deriving Income Under The Head ‘Salary’ & Also A Director In The Company Credence Hospital Pvt. Ltd., Thiruvananthapuram. No Regular Return Of Income For Ay 2016-17 Was Filed By The Appellant. Subsequently, Based On The Information Received From The Acit

For Appellant: Shri R. Krishnan, CAFor Respondent: Shri Sundarasan S., CIT-DR
Section 148Section 2(22)(e)Section 263Section 5

which the appellant was interested as a Director made an advance of Rs. 3.42 crores to the appellant which amounts to deemed dividend within the meaning of provisions of section 2(22)(e) of the Income Tax Act, 1961 (the Act), the AO formed an opinion that income escaped assessment ... that the assessment order is erroneous and prejudicial to the interests of Revenue for the failure of the AS to examine the issue of deemed dividend u/s. 2(22)(e) of the Act in respect of loan amount of Rs. 22.5 lakhs received from the company, Credence Hospital

Ponnamparambath Ashique, Calicut vs. ACIT Circle 1(1) Tps, Kozhikode

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

ITA 606/COCH/2023[2010-11]Status: DisposedITAT Cochin27 Jun 2025AY 2010-11

Bench: Shri Inturi Rama Rao, Am & Shri Prakash Chand Yadav, Jm Assessment Year: 2010-11 Ponnamparambath Ashique .......... Appellant Koyenco House, West Hill, Kozhikode 673005 [Pan: Acmpa5569N] Vs. Acit, Circle- 1(1) & Tps, Kozhikode .......... Respondent Appellant By: Smt. Parvathy Ammal, Ca Respondent By: Smt. Leena Lal, Sr. D.R. Date Of Hearing: 30.05.2025 Date Of Pronouncement: 27.06.2025 O R D E R Per: Inturi Rama Rao, Am This Appeal Filed By The Assessee Is Directed Against The Order Of The National Faceless Appeal Centre, Delhi [Cit(A)] Dated 19.06.2023 For Assessment Year (Ay) 2010-11. 2. Brief Facts Of The Case Are That The Appellant Is An Individual Deriving Income Under The Head ‘Salary’ & Also Managing Director Og M/S. Platino Classic Motors Pvt. Ltd. The Return Of Income For Ay 2010-11 Was Filed On 17.09.2010 Declaring Total Income Of Rs. 25,18,810/-. There Was No Scrutiny Assessment. Subsequently The Ao Received Information That The Appellant Is Holding Shares Of 25%

For Appellant: Smt. Parvathy Ammal, CAFor Respondent: Smt. Leena Lal, Sr. D.R
Section 143(3)Section 148Section 2(22)(e)

income of Rs. 1,66,13,650/-. While doing so, the AO brought to tax an amount of Rs. 1,39,39,841/- as deemed dividend in the hands of the assessee. 3. Being aggrieved, an appeal was filed before the CIT(A), contending that the company Platino Classic ... loans were received by the appellant towards business purposes of the company is a commercial advance and, therefore, it cannot be terms as deemed dividend and placed reliance on the following decisions:- i) CIT v. Arvind Kumar Jain [2011] (9) TMI 363 Delhi High Court ii) CIT v. Raj Kumar

Chetan Seth, New Delhi vs. ITO, Ward-15(3), Delhi

ITA 1808/DEL/2023[2004-05]Status: DisposedITAT Delhi25 Jun 2025AY 2004-05

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

Shri Chetan Seth, New Delhi vs. ITO, New Delhi

ITA 2985/DEL/2015[2007-08]Status: DisposedITAT Delhi25 Jun 2025AY 2007-08

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

Shri Chetan Seth, New Delhi vs. ITO, New Delhi

ITA 2984/DEL/2015[2006-07]Status: DisposedITAT Delhi25 Jun 2025AY 2006-07

Bench: Shri Satbeer Singh Godara & Shri Brajesh Kumar Singh

Section 147Section 148Section 2Section 2(22)Section 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

Shri Chetan Seth, New Delhi vs. ITO, New Delhi

ITA 2983/DEL/2015[2005-06]Status: DisposedITAT Delhi25 Jun 2025AY 2005-06

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

Thanjavur Commerce Private Limited, Nagpur vs. DCIT/ACIT Circle-4, Nagpur

In the result, appeal filed by the assessee is allowed in aforesaid terms

ITA 291/NAG/2025[2012-13]Status: DisposedITAT Nagpur23 Jun 2025AY 2012-13

Bench: Shri Narender Kumar Choudhry & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Surjit Kumar Saha
Section 154Section 2(22)(e)

vide impugned order, has affirmed the addition of ` 9,72,899, under section 2(22)(e) of the Act on account of deemed dividend towards loan received from Shri Agrawal Coal India Pvt. Ltd. On the contrary, the learned A.R. has submitted that the appeal was filed on 06/04/2015

Thanjavur Commerce Private Limited, Nagpur vs. DCIT/ACIT Circle-4, Nagpur

In the result, appeal filed by the assessee is allowed in aforesaid terms

ITA 290/NAG/2025[2011-12]Status: DisposedITAT Nagpur23 Jun 2025AY 2011-12

Bench: Shri Narender Kumar Choudhry & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Surjit Kumar Saha
Section 154Section 2(22)(e)

vide impugned order, has affirmed the addition of ` 9,72,899, under section 2(22)(e) of the Act on account of deemed dividend towards loan received from Shri Agrawal Coal India Pvt. Ltd. On the contrary, the learned A.R. has submitted that the appeal was filed on 06/04/2015

Ravinder Rao Takkallapelly, Hyderabad vs. DCIT., Circle-1, Karimnagar

In the result, the appeal is allowed for statistical purposes

ITA 477/HYD/2025[2015-16]Status: DisposedITAT Hyderabad18 Jun 2025AY 2015-16

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri A. Chiranjeevi, C.AFor Respondent: Dr. Sachin Kumar, SR-DR
Section 147Section 148Section 2(22)(e)

Against Incorrect Addition under Section 2(22)(e): The learned Assessing Officer (AO) erred in treating the amount of Rs.42,34,956 as deemed dividend under Section 2(22)(e) without correctly appreciating the factual and legal position. The AO failed to distinguish between transactions of business nature and those ... intended to be covered under the ambit of deemed dividend. Improper Calculation of Deemed Dividend: The calculation of deemed dividend by attributing accumulated profits of Rs.55,37,703 to the shareholder's shareholding percentage was done arbitrarily without substantiating the link between the loan and the distribution of profits

DCIT, Central Circle, Ghaziabad vs. Solitaire Realinfra Private Limited, Noida

ITA 1349/DEL/2021[2017-18]Status: DisposedITAT Delhi13 Jun 2025AY 2017-18

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 and Ld. CIT(A) has erred

DCIT, Central Circle, Ghaziabad vs. Solitaire Realinfra Private Limited, Noida

ITA 1336/DEL/2021[2016-17]Status: DisposedITAT Delhi13 Jun 2025AY 2016-17

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 and Ld. CIT(A) has erred

Solitaire Realinfra Private Limited, Noida vs. DCIT, Ghaziabad

ITA 1193/DEL/2021[2017-18]Status: DisposedITAT Delhi13 Jun 2025AY 2017-18

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharmadcit, Central Circle, Ghaziabad.

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 and Ld. CIT(A) has erred

Chinnaswamy Sunder Raju, Bangalore vs. Assistant Commissioner of Income-Tax, Central Circle-2(4), Bengaluru

In the result the appeal of the assessee is partly allowed

ITA 1071/BANG/2024[2017-18]Status: DisposedITAT Bangalore09 Jun 2025AY 2017-18

Bench: Shri. Laxmi Prasad Sahu & Shri. Keshav Dubeyassessment Year : 2017-18

For Appellant: Shri. V Chandra Sekhar, AdvocateFor Respondent: Shri. Shivanand Kalakeri, CIT(DR)(ITAT), Bangalore
Section 127Section 132Section 139(4)Section 143(2)Section 143(3)Section 153A

Loss claimed of Rs. 118,24,27,640/-. Further the AO disallowed the Long Term capital Gain of Rs. 13,90,558/- and deemed dividend of Page 12 of 23 Rs. 2,41,72072/- and the assessment was duly completed u/s 153A by order dated 31/03/2022, where the taxable income ... thus entitling it for depreciation. (d) On the other two additions by way of Income from Capital Gains and Income by way of Deemed Dividend, the AO does not have any evidence found and seized in the search of the assessee, which warrants these additions. We reiterate the proposition laid