“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

Dy. C.I.T. Central Cir2(2), Nagpur vs. M/S Shree Agrawal Coal India Pvt. Ltd., Nagpur

In the result, Revenue’s appeal stands dismissed

ITA 19/NAG/2016[2011-12]Status: DisposedITAT Nagpur15 May 2025AY 2011-12

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 132Section 139(1)Section 143(3)Section 153ASection 2(22)Section 2(22)(e)Section 40A(2)(b)

Agricultural income treated as business 2. ` 3,74,537 income ` 36,89,290 3. Disallowance u/s 40A(2)(b) ` 7,70,943 4. Deemed dividend u/s 2(22)€ ` 9,63,76,334 5. Deemed Dividend u/s. 2(22)(e) 6. Unsecured loans added ` 14,97,50,912 7. Sundry creditors

M/S Thanjavur Commerece Pvt; Ltd., Nagpur vs. A, C.I.T Cent Cir. 1(2), Nagpur

In the result, appeal by the assessee is allowed

ITA 182/NAG/2016[2011-12]Status: DisposedITAT Nagpur15 May 2025AY 2011-12

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 132Section 139(1)Section 143(2)Section 144Section 154Section 2(22)(e)

assessment year 2011–12, confirming the addition made by the Assessing Officer treating the loan repayment received from M/s. Mansa Agro Pvt. Ltd. as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961 ("the Act") on the following grounds:– 2. The assessee has raised following grounds ... same, the assessee has filed appeal before the learned CIT(A). Subsequently, order under section 154 was passed on 17/05/2013 rectifying the addition of deemed dividend and the addition was restricted to ` 13,92,098. The assessee being aggrieved filed appeal before the first appellate authority. 4. The learned

M/S Shree Agrawal Coal India Pvt. Ltd, Nagpur vs. A, C.I.T Cent Cir. 1(2), Nagpur

In the result, assessee’s appeal stands allowed

ITA 180/NAG/2016[2009-10]Status: DisposedITAT Nagpur15 May 2025AY 2009-10

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 132Section 139(1)Section 143(3)Section 153ASection 2(22)(d)Section 2(22)(e)

./2016 1. Interest on FDR ` 38,57,643 2. Investment in land ` 75,000 3. Agricultural treated as business income ` 1,93,083 4. Deemed Dividend u/s 2(22)(e) ` 5,80,89,178 5. Deemed Dividend u/s 2(22)(d) ` 7,69,50,670 Share application & premium treated

Dy. C.I.T. Central Cir2(2), Nagpur vs. M/S Shree Agrawal Coal India Pvt. Ltd., Nagpur

ITA 18/NAG/2016[2009-10]Status: DisposedITAT Nagpur15 May 2025AY 2009-10

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 153ASection 40Section 43B

facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition made on account of deemed dividend u/s 2(22)(e) of Rs. 4,77,67,712/-. 6. On the facts and circumstances of the case, the learned CIT(A) has erred in deleting ... addition made on account of deemed dividend u/s 2(22)(e) of Rs. 8,75,36,654/-. 7. On the facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition made on account of disallowance of depreciation

Dy. C.I.T. Central Cir.-2(2), Nagpur vs. M/S Shree Agrawal Finance India P. Ltd., Nagpur

In the result, Revenue’s appeal is dismissed

ITA 176/NAG/2016[2011-12]Status: DisposedITAT Nagpur15 May 2025AY 2011-12

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Harshad S. Vengurlekar

Section 10(34)Section 10(35)Section 132Section 139(1)Section 143(3)Section 153ASection 24

case and in law, the learned CIT(A) has erred in deleting the addition made by the Assessing Officer by disallowing the deemed dividend of Rs.6,49,70,741 (Rs.6,46,05,741 + Rs.3,65,000) (Revised after rectification to Rs. 1,72,80,539/-). 11. On the facts ... Revenue is dismissed. 14 Shree Agarwal Finance India Pvt. Ltd. ITA no.176/Nag./2016 30. Ground no.10, raised by the Revenue relates to disallowing the deemed dividend of ` 6,49,70,741 [` 6,46,05,741 (+) ` 3,65,000] (Revised after rectification to ` 1,72,80,539). “56. I have considered

Dy. C.I.T. Central Cir.-2(2), Nagpur vs. M/S Shree Agrawal Finance India P. Ltd., Nagpur

ITA 172/NAG/2016[2007-08]Status: DisposedITAT Nagpur15 May 2025AY 2007-08

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 153ASection 2(22)(e)Section 40Section 43B

Dy. C.I.T. Central Cir.-2(2), Nagpur vs. M/S Shree Agrawal Finance India P. Ltd., Nagpur

ITA 171/NAG/2016[2006-07]Status: DisposedITAT Nagpur15 May 2025AY 2006-07

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

For Appellant: Shri Sachin V. LuthraFor Respondent: Shri Harshad S. Vengurlekar

Section 153ASection 2(22)(e)Section 40Section 43B

ACIT, Central Cirlce-1, Nashik vs. Avinash Knatilal Jain, Jalgaon

In the result, the appeal filed by the Revenue is allowed for statistical purposes

ITA 26/PUN/2024[2015-16]Status: DisposedITAT Pune08 May 2025AY 2015-16

Bench: Shri R. K. Panda & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.26/Pun/2024 िनधा"रण वष" / Assessment Year : 2015-16 Acit, Central Circle-1, Vs. Avinash Kantilal Jain, Nashik. 36, Aryan Bunglow, Samta Nagar Road, Venketesh Colony- 425001. Pan : Acwpj9538Q Appellant Respondent Revenue By : Shri Ramnath P. Murkunde Assessee By Smt. Deepa Khare : Date Of Hearing : 11.02.2025 Date Of Pronouncement : 08.05.2025 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Revenue Is Directed Against The Order Dated 04.10.2023 Passed By Ld. Cit(A), Pune-12 [‘Ld. Cit(A)’] For The Assessment Year 2015-16. 2. The Revenue Has Raised The Following Grounds Of Appeal :- “01. Whether On The Facts & In The Circumstances Of The Case, The Ld.Cit(A) Erred In Deleting The Addition Of Rs 3,27,81,102/- On Account Of Deemed Dividend U/S 2(22)(E) Of The I.T. Act By Not Considering The Contents Of The Deeming Provision. 02. Whether On The Facts & In The Circumstances Of The Case, The Ld.Cit(A) Erred In Not Appreciating The Fact That The Decision In The Case Of Pradeep Kumar Malhotra Vs. Cit(Calcutta High Court), Which Was Relied By Ld.Cit(A) Has Distinguishable Facts

For Respondent: Shri Ramnath P. Murkunde

Section 139Section 143(2)Section 2(22)Section 2(22)(e)Section 44A

circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs 3,27,81,102/- on account of deemed dividend u/s 2(22)(e) of the I.T. Act by not considering the contents of the deeming provision. 02. Whether on the facts and in the circumstances ... applicable in this case and therefore addition of Rs.3,77,81,102/- was required to be made in the hands of the assessee as deemed dividend. However, it was found by the Assessing Officer that the maximum amount which was outstanding with the assessee during the year was only Rs.3

Kailash Kanhaiyalal Gidwani, L/H of Lat Kanhaiyalal V. Gidwani, Mumbai vs. Assistant Commissioner of Income-Tax, Circle -1, Sangli

In the result, appeal of the assessee is partly allowed

ITA 1799/PUN/2019[2010-11]Status: DisposedITAT Pune08 May 2025AY 2010-11

Bench: Dr.Manish Borad & Ms. Astha Chandraआयकर अपील सं. / Ita No.1792/Pun/2019 Assessment Year : 2010-11

For Appellant: Shri Nikhil PathakFor Respondent: Shri Akhilesh Srivastava

Section 2(2)(e)Section 68

account of unproved loans received from M/s. Jay Mahrashtra Consumer Pvt. Ltd. 2. Addition of Rs.6,70,740.00 made being deemed dividend u/s.2(2)(e) of the I.T. Act 1961 from M/s. Apeksha Impex Pvt. Ltd. 3. Addition of Rs.1,00,000.00 on account of household expenses.” 2.1 Whereas Column

Amit Kanhaiyalal Gidwani, Mumbai vs. Assistant Commissioner of Income-Tax, Circle - 1, Sangli

In the result, appeal of the assessee is partly allowed

ITA 1792/PUN/2019[2010-11]Status: DisposedITAT Pune08 May 2025AY 2010-11

Bench: Dr.Manish Borad & Ms. Astha Chandraआयकर अपील सं. / Ita No.1792/Pun/2019 Assessment Year : 2010-11

For Appellant: Shri Nikhil PathakFor Respondent: Shri Akhilesh Srivastava

Section 2(2)(e)Section 68

Shyam Sunder Gupta, Kanpur vs. Dy. Commissioner of Income Tax-1, Kanpur

ITA 168/LKW/2017[2012-13]Status: DisposedITAT Lucknow06 May 2025AY 2012-13

Bench: Shri Kul Bharat & Shri Nikhil Choudhary

For Appellant: Respondent byFor Respondent: Date of hearing

Section 150Section 150(1)Section 153(3)(ii)Section 2(22)(e)Section 251(2)Section 41(1)

appeal: - "1. Because the CIT(A) has erred on facts and in law in upholding the disallowance of Rs.70,64,782/- on account of deemed dividend under section 2(22)(e) of the I.T. Act, 1961, which addition is contrary to facts, bad in law and be deleted. 2. Because ... passing an order under section 153(3)(ii) read with section 150(1) directing the AO to make similar additions on account of deemed dividend in A.Y. 2011-12 & A.Y. 2012-13 without giving the assessee any opportunity to elaborate his submissions and to further clarify his stand, the direction

Assistant Commissioner of Income-Tax, Central Circle - 1, Aurangabad vs. M/S. M.B. Patil Construction Ltd, Aurangabad

In the result, the cross appeal filed by the Revenue in ITA

ITA 2078/PUN/2017[2013-14]Status: DisposedITAT Pune05 May 2025AY 2013-14

Bench: SHRI MANISH BORAD (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)

For Appellant: Shri Kalrav MehrotraFor Respondent: Shri Ajay Kumar Keshari &

Section 143(2)Section 143(3)Section 2(22)(e)Section 40A(3)Section 68Section 801ASection 80I

added back by the assessee, (c) Disallowance of agricultural income of Rs.6,00,000/-, (d) Disallowance of other expenses of Rs.35,00,000/-, (e) Deemed dividend u/s 2(22)(e) of Rs.49,59,14,779/- and (f) Disallowance of deduction claimed u/s 80IA of Rs.2 ... Patil Construction & Infrastructure Ltd. to the assessee company i.e. M/s M.B. Patil Construction Pvt. Ltd. will be treated as deemed dividend u/s 2(22)(e) of the IT Act.. However, section 2(22)(e) limits the amount of deemed dividend to the extent of accumulated profits of the lender

M/S. M.B.Patil Constructions Ltd, Aurangabad vs. Deputy Commissioner of Income-Tax, Central Circle - 1, Aurangabad

In the result, the cross appeal filed by the Revenue in ITA

ITA 2058/PUN/2017[2013-14]Status: DisposedITAT Pune05 May 2025AY 2013-14

Bench: SHRI MANISH BORAD (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)

For Appellant: Shri Kalrav MehrotraFor Respondent: Shri Ajay Kumar Keshari &

Section 143(2)Section 143(3)Section 2(22)(e)Section 40A(3)Section 68Section 801ASection 80I

Rama Devi Tummala, Hyderabad vs. ACIT., Circle-6(1), Hyderabad

In the result, the appeal of the assessee is allowed

ITA 778/HYD/2024[2018-19]Status: DisposedITAT Hyderabad05 May 2025AY 2018-19

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri T. Chaitanya KumarFor Respondent: Shri B. Bala Krishna, CIT-DR

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

Rachana Television Pvt. Ltd. on behalf of the appellant attract the provisions of Section 2(22)(e) of the Income Tax Act, 1961, as deemed dividend. The PCIT failed to appreciate that the payments were made for legitimate business expenses of the company, not as loans or advances ... company”) and that certain credit card expenses of the assessee were paid by the company. Observing that such payment falls within the ambit of deemed dividend u/s.2(22)(e) of the Act, the Ld. PCIT formed a view that the assessment order passed by the Ld. AO is erroneous

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Circle 3(2), Hyderabad

ITA 156/HYD/2025[2017-2018]Status: DisposedITAT Hyderabad29 Apr 2025AY 2017-2018

Bench: Us:

Section 133(6)Section 133ASection 142Section 147Section 148Section 159Section 2(22)(e)Section 251

holding substantial shareholding in the said company had received a loan that was liable to be brought to tax in his hands as “deemed dividend” under Section 2(22)(e) of the Act. Therefore, the A.O. initiated proceedings in the case of the assessee u/s 147 of the Act. Notice ... Considering the aforesaid fact, the A.O. brought the amount received by the assessee from the aforementioned company to tax by treating it as a “deemed dividend” u/s 2(22)(e) of the Act. Accordingly, the A.O. vide his order passed u/s 147 r.w.s. 144 of the Act, dated 23.02.2022 after

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Cirlce 3(2), Hyderabad

ITA 155/HYD/2025[2016-2017]Status: DisposedITAT Hyderabad29 Apr 2025AY 2016-2017

Section 133(6)Section 133ASection 142Section 147Section 148Section 159Section 2(22)(e)Section 251

holding substantial shareholding in the said company had received a loan that was liable to be brought to tax in his hands as “deemed dividend” under Section 2(22)(e) of the Act. Therefore, the A.O. initiated proceedings in the case of the assessee u/s 147 of the Act. Notice ... Considering the aforesaid fact, the A.O. brought the amount received by the assessee from the aforementioned company to tax by treating it as a “deemed dividend" u/s 2(22)(e) of the Act. Accordingly, the A.O. vide his order passed u/s 147 r.w.s.144 of the Act, dated 23.02.2022 after making

Kath Brothers, Jaipur vs. ACIT, Central Circle-3, Jaipur

In the result, the appeal of the assessee is allowed

ITA 77/JPR/2025[2019-20]Status: DisposedITAT Jaipur28 Apr 2025AY 2019-20

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Shrawan Kumar Gupta, AdvFor Respondent: Sh. Anoop Singh, Addl. CIT

Section 115BSection 133ASection 143(2)Section 143(3)Section 145(3)Section 234ASection 69

given by Company to Assessee being deemed income as per provisions of S. 2(22)(e), no addition can be made on account of deemed dividend 2.2 ITO v/s Chitalia Builders 90 CCH 405(Guj) it has been held that Insofar as the deletion of addition is concerned, we find

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Cirlce 3(2), Hyderabad

Appeals are dismissed in terms of our aforesaid observations

ITA 154/HYD/2025[2014-2015]Status: DisposedITAT Hyderabad28 Apr 2025AY 2014-2015

Bench: Us:

Section 133ASection 143(1)Section 144Section 147Section 148Section 159Section 2(22)(e)Section 251

holding a conviction that the amount received by the assessee was liable to be brought to tax in his hands as a “deemed dividend” under the provisions of Section 2(22)(e) of the Act, initiated proceedings u/s 147 of the Act. Notice u/s 148 of the Act was issued ... framed the assessment vide his order passed u/s 144 r.w.s. 147 of the Act, dated 27.02.2021, wherein he made an addition of “deemed dividend” of Rs. 4,05,95,758/- u/s 2(22)(e) of the Act and assessed the income of the assessee at Rs.5

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Circle 3(2), Hyderabad

Appeals are dismissed in terms of our aforesaid observations

ITA 149/HYD/2025[2013-2014]Status: DisposedITAT Hyderabad28 Apr 2025AY 2013-2014

Bench: Us:

Section 133ASection 143(1)Section 144Section 147Section 148Section 159Section 2(22)(e)Section 251

Late Rajasekhar Chelikani, Hyderabad vs. ACIT., Central Circle-3(2), Hyderabad

Appeals are dismissed in terms of our aforesaid observations

ITA 148/HYD/2025[2012-2013]Status: DisposedITAT Hyderabad28 Apr 2025AY 2012-2013

Bench: Us:

Section 133ASection 143(1)Section 144Section 147Section 148Section 159Section 2(22)(e)Section 251