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“accumulated profits”

Special Rate ProvisionsSection 2(22)Section 2(22)462 judgments

The decision most relied on for accumulated profits is CIT v. Ankitech (P) Ltd. (340 ITR 14), cited in 202 judgments on BharatTax.

Leading authorities on accumulated profits

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.

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.

CIT v. Nagindas M. Kapadia
177 ITR 393 · 1989 · High Court
53
citing judgments

Trade advances arising from genuine commercial transactions are not considered deemed dividends under Section 2(22)(e) of the Income-tax Act. The provision applies only to payments in the nature of dividend, not bona fide business transactions.

PCIT v. Vaishnodevi Refoils & Solvex
89 Taxmann.com 80 · 2018 · High Court
46
citing judgments

The addition of share application money to the income of the assessee under Section 68 is not justified if the assessee has discharged the initial onus by providing complete particulars and documentary evidence of the creditor, and the Revenue has failed to prove otherwise. The Supreme Court has also dismissed the Revenue's SLP in this matter.

Judgments citing accumulated profits

Scott Edil Advance Research Laboratories and Education Limited, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 843/CHANDI/2023[2012-13]Status: DisposedITAT Chandigarh03 Mar 2025AY 2012-13
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Scott Edil Pharmacia Ltd., Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 833/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Scott Edil Pharmacia Ltd., Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 832/CHANDI/2023[2016-17]Status: DisposedITAT Chandigarh03 Mar 2025AY 2016-17
Section 127Section 153DSection 2(22)(e)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Scott Edil Pharmacia Ltd., Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 831/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh03 Mar 2025AY 2015-16
Section 127Section 132Section 153ASection 153DSection 2(22)(e)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there

Scott Edil Pharmacia Ltd., Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 829/CHANDI/2023[2013-14]Status: DisposedITAT Chandigarh03 Mar 2025AY 2013-14

Bench: Shri Sanjay Garg & Shri Krinwant Sahayआयकर अपील सं./Ita No. 579/Chd /2023 निर्धारण वर्ष / Assessment Year : 2017-18 & आयकर अपील सं./Ita Nos.582 To 584/Chd/ 2023 निर्धारण वर्ष / Assessment Years : 2014-15 To 2016-17 & आयकर अपील सं./Ita No. 591/Chd /2023 निर्धारण वर्ष / Assessment Year : 2018-19

Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 732/CHANDI/2023[2018-19]Status: DisposedITAT Chandigarh03 Mar 2025AY 2018-19
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 731/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18
Section 127Section 132Section 153ASection 153DSection 2(22)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 730/CHANDI/2023[2016-17]Status: DisposedITAT Chandigarh03 Mar 2025AY 2016-17
Section 127Section 132Section 153ASection 153DSection 2

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 729/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh03 Mar 2025AY 2015-16
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 728/CHANDI/2023[2014-15]Status: DisposedITAT Chandigarh03 Mar 2025AY 2014-15

Bench: Shri Sanjay Garg & Shri Krinwant Sahayआयकर अपील सं./Ita No. 579/Chd/2023 निर्धारण वर्ष / Assessment Year : 2017-18 & आयकर अपील सं./Ita Nos.582 To 584/Chd/2023 निर्धारण वर्ष / Assessment Years : 2014-15 To 2016-17 & आयकर अपील सं./Ita No. 591/Chd/2023 निर्धारण वर्ष / Assessment Year : 2018-19 Maxport India Pvt. Ltd. C/O Parikshit Aggarwal, Chartered Accountant, H. No. 3035, Sector 27D, Chandigarh- 160019. स्था.लेखा सं./Pan No: Aaicm9120E अपीलाथ/Appellant बनाम प्रथीय/Respondent Deputy Commissioner Of Income-Tax, Centre Circle-1, Chandigarh. & आयकर अपील सं./Ita Nos.482 & 483/Chd/2023 निर्धारण वर्ष / Assessment Years : 2017-18 & 2018-19 Vaishali Aggarwal C/O Parikshit Aggarwal, Chartered Accountant, H No. 3035, Sector 27D, Chandigarh- 160022. स्था.लेखा सं./Pan No: Aaqpa4025M अपीलाथ/Appellant बनाम प्रथीय/Respondent Deputy Commissioner Of Income-Tax, Centre Circle-1, Chandigarh. & आयकर अपील सं./Ita No. 846/Chd/2023

Section 127Section 132Section 153ASection 153DSection 2(22)(e)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 727/CHANDI/2023[2013-14]Status: DisposedITAT Chandigarh03 Mar 2025AY 2013-14
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Shri Balram Krishan, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 726/CHANDI/2023[2012-13]Status: DisposedITAT Chandigarh03 Mar 2025AY 2012-13
Section 153A

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Maxport India Private Limited, Chandigarh vs. Dy. Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 583/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh03 Mar 2025AY 2015-16
Section 127Section 132Section 153ASection 153DSection 2(22)(e)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Maxport India Private Limited, Chandigarh vs. Dy. Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 582/CHANDI/2023[2014-15]Status: DisposedITAT Chandigarh03 Mar 2025AY 2014-15
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

DCIT, Chandigarh vs. Sanjeev Aggarwal, Chandigarh

ITA 506/CHANDI/2023[2018-19]Status: DisposedITAT Chandigarh03 Mar 2025AY 2018-19
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

DCIT, CC 1, Chandigarh vs. Sanjeev Aggarwal, Chandigarh

The appeals of the revenue are treated as dismissed

ITA 505/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18
Section 127Section 153DSection 2

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Sanjeev Aggarwal, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 489/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh03 Mar 2025AY 2017-18
Section 127Section 132Section 153ASection 153D

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Sanjeev Aggarwal, Chandigarh vs. Deputy Commissioner of Income Tax, Central Circle-1, Chandigarh

ITA 480/CHANDI/2023[2018-19]Status: DisposedITAT Chandigarh03 Mar 2025AY 2018-19
Section 127Section 132Section 153ASection 153DSection 2(22)(e)

remaining conditions (beneficial share holding being more than 10%, M/s SEPL/SEARLE being companies in which the public is not substantially interested and availability of accumulated profits) are fulfilled. The case of the appellant is not covered by any of exceptions provided u/s 2(22)(e) of the Act.” However there ... between a shareholder and the company create mutual benefits and obligations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. 34. The Ld. Counsel, however, in his alternate contentions, has submitted that while calculating the addition for deemed

Pawan Tradecorp Private Limited, Dhar vs. ACIT-4(1), Indore

In the result appeal of the assessee is partly allowed

ITA 644/IND/2024[2016-17]Status: DisposedITAT Indore27 Feb 2025AY 2016-17

Bench: Shri Manish Boradpawan Tradecorp Private Acit 4(1), Limited, Indore Khandelwal Complex, Dhar Road, Vs. Manawar, Dist. Dhar Dhar (Appellant / Assessee) (Respondent/ Revenue) Pan: Aadcp6640D Assessee By Ms. Nisha Lahoti, Ar Revenue By Shri Ashish Porwal, Sr.Dr Date Of Hearing 27.02.2025 Date Of Pronouncement 27.02.2025 O R D E R

Section 143(3)Section 14A

investment in the particular firm is Rs.73,91,631/- and Rs.79,74,202/- as on 31.3.2015 and 31.03.2016 respectively. It clearly indicates that the accumulated profits and share capital is much more than the investment made in the particular firm. It is not the case of revenue that interest bearing

Sumitkumar Devchandbhai Savaliya, Bodakdev vs. DCIT, Circle-4(1)(1), Ahmedabad

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

ITA 964/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad25 Feb 2025AY 2017-18

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Vivek Chavda, A.RFor Respondent: Smt. Mamta Singh, Sr. DR
Section 147Section 2(22)(e)Section 250

more than 10 per cent of shares and public was not substantially interested in these two companies and loan amount was given out of accumulated profits of companies upto date of payments, basic conditions for attracting provisions of section 2(22)(e) were satisfied and, thus, Assessing Officer was justified