Section 2(22)(e) of the Income Tax Act

The decision most relied on for Section 2(22)(e) is CIT v. Winsome Textile Industries Ltd. (319 ITR 204), cited in 378 of the 1,757 judgments on BharatTax that turn on this section.

Leading authorities on Section 2(22)(e)

CIT v. Winsome Textile Industries Ltd.
319 ITR 204 · 2009 · High Court
378
citing judgments

Section 14A of the Income-tax Act, 1961, which disallows expenditure incurred in relation to exempt income, is not applicable if the assessee has not earned any exempt income in the relevant assessment year.

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.

DCIT v. Core Health Care Ltd.
298 ITR 194 · 2008 · Supreme Court
165
citing judgments

Interest expenditure incurred for acquiring capital assets, even if capitalized in the books, is deductible if for the purpose of business. Section 36(1)(iii) is a self-contained code regarding such deductions.

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.

Jamshedpur Motor Accessories Stores v. CIT
72 ITR 612 · 1969 · Supreme Court
140
citing judgments

The reasonableness of an expenditure for business purposes must be assessed from the businessman's perspective, not the revenue's, and the primary motive to earn income directly is not a prerequisite for its admissibility as a deduction.

H T Media Ltd. v. PCIT
399 ITR 576 · 2017 · High Court
132
citing judgments

The Assessing Officer must first record satisfaction that the assessee’s claim regarding expenditure incurred for earning exempt income is incorrect or unreasonable before applying the provisions of Rule 8D to determine such disallowance under Section 14A(2) of the Income Tax Act.

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.

Judgments on Section 2(22)(e)

Assistant Comissioner of Income Tax, Circle-28(1), Delhi vs. Ashish Gupta, Delhi

In the result, the appeal of the Revenue is dismissed and Cross Objection filed by the assessee is allowed

ITA 3716/DEL/2023[2012-13]Status: DisposedITAT Delhi29 Apr 2026AY 2012-13

Bench: Shri Sudhir Kumar & Shri Manish Agarwalasst. Cit, Ashish Gupta, Central Circle-18 Aerene Bimaldeep Complex, 1001, 10Th Floor, Vs. Mall Road, Kishan Garh, E-2 Block, Civic Centre, Behind Pocket D-3, Vasant Delhi-110002. Kunj, Delhi-110070 Pan-Ahepg5510G (Appellant) (Respondent) C.O. No.103/Del/2025 Arising Out Of Ita No.3716/Del/2023 (Assessment Year: 2012-13) Ashish Gupta, Asst. Cit, Aerene Bimaldeep Complex, Central Circle-18 Mall Road, Kishan Garh, Vs. 1001, 10Th Floor, Behind Pocket D-3, Vasant E-2 Block, Civic Centre, Kunj, Delhi-110070 Delhi-110002. Pan-Ahepg5510G (Cross Objector) (Respondent) Assessee By Shri Rajeshwar Prasad Painuly, Ca Department By Ms.Kanchan Garg, Sr. Dr Date Of Hearing 10/02/2026 Date Of Pronouncement 29/04/2026 O R D E R Per Manish Agarwal, Am: The Captioned Appeal Is Filed By The Revenue & Cross Objection Is Filed By The Assessee Against The Order Of Learned Commissioner Of Income Tax (Appeals)- 27, New Delhi [Cit(A) In Short], Dated 14.06.2023 In Appeal No. Cit(A), Delhi- C.O. No.103/Del/2025 Acit Vs. Ashish Gupta 10245/2019-20 Arising Out Of The Order Passed U/S 143(3) R.W.S. 147 Of The Income Tax Act, 1961 (The Act, In Short) Dated 24.12.2029 For Assessment Year 2012-13. 2. Assessee In The Cross Objections Has Challenged The Reopening U/S147 Of The Act On The Ground That No New/Fresh Material Was Brought On Record Though The Case Is Reopened After The Expiry Of Four Years From The End Of The Relevant Assessment Year, More Particularly When All The Materials Facts Truly & Necessarily Required For Completing The Assessment Were Disclosed By The Assessee In The Original Assessment Proceedings U/S 143(3) Of The Act & Available In The Assessment Records. Since, The Assessee Has Taken Legal Objections Challenging The Reopening Of Assessment, Therefore, The Same Is Taken First For Consideration.

Section 143(3)Section 147Section 148Section 2(22)(e)

Aditya Arunkumar Poddar, Pune vs. The ACIT, Central Circle-1(2), Pune

In the result, the appeal filed by the assessee in ITA

ITA 2758/PUN/2024[2021-22]Status: DisposedITAT Pune10 Apr 2026AY 2021-22

Bench: Shri R. K. Panda & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2757/Pun/2024 िनधा"रण वष" / Assessment Year : 2021-22 Ashwinikumar Ramkumar Vs. Acit, Central Circle-1(2), Poddar, Pune. Plot No.342, Sind Society, Baner Road, Aundh, Pune- 411007. Pan : Aarpp7606E Appellant Respondent आयकर अपील सं. / Ita No.2758/Pun/2024 िनधा"रण वष" / Assessment Year : 2021-22 Aditya Arunkumar Poddar, Vs. Acit, Central Circle-1(2), Plot No.130, Sind Society, Pune. Baner Road, Aundh, Pune- 411007. Pan : Ahspp3084G Appellant Respondent Assessee By : Shri Sarvesh Kandelwal Revenue By : Smt. Sonal L. Sonkavde Date Of Hearing : 02.02.2026 Date Of Pronouncement 10.04.2026 : आदेश / Order Per Vinay Bhamore, Jm: Both The Above Captioned Appeals Filed By The Two Different Assessees Are Directed Against The Separate Orders Dated 28.10.2024 Passed By Ld. Cit(A), Pune-11 [‘Ld. Cit(A)’] For The Assessment Year 2021-22 Respectively. 2. Since Identical Facts & Common Issues Are Involved In Both The Above Captioned Appeals Of The Two Different Assessee, Therefore, We Proceed To Dispose Of The Same By This Common Order. 3. First, We Shall Take Up The Appeal Of The Assessee In Ita No.2757/Pun/2025 For Adjudication As The Lead Case.

For Appellant: Shri Sarvesh KandelwalFor Respondent: Smt. Sonal L. Sonkavde
Section 02Section 132Section 139(1)Section 143(1)Section 143(2)Section 143(3)Section 2(22)(e)Section 22