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)

ACIT, New Delhi vs. M/S Subash Dabas, New Delhi

In the result, the appeal filed by the Revenue is dismissed and the cross objection filed by the assessee is allowed

ITA 2398/DEL/2016[2008-09]Status: DisposedITAT Delhi02 Sept 2019AY 2008-09

Bench: Shri R.K. Panda & Ms Suchitra Kambleassessment Year: 2008-09 Acit, Vs Subhash Dabas, Central Circle-18, Prop. Tirupati Construction Co., New Delhi. C/O Tirupati Bldgs. & Offices Pvt. Ltd., Plot No.3, Dwarka City Centre, Sector-10, Dwarka, New Delhi. Pan: Aagpd6947F Co No.221/Del/2016 (Ita No.2398/Del/2016) Assessment Year: 2008-09 Subhash Dabas, Vs. Acit, Prop. Tirupati Construction Co., Central Circle-18, C/O Tirupati Bldgs. & New Delhi,. Offices Pvt. Ltd., Plot No.3, Dwarka City Centre, Sector-10, Dwarka, New Delhi. Pan: Aagpd6947F (Appellant/Cross Objector) (Respondent) Assessee By : Shri Mahavir Singh, Advocate Revenue By : Ms Nidhi Srivastava, Cit, Dr Date Of Hearing : 21.08.2019 Date Of Pronouncement : 02.09.2019 Order Per R.K. Panda, Am: The Appeal Filed By The Revenue Is Directed Against The Order Dated 22Nd February, 2016 Of The Cit(A)-27, New Delhi Relating To Assessment Year 2008-09. Co No.221/Del/2016 The Assessee Has Also Filed Cross Objections Against The Appeal Filed By The Revenue. For The Sake Of Convenience, These Were Heard Together & Are Being Disposed Of By This Common Order.

For Appellant: Shri Mahavir Singh, AdvocateFor Respondent: Ms Nidhi Srivastava, CIT, DR
Section 127Section 132Section 133(6)Section 139(1)Section 153ASection 2(22)(e)Section 68

Assistant Commissioner of Income Tax, Ahmednagar vs. Sandesh Rajendra Lodha, Ahmednagar

In the result, the appeal of the Revenue is dismissed

ITA 650/PUN/2017[2011-12]Status: DisposedITAT Pune27 Aug 2019AY 2011-12

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील सं. / Ita No.650/Pun/2017 िनधा"रण वष" / Assessment Year : 2011-12 Acit, Ahmednagar Circle, .......अपीलाथ" / Appellant Ahmednagar. बनाम / V/S. Sandesh Rajendra Lodha, Bunglow No.5-6, Maniknagar, Near Anand Rishi Hospital, Ahmednagar-414001. ……""यथ" / Respondent Pan : Abepl6658E Revenue By : Mrs. Shabana Parveen Assessee By : Shri Prasad Bhandari सुनवाई क" तारीख / Date Of Hearing : 29.07.2019 घोषणा क" तारीख / Date Of Pronouncement : 27.08.2019 आदेश / Order Per D. Karunakara Rao, Am: This Appeal Is Filed By The Revenue Against The Order Of The Cit(A)- 2, Pune Dated 14.10.2016 For The Assessment Year 2011-12. 2. The Grounds Raised By The Revenue Are As Under :- “1. The Order Of The Learned Commissioner Of Income-Tax (Appeals)-2 Is Contrary To Law & To The Facts & Circumstances Of The Case. 2. The Learned Commissioner Of Income-Tax(Appeals) Erred In Deleting The Addition Of Rs.5,03,61,119/- Made By The Ao U/S 2(22)(E) Of The It Act. 3. The Learned Commissioner Of Income-Tax(Appeals) Grossly Erred, In Ignoring The Finding Of Facts By The Ao That On Verification Of Ledger Of Gepl Appearing In The Books Of Gaepl, That Gaepl Had Sold Aluminum Scrap To Gepl For Which Separate Account Was Maintained. Therefore, The Loan / Advances Given By Gaepl To Gepl Through Separate Account Cannot Be Considered As Trade Advances But Loan / Advances Only.

For Appellant: Shri Prasad BhandariFor Respondent: Mrs. Shabana Parveen
Section 2(22)(e)

Dy. Commissioner of Income Tax-2, Kanpur vs. Sh. Krishna Mohan Agarwal, Kanpur

In the result, the appeal of the Revenue stands dismissed

ITA 86/LKW/2017[2012-13]Status: DisposedITAT Lucknow22 Aug 2019AY 2012-13

Bench: Shri. A. D. Jain & Shri T. S. Kapoorassessment Year: 2012-13 Dy. Cit-2 V. Shri Krishna Mohan Agarwal Kanpur 111/230, Harsh Nagar Kanpur Tan/Pan:Acf[A1341, (Appellant) (Respondent) Appellant By: Shri S. K. Madhuk, Cit (Dr) Respondent By: Shri Swarn Singh, Fca Date Of Hearing: 23 07 2019 Date Of Pronouncement: 22 08 2019 O R D E R Per A. D. Jain, V.P.: This Is Revenue’S Appeal Against The Order Of The Ld. Cit(A)-I, Kanpur, Dated 28/11/2016 For Assessment Year 2013-14, Taking The Following Grounds: 1. The Ld. Commissioner Of Income Tax (Appeals)-I,- Kanpur Has Erred In Law By Deleting The Addition Of Rs.10,45,07,000/- Made On Account Of Deemed Dividend As Per Section 2(22)(E) Of I.T. Act, 1961. 2. The Ld. Commissioner Of Income Tax (Appeals)-I, Kanpur Has Erred In Law By Not Considering The Correct Voting Power Of Shri K.M. Agarwal As Registered Shareholder & Beneficial Owner Of Shares Both In Individual & Karta/Member Of Huf Capacity. 3. The Order Of The Ld. Commissioner Of Income Tax (Appeals)-I, Kanpur Had Not Taken Into Account The Fact That As Individual He Had Voting Power Of 8.84% & As Karta /Member Of Huf His Share Is 25% Of Income In Huf & Has Voting Rights In The Company M/S Sumit Chemicals Pvt. Ltd. To That Extent. As Per

For Appellant: Shri S. K. Madhuk, CIT (DR)For Respondent: Shri Swarn Singh, FCA
Section 2Section 2(22)(e)

DCIT 8(2)(1), Mumbai vs. Simplex Renewable Resources P.Ltd, Mumbai

ITA 751/MUM/2017[2012-13]Status: DisposedITAT Mumbai09 Aug 2019AY 2012-13

Bench: Hon’Ble Shri Sandeep Gosain, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ I.T.A. No.751/Mum/2017 (िनधा"रणवष" / Assessment Year:2012-13) Dcit-8(2)(1) M/S. Simplex Renewable Resources Pvt. Ltd. बनाम/ 2Nd Floor, Simplex Mills Compound Room No.624 M.K. Road 30, Keshavrao Khadye Marg Vs. Mumbai-400 020. Sant Gadge Maharaj Chowk, Mumbai-400 011. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaocs-1660-H (अपीलाथ"/Appellant) (""यथ" / Respondent) : & C.O. No.112/Mum/2018 Arising Out Of Ita No.751/Mum/2017 (िनधा"रणवष" / Assessment Year:2012-13) M/S. Simplex Renewable Resources Pvt. Ltd. Dcit-8(2)(1) बनाम/ 2Nd Floor, Simplex Mills Compound Room No.624 30, Keshavrao Khadye Marg M.K. Road Vs. Sant Gadge Maharaj Chowk, Mumbai-400 011. Mumbai-400 020. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaocs-1660-H (अपीलाथ"/Appellant/C.O.) (""यथ" / Respondent) : Revenue By : Chaudhury Arun Kumar, Ld. Dr Assessee By : Shri Anil Lohia, Ld. Ar Date Of Hearing : 08/07/2019 Date Of Pronouncement : 09.08.2019 आदेश / O R D E R Manoj Kumar Aggarwal (): - 1.1 As Per The Provisions Of Section 2(22)(E) Of The Income Tax Act, 1961 [In Short ‘Act’], Dividend Includes Any Payment Of Any Sum, By A Company

For Appellant: Shri Anil Lohia, Ld. ARFor Respondent: Chaudhury Arun Kumar, Ld. DR
Section 2(22)(e)