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, Circle-45, Kolkata vs. Shri Kishan Saraf, Kolkata

In the result, appeal filed by the Revenue, on this issue, is dismissed

ITA 27/KOL/2015[2008-2009]Status: DisposedITAT Kolkata04 Dec 2017AY 2008-2009

Bench: Shri A. T. Varkey, Jm &Dr. A.L. Saini, Am आयकरअपीलसं./Ita No.2265/Kol/2014 िनधा"रणवष" / Assessment Year: 2008-09 Vs. A.C.I.T, Cir-45, Kolkata. Shri Kishan Saraf Krishna Building, Room No.817, Govt. Place(West), Kolkata – 224, A.J.C. Bose Road, Kolkata – 700 001. 700 020. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Akups4979 C (Assessee) .. (Revenue) & आयकरअपीलसं./Ita No.27/Kol/2015 िनधा"रणवष" / Assessment Year: 2008-09 A.C.I.T, Cir-45, Kolkata. Vs. Shri Kishan Saraf Krishna Building, Room No.817, Govt. Place(West), Kolkata 224, A.J.C. Bose Road, Kolkata – – 700 001. 700 020. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Akups 4979 C (Revenue) .. (Assessee) Assesseeby : Shri S.D Varma, Adv. Revenue By : Shri Saurabh Kumar, Acit, Dr सुनवाईकीतारीख/ Date Of Hearing : 05/09/2017 घोषणाकीतारीख/Date Of Pronouncement : 04/12/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: The Captioned Cross-Appeal Filed By The Assessee & Revenue, Pertaining To Assessment Year 2008-09, Are Directed Against An Order Passed By The Ld. Commissioner Of Income Tax (Appeals)-Xxx, Kolkata In Appeal No.238/Cit(A)- Xxx/Cir-45/2013-14, Dated 29.10.2014, Which In Turn Arises Out Of An Order Passed

For Appellant: Shri S.D Varma, AdvFor Respondent: Shri Saurabh Kumar, ACIT, DR
Section 143(3)Section 2(22)(e)Section 263Section 40

DCIT, Cir-1, Kolkata vs. M/S the Hooghly Mills Co. Ltd., Kolkata

In the result, the appeal filed by the Revenue (in Ground No

ITA 667/KOL/2014[2008-2009]Status: DisposedITAT Kolkata04 Dec 2017AY 2008-2009

Bench: Shri A. T Varkey, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita No.667/Kol/2014 (िनधा"रणवष" / Assessment Year: 2008-09 D.C.I.T, Circle-1 Kolkata Vs. M/S The Hooghly Mills Co. Ltd. 10, Clive Row, Kolkata – 1. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Aaact 9780 F (Revenue/Department) .. (Assessee) Assessee By : Shri S. Jhajharia, Ca Revenue/Department By : Shri Kalyan Nath, Acit सुनवाईकीतारीख/ Date Of Hearing : 07/09/2017 घोषणाकीतारीख/Date Of Pronouncement : 04/12/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: The Captioned Appeal Filed By The Revenue, Pertaining To Assessment Year 2008-09, Is Directed Against An Order Passed By The Ld. Commissioner Of Income Tax(Appeals) In Appeal No.259/Cc-Vii/Cit(A)C-I/10-11, Dated 31.01.2014, Which In Turn Arises Out Of An Order Passed By The Assessing Officer U/S 143(3) Of The Income Tax Act, 1961(Hereinafter Referred To As The ‘Act’), Dated 27.12.2010. 2.The Revenue Has Raised The Following Grounds Of Appeal: “1.That, On The Facts & In The Circumstances Of The Case, The Cit(A) Has Erred In Deleting The Addition Of Rs.2,30,00,000/- Made By The Assessing Officer U/S 2(22)(E). 2.That, On The Facts & In The Circumstances Of The Case, The Cit(A) Has Erred In Deleting The Addition Made By The Assessing Officer U/S 36(I)(Va) Read With Section 2(24)(X) In Respect Of Employee’S Contribution To Pf/Esi For An Amount Of Rs.1,32,86,580/-. 3.That, On The Facts & In The Circumstances Of The Case, The Cit(A) Has Erred In Deleting The Addition Of Rs.1,30,70,800/- Made On Account Of Gratuity Liability. 4.That, On The Facts & In The Circumstances Of The Case, The Cit(A) Is Not Justified In Deleting The Addition Of Rs.12,23,842/- Made By The Assessing Officer U/S 14A Of The Income Tax Act Read With Rule 8D Of The Income Tax Rules, 1962. 5. The Appellant Craves Leave To Amend, Modify & Later Any Grounds Of Appeal During The Course Of Hearing Of This Case.”

For Appellant: Shri S. Jhajharia, CAFor Respondent: Shri Kalyan Nath, ACIT
Section 143(3)Section 14ASection 2(22)(e)Section 2(24)(x)Section 36

Shri Kishan Saraf, Kolkata vs. ACIT, Circle - 45, Kolkata

In the result, appeal filed by the Revenue, on this issue, is dismissed

ITA 2265/KOL/2014[2008-2009]Status: DisposedITAT Kolkata04 Dec 2017AY 2008-2009

Bench: Shri A. T. Varkey, Jm &Dr. A.L. Saini, Am आयकरअपीलसं./Ita No.2265/Kol/2014 िनधा"रणवष" / Assessment Year: 2008-09 Vs. A.C.I.T, Cir-45, Kolkata. Shri Kishan Saraf Krishna Building, Room No.817, Govt. Place(West), Kolkata – 224, A.J.C. Bose Road, Kolkata – 700 001. 700 020. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Akups4979 C (Assessee) .. (Revenue) & आयकरअपीलसं./Ita No.27/Kol/2015 िनधा"रणवष" / Assessment Year: 2008-09 A.C.I.T, Cir-45, Kolkata. Vs. Shri Kishan Saraf Krishna Building, Room No.817, Govt. Place(West), Kolkata 224, A.J.C. Bose Road, Kolkata – – 700 001. 700 020. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Akups 4979 C (Revenue) .. (Assessee) Assesseeby : Shri S.D Varma, Adv. Revenue By : Shri Saurabh Kumar, Acit, Dr सुनवाईकीतारीख/ Date Of Hearing : 05/09/2017 घोषणाकीतारीख/Date Of Pronouncement : 04/12/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: The Captioned Cross-Appeal Filed By The Assessee & Revenue, Pertaining To Assessment Year 2008-09, Are Directed Against An Order Passed By The Ld. Commissioner Of Income Tax (Appeals)-Xxx, Kolkata In Appeal No.238/Cit(A)- Xxx/Cir-45/2013-14, Dated 29.10.2014, Which In Turn Arises Out Of An Order Passed

For Appellant: Shri S.D Varma, AdvFor Respondent: Shri Saurabh Kumar, ACIT, DR
Section 143(3)Section 2(22)(e)Section 263Section 40