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-2(1), Cuttack vs. M/S. Mahimananda Mishra, Cuttack

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

ITA 52/CTK/2016[2011-12]Status: DisposedITAT Cuttack09 Oct 2017AY 2011-12

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपील सं./Ita No.52/Ctk/2016 (धनधाारण वषा / Assessment Year :2011-2012) Acit, Circle-2(1), Cuttack Vs. M/S Mahimananda Mishra Oriya Bazar, P.O.Buxi Bazar, Cuttack स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No. : Aaffm 2518 J (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. राजस्व की ओर से /Revenue By : Shri Kunal Singh, Citdr निर्ााररती की ओर से /Assessee By : Shri Saswat Acharya, Ar सुनवाई की तारीख / Date Of Hearing : 04/10/2017 घोषणा की तारीख/Date Of Pronouncement 10/10/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, Jm: The Revenue Has Filed An Appeal Against The Order Of Cit(A), Cuttack, In Appeal No.147/2014-15, Dated 16.11.2015, Passed U/S.143(3)/250 Of The Income Tax Act, 1961 For The Assessment Year 2011-2012, Wherein The Revenue Has Raised The Following Grounds :- 01. Whether On The Facts & In Circumstances Of The Case, The Ld. Cit(A) Is Justified In Deleting The Addition On Account Of Deemed Dividend In The Hands Of The Assessee, Since The Requisite Conditions Prescribed In The Section 2(22)(E) Have Been Fulfilled In This Case. 02. Whether In The Facts & In Circumstance Of The Case, The Id.Cit(A) Is Justified In Deleting The Addition On The Basis Of Observation That No Deemed Dividend Could Be Assessed In The Hands Of The Assessee Since The Assessee Firm Itself Was Not A Shareholder In The Payer Company, Which Is Not In Accordance With The Provisions Of Section 2(22)(E) Of The I.T.Act. 03. Any Other Matter, If Any, Shall Be Urged At The Time Of Hearing. 2. Brief Facts Of The Case Are That The Assessee Is A Partnership Firm Engaged In The Business Of Labour Contract In The Brand Name Of M/S Mahimananda Mishra & Filed The Return Of Income For The Assessment

For Appellant: Shri Saswat Acharya, ARFor Respondent: Shri Kunal Singh, CITDR
Section 143(1)Section 143(2)Section 143(3)Section 2(22)(e)

I.T.Owd3(1), Kolkata vs. M/S Sanchiya Housing Pvt. Ltd., Kolkata

In the result, the appeal of the revenue is dismissed

ITA 1518/KOL/2013[2006-2007]Status: DisposedITAT Kolkata20 Sept 2017AY 2006-2007

Bench: Shri P.M. Jagtap, Am & Shri S.S. Viswanethra Ravi, Jm] I.T.A. No. 1518/Kol/2013 Assessment Year: 2006-07 I.T.O. Ward 3(1) Kolkata .............................…………………………......................Appellant P-7, Chowringhee Square, Aayakar Bhawan Kolkata - 700069 M/S. Sanchiya Housing Pvt. Ltd.……………………………………………….........Respondent 9, Dacres Lane Kolkata – 700069 [Pan: Aaecs0323H] Appearances By: Shri Sallong Yaden, Addl. Cit Appearing On Behalf Of The Revenue. None Appearing On Behalf Of The Assessee. Date Of Concluding The Hearing : September 11, 2017 Date Of Pronouncing The Order : September 20, 2017 Order Per P.M. Jagtap, Am This Appeal Is Preferred By The Revenue Against The Order Of Ld. Cit (Appeals) – Xx, Kolkata Dated 25.02.2013 On The Following Grounds: I. That The Ld. Cit (A) Has Erred In Law & On Facts By Allowing The Appeal Of The Assessee Company That The Provision Of Section 2(22)(E) Is Not Applicable In This Case Hence Deleted The Addition Of Deemed Dividend Of Rs. 42,97,818/-. Ii. That The Ld. Cit (A) Has Erred In Law & On Facts By Allowing The Appeal Of The Assessee Company That The Interest Of Rs. 13,53,854/-, Except Payment Of Interest To M/S. Adventure Buildcon Of Rs. 21,273/-, Is Expended For The Purpose Of The Business.

Section 143(3)Section 2(22)(e)
Section 2(22)(e) of the Income Tax Act — Case Laws | BharatTax