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| The Tax Publishers2020 TaxPub(DT) 2963 (Mad-HC) : (2020) 429 ITR 0036 : (2020) 273 TAXMAN 0424 INCOME TAX ACT, 1961
Section 2(22)(e)
Amount shown in balance sheet of assessee (holding company) for relevant assessment year was only an advance made by its subsidiary company, in course of business, for providing corporate guarantee by assessee, and thus, it was not deemed dividend within meaning of section 2(22)(e).
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Dividend deemed under section 2(22)(e) - Applicability of provision - Advance made by assessee's subsidiary company, in course of business, for providing corporate guarantee by assessee -
Assessee was a holding company having 92.43% of shares in its subsidiary company. Said share holding was subsequently reduced from 92.43% to 61.24%. AO found that company received a sum of Rs. 3.00 Crores as loan from its subsidiary company and treated amount advanced by subsidiary company to its holding company, as deemed dividend within meaning of section 2 (22)(e). Held: Sum of Rs. 3.00 Crores shown in balance sheet of assessee company for relevant assessment year was only an advance made by its subsidiary company, in course of business, for providing corporate guarantee by assessee, and thus, it was not deemed dividend within meaning of section 2(22)(e).
Confirmed:CIT v. Accel Ltd. [Tax Case (Appeal) No.167 of 2011, dt. 21-1-2019] M/s. Accel Limited v. DCIT [I.T.A. Nos. 23 & 24/Mds/2015, I.T.A. Nos. 144, 145, 146 & 147/Mds/2015, dt. 20-5-2016]
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2002-03
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