The Tax Publishers2020 TaxPub(DT) 4098 (Pune-Trib)

INCOME TAX ACT, 1961

Section 2(22)(e)

Where the transactions between the shareholder and company create mutual benefits and obligations, then the provisions of treating any sum received by the shareholder does not constitute deemed dividend.

Dividend - Deemed dividend under section 2(22)(e) - Mutual benefits and obligations -

Assessee took loan from a company wherein he was a Director, having 50% shareholding. He took temporary accommodation loans from company which was considered as deemed dividend under section 2(22)(e). Held: In case of CIT v. Gayatri Chakraborty [(2018) 407 ITR 730 (Cal) : 2018 TaxPub(DT) 3141 (Cal-HC)] it was held that where the transactions between the shareholder and company create mutual benefits and obligations, then the provisions of treating any sum received by the shareholder does not constitute deemed dividend. Further, in case of CIT v. Schutz Dishman Biotech Pvt. Ltd. [(Tax Appeal No. 958 & 959/2012) : 2016 TaxPub(DT) 1541 (Guj-HC)] it was also held that accommodation adjustment entries do not fall within the realm of deemed dividend under section 2(22)(e). Following the same, the action of AO could not be held justified.

Followed:CIT v. Gayatri Chakraborty [(2018) 407 ITR 730 (Cal) : 2018 TaxPub(DT) 3141 (Cal-HC)] and CIT v. Schutz Dishman Biotech Pvt. Ltd. [(Tax Appeal No. 958 & 959/2012) : 2016 TaxPub(DT) 1541 (Guj-HC)].

REFERRED :

FAVOUR : In favour of assessee

A.Y. : 2014-15



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