| COURT: | Supreme Court |
| CORAM: | Rohinton Fali Nariman J., Sanjay Kishan Kaul J |
| SECTION(S): | 2(22)(e) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | beneficial owner of shares, deemed dividend |
| COUNSEL: | Ajay Vohra, Harish Salve, Percy Pardiwala |
| DATE: | October 5, 2017 (Date of pronouncement) |
| DATE: | October 20, 2017 (Date of publication) |
| AY: | - |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 2(22)(e): Any payment by a closely-held company by way of advance or loan to a concern in which a substantial shareholder is a member holding a substantial interest is deemed to be “dividend” on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. However, the legal fiction in s. 2(22)(e) does not extend to, or broaden the concept of, a “shareholder” | |
U/s 2(22)(e), any payment by a closely-held company by way of advance or loan to a concern in which a substantial shareholder is a member holding a substantial interest is deemed to be “dividend” on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. The legal fiction in s. 2(22)(e) enlarges the definition of dividend but does not extend to, or broaden the concept of, a “shareholder”. As the assessee was not a shareholder of the paying company, the “dividend” was not assessable in its hands
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