S. 2(22)(e) : Deemed Dividend – Advance received from closely held company by its shareholder – Holding more than 10% -Commercial transaction – Not assessable as deemed dividend.
Assessee was holding 35% shares in the company, which had two subsidiary companies. A foreign entity wanted to purchase stake in the company but was not interested to take any stake in the subsidiary companies. Therefore, shareholders of the company decided to give advance to assessee’s firm to purchase share of said subsidiary companies to facilitate the completion of transaction with foreign entity. Thereafter, 70% stake in the company was sold to foreign entity and assessee returned the amount of advance from sale consideration received to him. Thus, the transaction was commercial in nature and the advance was made for the advantage of the company. Hence, such transaction would not fall within the ambit of the provisions of section 2(22)(e). [ITA No. 1667/Mum/2024 dated 06/01/2025] [AY. 2014-15]
Subhash Chander Oberoi v. ACIT (Mum)(Trib), www.itatonline.org
[Coram : Hon’ble Shri Amarjit Singh, AM and Hon’ble Shri Sandeep Singh Karhail, JM]