During the year under consideration, the assessee-partnership \ufb01rm received capital contributions from two partner-companies in which two other partners held substantial interest. The assessee was neither a registered shareholder nor a bene\ufb01cial owner of shares held in the companies. However, the assessing o\ufb03cer assessed the contributions as deemed dividend under section 2(22)(e) and taxed the same in the hands of assessee. The Commissioner of Income-Tax (Appeals) held that the capital contribution could not be treated as loans or advances extended to the assessee and therefore, the assessing o\ufb03cer could not have treated the same as deemed dividend in the hands of the assessee and the same has been upheld by the Hon\u2019ble Tribunal. On appeal by the Department, the Hon\u2019ble Delhi High Court \u00a0held that capital contribution made by the two partner-companies could not be treated as a loan or advance extended to assessee and therefore, addition could not be made in hands of assessee. Further, if at all addition could have been made, it could\u2019ve been in hands of two individual partners and that too only by their assessing o\ufb03cers after a\ufb00ording them an opportunity of being heard.(AY. 2006-07), 2010-11)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 2(22)(e): Deemed dividend-Capital contribution by companies in which assessee Firm\u2019s partners were shareholders-Commercial Transaction-Not loans and advances-Not assessable as deemed dividend. [S. 260A] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-42403","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-b1V","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=42403"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42403\/revisions"}],"predecessor-version":[{"id":42404,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/42403\/revisions\/42404"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=42403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=42403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=42403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}