Deemed dividend under Section 2(22)(e) requires the statutory shareholder relationship; absent perversity in findings, appellate interference was refused.

Section 2(22)(e) of the Income-tax Act applies only when the statutory conditions for deemed dividend are satisfied, including the relevant shareholder relationship. On the facts found, the assessee was not a shareholder of the concerned companies, so the inter-corporate deposit could not be treated as deemed dividend. The Bombay HC also found no perversity or legal error in the Tribunal's factual findings and declined to interfere in appeal. The Revenue's challenge therefore failed, and the Tribunal's order was left undisturbed.

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Issues: Whether the amount received by the assessee as an inter-corporate deposit could be treated as deemed dividend under Section 2(22)(e) of the Income-tax Act, 1961, and whether the Tribunal's factual findings suffered from perversity or an error of law warranting interference in appeal.

Analysis: The Tribunal had recorded that the assessee was not a shareholder of the concerned companies. In that situation, the statutory precondition for invoking deemed dividend treatment was not satisfied. The Court also found no perversity or legal error in the Tribunal's findings of fact, and declined to reappreciate the matter for the purpose of admitting the appeal.

Conclusion: The question was answered against the Revenue and in favour of the assessee; the amount was not liable to be treated as deemed dividend on the facts found, and no interference with the Tribunal's order was called for.

Final Conclusion: The appeal failed and the Tribunal's order was left undisturbed.

Ratio Decidendi: Section 2(22)(e) can be invoked only where the statutory conditions, including the relevant shareholder relationship, are satisfied; absent such relationship, and absent perversity in the fact-finding, appellate interference is unwarranted.

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