TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether an advance or loan made by a closely held company to a shareholder is treated as dividend under section 2(6A)(e) of the Indian Income-tax Act, 1922 when the loan is repaid before the close of the previous year.
Analysis: Section 2(6A)(e) creates a statutory fiction by which payments by a company to a shareholder by way of advance or loan are treated as dividend to the extent of accumulated profits. The liability is attracted when the loan is advanced and not when the account is finally balanced at the end of the year. The repayment of the loan before the close of the accounting period does not undo the statutory character already attached to the amount. The reference to section 16(2) only governs inclusion and grossing up of dividend income, while section 12(2) does not permit deduction of repayment of principal so as to neutralise the deemed dividend.
Conclusion: The loan amount was rightly treated as dividend income in the hands of the assessee, and the answer is against the assessee and in favour of the Revenue.
Ratio Decidendi: For the purposes of section 2(6A)(e), the taxable event occurs when the shareholder receives the advance or loan from a company in which the public are not substantially interested, and subsequent repayment within the same accounting year does not prevent the amount from being treated as deemed dividend.
TaxTMI 
TaxTMI 
