https://www.taxtmi.com/caselaws?id=337251 The SC held that loans/advances received by a HUF constitute deemed dividend under Section 2(22)(e) of the Income Tax Act. Although share certificates were issued in the Karta's name, the HUF was shown as registered and beneficial shareholder in company's annual returns filed with ROC. The Court found that since the Karta was a HUF member with substantial interest (entitled to not less than 20% of HUF income), Section 2(22)(e) provisions applied regardless of whether HUF could be a registered shareholder. Under Explanation 3 to Section 2(22)(e), when payment is received by HUF and the shareholder is a HUF member with substantial interest, such payment constitutes deemed dividend. The Court distinguished the C.P. Sarathy Mudaliar precedent as it was decided under the 1922 Act which lacked Explanation 3 provisions. en-us Wed, 04 Jan 2017 00:00:00 +0530 Fri, 31 Jul 2026 10:04:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=337251 The SC held that loans/advances received by a HUF constitute deemed dividend under Section 2(22)(e) of the Income Tax Act. Although share certificates were issued in the Karta's name, the HUF was shown as registered and beneficial shareholder in company's annual returns filed with ROC. The Court found that since the Karta was a HUF member with substantial interest (entitled to not less than 20% of HUF income), Section 2(22)(e) provisions applied regardless of whether HUF could be a registered shareholder. Under Explanation 3 to Section 2(22)(e), when payment is received by HUF and the shareholder is a HUF member with substantial interest, such payment constitutes deemed dividend. The Court distinguished the C.P. Sarathy Mudaliar precedent as it was decided under the 1922 Act which lacked Explanation 3 provisions. Case-Laws Income Tax Wed, 04 Jan 2017 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=337251