https://www.taxtmi.com/caselaws?id=797943 Payments by a closely held company to a substantial shareholder do not constitute deemed dividend under Section 2(22)(e) unless they have the character of a loan or advance. Where audited accounts and a running ledger show that the company owed funds to the shareholder throughout the year, the shareholder's account never became debit, and the payment merely reduced the company's existing credit liability, no shareholder indebtedness arises. The absence of a formal loan agreement, interest provision or board approval does not change the transaction's established character. Repayment of funds already due to the shareholder is therefore outside deemed-dividend taxation. en-us Wed, 19 Aug 2026 00:00:00 +0530 Mon, 31 Aug 2026 08:28:50 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=797943 Payments by a closely held company to a substantial shareholder do not constitute deemed dividend under Section 2(22)(e) unless they have the character of a loan or advance. Where audited accounts and a running ledger show that the company owed funds to the shareholder throughout the year, the shareholder's account never became debit, and the payment merely reduced the company's existing credit liability, no shareholder indebtedness arises. The absence of a formal loan agreement, interest provision or board approval does not change the transaction's established character. Repayment of funds already due to the shareholder is therefore outside deemed-dividend taxation. Case-Laws Income Tax Wed, 19 Aug 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=797943