Deemed dividend on shareholder debit balance upheld, but net liability remanded for interest-based recomputation.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ITAT upheld the applicability of deemed dividend under section 2(22)(e) where a shareholder had the requisite shareholding, a debit balance appeared in the company's books, and the company had sufficient accumulated profits; the short duration of the debit balance did not alter its character as a shareholder advance or loan. On computation, however, the Tribunal held that the net debit balance could not be determined by ignoring accrued interest on day-to-day credit balances, and the assessee had to be given a reasonable opportunity to have that adjustment considered. The matter was therefore remanded for recomputation of the amount assessable as deemed dividend.....