Settled View on section 2(22)(e) of the Income Tax Act. trade advances -reg.

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..... (e) of the Income Tax Act, 1961 (the Act) provides that dividend includes any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits hold .....

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..... t are as follows: i. Advances were made by a company to a sister concern and adjusted against the dues for job work done by the sister concern. It was held that amounts advanced for business transactions do not to fall within the definition of deemed dividend under section 2(22) (e) of the Act. ( CIT vs. Creative Dyeing Printing Pvt. Ltd. - ([NJRS] 2009-LL-0922-2, ITA No. 2500[2009) = 200 .....

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..... essional rates, It was held that the security deposit made by the company to its sister concern was a business transaction arising in the normal course of business between two concerns and the transaction did not attract section 2(22) (e) of the Act. ( CIT, Agra vs Atul Engineering Udyog, Allahabad High Court - [NJRS] 2014-LL-0926-121, ITA No. 223 0[2011 = 2014 (10) TMI 41 - ALLAHABAD HIG .....

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