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TMI Blog2018 (5) TMI 1757X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. The business transaction of the company do not fall within the provisions of deemed dividend u/s 2(22)(e) of the Act. Therefore, the addition of ₹ 2,88,000 is deleted. - Decided in favor of assessee. Deemed dividend - the loan taken was in respect of key man policy taken on the life of the assessee - Held that:- Since the nexus between the loan and advance to the assessee is clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by the company were relatable to chits for which he contributed and under no circumstances the same cannot constitute deemed dividend within the meaning of section 2(22)(e) of the IT Act. 3. The Hon'ble CIT(A) ought have observed that the loan taken was in respect of key man policy taken on the life of the assessee and therefore the same cannot be considered as deemed dividend u/s.2(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner of the shares of the company, holding more than 10% of the voting power, and also since the company has accumulated profits of more than the above aggregate amount of advance, the AO treated the said advance as deemed dividend u/s 2(22)(e) of the Act and brought it to tax which includes a loan of ₹ 5,29,750 obtained by the company and then was passed on to the assessee. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend u/s 2(22)(e) of the Act. 4. The learned DR, on the other hand, supported the orders of the authorities below. 5. Having regard to the rival contentions and the material on record, we find that the assessee was a subscriber of the Chits and as seen from the ledger a/c in the books of account of the company, the assessee has received a sum of ₹ 50,000 on 21.04.2008, ₹ 1,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has received a loan from LIC and has transferred the same to the assessee on 14.8.2008. This loan was taken on the premium paid for the Keyman Insurance Policy taken on 31.3.2008. Since the nexus between the loan and advance to the assessee is clearly established and there is accumulated profit of the company available to such an extent, the same is taxable as deemed dividend u/s 2(22)(e) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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