Short Overview: Where assessee was not a member/shareholder of the concerned company, therefore, loan/advance received from such company was not deemed dividend under section 2(22)(e).

During the course of assessment proceedings, AO noticed that assessee had received amounts/loans and had paid various amounts to two companies. AO treated such loans/advance amount as deemed dividend as per section 2(22)(e) in the hands of assessee.

It is held that  the issue as to applicability of provision to a non-member/non-shareholder of the concerned company which had given the loan/advance was settled by the decision in CIT v. M/s. Ankitech Pvt. Ltd. and Others [(2012) 340 ITR 14 (Del) : 2011 TaxPub(DT) 1008 (Del-HC)] that assessee being not a member/shareholder of the concerned company, the loan/advance received from such company was not deemed dividend under section 2(22)(e).

Decision: In assessee’s favour.