Deemed Dividend

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Nirav Vora (Querist)
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16 December 2009 Sir,

In one of the case, the assessee company refered as A Ltd, dealing in construction business has received advance as part payment for purchase of land from B ltd. One of the shreholder has substantial interest in A ltd and more than 10 % interest in B ltd.

By virtue of the fact the transaction has been catagorized as Deemed Dividend. But the advance is given in normal business prectice.

Can the said advance be considered as deemed dividend ?

if no can any one give reference of case law.

Thakns....

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 December 2009 Here companies are A Ltd and B ltd and if those are companies in which public are substantially interested, then question of 2(22)(e) does not arise. If they are closely held companies ,even though both being corporates, section attracts vide Bombay High Court's decision in
Sadhana Taxtiles Mills (P.) Ltd. v. CIT [1991] 188 ITR 318 (Bom.).