Deemed dividend to be assessed in the hands of shareholder instead of firm: Madras HC

The Madras High Court in a recent suit has ruled that the deemed dividend u/s 2(22) (e) of the Income Tax Act 1961, has to be assessed in the hands of the shareholder rather than assessing it in the hands of the business firm.

In the Case – “Commissioner of Income Tax Vs. M/s T. Abdul Wahid & Co.”, the Madras High Court has concluded that the Section 2(22) (e) of the Income Tax Act 1961, would be applicable in case a payment is done by a company, where the public is not substantially interested by means of advances or loan to a shareholder who is the beneficial owner of his shares.