Share application money couldn’t be treated as loan/deposits to trigger provisions of deemed dividend

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[2014] 49 taxmann.com 389 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Alpex Exports (P.) Ltd.

Merely because shares were issued belatedly in subsequent year, share application money cannot be treated as loan or deposits or advance for invoking provisions of section 2(22)(e).

Section 2(22) of the Income-tax Act, 1961 – Deemed dividend (Loans and advances) – Assessment year 2008-09 – Assessing Officer, observing that share application money remained with assessee for more than three months during relevant assessment year and shares were issued in subsequent year, treated such money as advance under section 2(22)(e) – Tribunal, however, held that section 2(22)(e) was not applicable as amount was received as share application money – Whether once Tribunal recorded finding that amount received by assessee was share application money, said amount could not be treated as loan or deposit or advance for invoking provisions of section 2(22)(e) – Held, yes [Para 10] [In favour of assessee]