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2011 (9) TMI 95 - AT - Income TaxDeemed dividend under section 2(22)(e) - Accumulated profit - The assessees are directors in a closely held company named M/s. Vikas Educational Institutions Ltd. (VEIL) and each of them held 25 per cent shares in that company. - The Assessing Officer noticed from the assessment record of the VEIL for the assessment year 2004-05 that the said company has advanced money to the assessee - Held that:- as per the provisions of section 2(22)(e) of the Act, such payments can be treated as deemed dividend only to the extent to which the company possesses accumulated profits. - Supreme Court in the cases of CIT v. Urmila Rungta (1998 -TMI - 5635 - SUPREME Court) and, P.K. Badiani v. CIT (1976 -TMI - 6489 - SUPREME Court) has held that the "Profits" mentioned in section 2(22)(e) is the actual profits calculated on commercial principles. - the question of determination of the quantum of accumulated profits that were available in the hands of the company on the date of entering into the impugned transactions requires to be examined afresh. - matter remanded back.
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