DMAI vs

The Supreme Court addressed two key issues regarding the interpretation of Section 2(22)(c) and Section 41(2) of the Income-tax Act, 1961. The Court held that the amount assessed under Section 41(2) cannot be classified as 'commercial profits' and thus does not constitute 'accumulated profits' for the purpose of deemed dividends under Section 2(22)(c). Consequently, the Court upheld the High Court's decision that such amounts cannot be taxed as deemed dividends in the hands of shareholders.