National Travel Services vs Commissioner Of Income Tax Delhi Viii .

The Supreme Court interpreted Section 2(22)(e) of the Income Tax Act, 1961, clarifying that a loan made to a shareholder who is a beneficial owner of shares holding at least 10% voting power in a company, and who is also a partner in a firm with substantial interest (20% or more of profits), qualifies as a deemed dividend. The Court held that the conditions for classifying a loan as a dividend under this section were satisfied, thereby affirming the applicability of the provision to the facts of the case. The judgment emphasized the necessity of the shareholder's registration in the company's books for the loan to be considered as advanced to a shareholder.