Dividend” includes‑(e) any payment by a company, not being a company in which the public are substantially interested, of any sum by way of – i)        Advance or loan to a shareholder ii)      To any concern in which such shareholder is a member or a partner and in which he has a substantial interest iii)    Any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits.    Note:   i) shareholder, being a person who is the beneficial owner of shares and, ii)holding not less than ten per cent of the voting power. To determine the substantial interest of a shareholder for the said section, whether ownership of shareholder alone or along with their family and relative shall be considered? This issue was clarified by the Tribunal in Assistant Commissioner of Income Tax vs. Maharishi Ayurveda Products (P.) Ltd. Facts of the above mentioned case: The company was engaged in the business of manufacturing and exporting of ayurvedic and herbal preparations. During the assessment proceedings, AO noticed that company has provided loan/ advances was made to the beneficial owner. In addition, 90 percent of the beneficial shares was held by the shareholders to whom loan was given along with his family members. AO held that shareholder was beneficial shareholder and thus, invoked the concept of ‘Deemed Dividend’. Hence, AO made additions to income of assessee under section 2(22)(e). on appeal, Commissioner (Appeals) concluded that for invoking section 2(22) (e), determinative factor shall the ownership of shareholder alone and not along with their relatives. Aggrieved by the order, Revenue appealed to the Tribunal. Held: The Tribunal clarified that section 2(22) (e) was inserted to control the act of distributing accumulated profits as loan or advances instead of distributing it as dividend to avoid tax on dividends in the hands of shareholders. As per the section, the words used are “such shareholder is a member or a partner and in which he has a substantial interest” and “a person who is the beneficial owner of the shares, not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits, carrying not less than 20% of the voting power” as appearing in section 2(32) of the Act. Thus it is the ownership of the shareholder alone in the company to which the loan/advance is made by the company, and not his or her relative or family members, which is the determinative factor. Hence, to invoke deemed dividend, shares held by shareholder alone be basis to determine substantial interest. Thus, the Tribunal upheld the order of CIT (A) and deleted the additions made by the AO. ___________________________________________________________