Deemed dividend

Save Share

This query is : Resolved

GUNEET (Querist)

05 March 2013 Dear Experts,

The facts of the case is as follows.
Mr. A & Mr. B are 2 individuals, both A and B hold 20 % shares in C Pvt. Ltd.
Moreover, there is a company called D Pvt . Ltd. where in both A & B holds 50% shares each.
Now C Pvt. Ltd. wants to give loan to D Pvt. Ltd.
My Queries are
1) Does this proposal attract the provision of Deemed Dividend u/s 2(22)e , if yes on which amount??
2) What is the best legal route to escape the incidence of deemed dividend.

Thanks & Regards

Sanket

Sanket (Expert)

05 March 2013 Person Covered under this Section….…..
Any shareholder who is a beneficial owner of 10% or more of Voting power of the Company (but the shares shall not be entitled to a fixed rate of dividend, whether with or without a right to participate in profits); Or [See Note 9]
To a concern (includes {HUF, Firm, AOP or BOI, Company}) in which such shareholder is a partner or a member , AND;
Has substantial interest (when entitled to 20% or more of the income of such concern).

So as per your case it is Considered as Deemed Dividend 2(22)(e) of The Income Tax Act, 1961

GUNEET

GUNEET (Querist)

05 March 2013 Mr. Sanket,
Is there any legal way out to avoid yhis incidence of deemed dividend

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now