deemed dividend

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divekar (Querist)
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05 November 2009 i have a query on sec 2 22 e the company had given loan to shareholder, it has accumulated profits, however at the time of loan the holding was less than 10%, subsequently during the year holding increases above 10%. does the loan becomes deemed dividend to the shareholder? if not is there any case law to support?

M Prabhakar Menon

M Prabhakar Menon (Expert)
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06 November 2009 The Shareholding during the previous year in question is important any subsequent or earlier holding is not material

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 November 2009 To attract the provisions of section 2(22)(e),the share holder must hold not less than 10% of the voting power and should have beneficial ownership also in the shares at the time of accepting the loan.

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