deemed dividend

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This query is : Resolved

Sneha (Querist)

30 January 2010 Any loan/advance by ABC P. Ltd. to a person who has substantial interest (10% holding) in ABC is deemed dividend. Is this correct?

Also any loan/advance to a concern of which this person is a member or a partner having substantial interest is deemed dividend.

What if loan/advance is given by ABC to a company where this person is merely a director (without any substantial interest)? Is it still deemed to be dividend?

Please help.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)

01 February 2010 First is Correct, it will be Deemed dividend u/s 2(22)(e).

Second is also correct under same section.

Third: It is given that in that case Certain shareholder should be having Substantial Interest[sec 2(34)] any any time during the pervious year, but if that person is merely director then deemed dividend section will not be applicable here.

Regards!!!

Sneha

Sneha (Querist)

01 February 2010 Thanks a lot!

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