deemed dividend

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dhanya (Querist)
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08 February 2010 sir,
a company has taken premises of directors on rent and paid security deposit for the same. whether attract sec2(22)e?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 February 2010 Prima facie Provisions of section 2(22)(e) attracts.
Where assessee was managing director of company and company had agreed to pay an advance of Rs. 10 lakhs when it had taken the first floor on lease from assessee for the purpose of meeting the cost of construction of the other three floors and the lease deed provided explicitly that the advance so paid was to be adjusted against the rent payable for the other three floors, advance was to be treated as deemed dividend in assessee's hands.

Citation:- CIT v. P.K. Abubucker [2003] 259 ITR 507(Mad).

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