Deemed Dividend u/s 2(22)
This query is : Resolved
04 August 2010
Hi all
Loan given to a partnership firm by a private ltd. company in which one of the director is also a partner of the firm, will it amount to deemed dividend
please advise its urgent
Loan given to a partnership firm by a private ltd. company in which one of the director is also a partner of the firm, will it amount to deemed dividend
please advise its urgent
Aditya Maheshwari
(Expert)
04 August 2010
2(22)(e) could be attracted if the shareholder holds more than 10% in the company and more than 20% in the firm.
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04 August 2010
Section 2(22)(e)
"any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) [made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten percent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as said concern)] or 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;"
As per Explanation 3(b) to Section 2(22) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty percent of the income of such concern
yes , amount will be deemed dividend to the extent of accumulated profit of company if partner has at any time not less 20% share in firm. Read above definatin to any concern in which such shareholder is member or a partner.
"any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) [made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten percent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as said concern)] or 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;"
As per Explanation 3(b) to Section 2(22) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty percent of the income of such concern
yes , amount will be deemed dividend to the extent of accumulated profit of company if partner has at any time not less 20% share in firm. Read above definatin to any concern in which such shareholder is member or a partner.
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04 August 2010
https://www.caclubindia.com/articles/deemed-dividend-section-2-22-e-of-income-tax-act-1961-6121.asp
You can also check above article for details.
You can also check above article for details.
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