Deemed Dividend u/s 2(22)(e)

Save Share

This query is : Resolved

Dipen Palan (Querist)

19 February 2009 if advance salary is given to one employee and afterwards that employee is appointed as director of the company then whether such advance given earlier is covered as deemed dividend u/s 2(22)(e)?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

19 February 2009 If you pay any advance salary then it will be recovered immediately at the time of next payament of salary.

At the time of becomming a director you should settle his salary as employee and transfer that salary to loan.

If pending salary is not sufficient then you have to collect the balance due at the time he becomes a director.

If you are not doing that the balance in his accountwill become deemed dividend.

Dipen Palan

Dipen Palan (Querist)

19 February 2009 thanx sir
i like to further clear my situation to you?
suppose a company has made an advance payment of salary (6 months) on march 2008 and afterwords in May 08 that same person to whom advance was made is appointed as director of the company and at the time of appointment that advance salary is still there in the balance sheet, so problem is that whether such advance will be considered as deemed dividend.

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