Deemed dividend u/s 2(22)(e)
This query is : Open
Pushkar Kumar
(Querist)
03 September 2013
Dear All
Can any body guide me on this situation.
A closely held company i.e. say ABC Private Limited is giving Salary Advance to its Whole Time Director who is also a shareholder of the company. Now is that advance will be treated as deemed dividend and to what extent.
Secondly what if the WTD is only a director and not a shareholder what will be the treatment then.
Please do reply and if there any case of any tribunal,HC or SC is available in this regard please quote that one also.
Thanks
Can any body guide me on this situation.
A closely held company i.e. say ABC Private Limited is giving Salary Advance to its Whole Time Director who is also a shareholder of the company. Now is that advance will be treated as deemed dividend and to what extent.
Secondly what if the WTD is only a director and not a shareholder what will be the treatment then.
Please do reply and if there any case of any tribunal,HC or SC is available in this regard please quote that one also.
Thanks
CA Vijeta Verma
(Expert)
03 September 2013
As per section 2(22)(e),any payment made by a private company by way of loans and advances to a shareholder being a substantial shareholder of the company would be governed by sec 2(22)(e).
But it would be prudent to include advance of salary,as salary is a regular payment and not a one time payment .the section is focussing more on one time payment.
In my opinion advance of salary can't be governed by this section.
If he is director only then that will be a regular PGBP expense
But it would be prudent to include advance of salary,as salary is a regular payment and not a one time payment .the section is focussing more on one time payment.
In my opinion advance of salary can't be governed by this section.
If he is director only then that will be a regular PGBP expense
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Pushkar Kumar
(Querist)
03 September 2013
Thank you ma'am...
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