Dividend distribution tax

This query is : Resolved

sachin (Querist)
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09 March 2014 A Ltd paid Rs. 2 lacs as loan to B Ltd. But it was treated as deemed dividend and Dividend Distribution Tax was paid on it.
After 3 months B ltd returned the amount to A Ltd.
After 6 months A Ltd decided to declare Dividend. So here can A Ltd claim rebate of DDT paid on Rs. 2 lacs earlier. As he is using the same money to Pay dividend.
Kindly let me know and also if there is any case law and time- line to do so.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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09 March 2014 1. I dont think deemed dividend attracts DDT. deemed dividend is covered under 194.

2. Clause (iii) to section 2(22) provides that “dividend” does not include any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e),to the extent to which it is set off. However, if the loan has been repaid by the shareholder and nothing is due by the shareholder against the loan referred in section 2(22)(e), then no set-off would be possible. Therefore, set off in DDT should not be possible.

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