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Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2013 if mr. x is shareholder in a closly held company and also a partner in a partnership firm with having substantial interest and the company gives loan to firm then is it a deemed dividend or not and if yes then in whose hand it is taxable in the hands of mr.x or the firm as per the income tax act 1961?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2013 If Mr. X is a shareholder and does not hold 10% or more shares in such a closely held company, there will be no deemed dividend in the hands of Mr.X's firm.
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In case X has not less than 10% of the voting Power in the closely held co. then in such a case, it will be the firm, which will be liable to pay tax on such deemed dividend.
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