As per Sec 2(22) (e), if a laon/advance is given to a director/s is given in case of Loss, it is taxable dividend in the hand of the Director/TDS to be deducted. Again accumulated profit means only profit or vice versa also. Plz answer with all treatment in the Books, taxation etc. Regards Nagendra Prasad Gupta ACA509615
05 June 2009
Accumulated profits within the meaning of section 2(22)(e) will necessarily be comprised of the amount available for being distributed as profits. The word ‘accumulated’ means the profit earned bit by bit and accumulated. It does not mean that it should be carried forward from year to year. Profits can accumulate even within a single year. The entire amount which is available for distribution as profits on a particular date would be the accumulated profit and any amount paid as advance or loan to the shareholder to the extent of this amount of accumulated profits will be dividend within the meaning of section 2(22)(e) - CIT v. Roshan Lal [1975] 98 ITR 349 (All.).
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