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This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 May 2010
related to section 2(22)(e)
if a closely held company x ltd. advances loan to y ltd. for the benefit of A,an individual shareholder holding 10% shares of X ltd.,then what shall be the taxability implications of the aforesaid transaction..?
and is individual covered within the context of concern as per the same section??
Further will it make any difference if A is a company ?
if a closely held company x ltd. advances loan to y ltd. for the benefit of A,an individual shareholder holding 10% shares of X ltd.,then what shall be the taxability implications of the aforesaid transaction..?
and is individual covered within the context of concern as per the same section??
Further will it make any difference if A is a company ?
Piyush Suhasaria
(Expert)
04 May 2010
The same will be taxable in the hands of Mr A as dividend income since the same is not subject to Corporate Dividend Tax in the hands of the company (X Ltd) to the extent the company possesses accumulated profits.
No, since as per explanation 3 to the aforesaid section reads as follows:
"concern means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company
It does no make any difference as to whether A is a company since the section mentions the word "being a person who is the beneficial owner of shares" and as per section 2(31) person includes a company.
No, since as per explanation 3 to the aforesaid section reads as follows:
"concern means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company
It does no make any difference as to whether A is a company since the section mentions the word "being a person who is the beneficial owner of shares" and as per section 2(31) person includes a company.
04 May 2010
The queriest did not mention the percentage of shareholding held by Mr. A in M/s. Y Ltd and also the X Ltd has any accumulated profits or not. Kindy furnish this particulars
04 May 2010
AGREED WITH MR. SRINIVASAN, DEEMED DIVIDEND IS TAXABLE SUBJECT TO LIMIT OF ACCUMULATED PROFIT
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