sec 2 (22) (e)

This query is : Resolved

Dharmesh k. Dubey (Querist)
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28 August 2009 dear sir & friends ,
If a company pays Loans out of security premium a/c to its shareholders does this loan qualify for deemed dividend.pls reply with reason .

KRISHNA KUMAR R C

KRISHNA KUMAR R C (Expert)
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28 August 2009 As per Scetion 2(22)(e) of the income tax act, 1961 any advance paid to shareholder who is having morethan 10% of voting power in the company, then the whole amount paid will be deemed to be dividend recieved by the shareholder.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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28 August 2009 To attract the provisions of section 2(22)(e), two more conditions are also to be looked into viz.,1) the company should not be a company in which public are substantially interested. 2) the company should have accumulated profits.

Dharmesh k. Dubey

Dharmesh k. Dubey (Querist)
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29 August 2009 dear sir ,
sorry for not providing full details the company is a closely held company n it is having accumalated profits . so if it distributes dividend to its shareholders holidng more than 10% voting power than will it b covered under 2(22)(e).? coz as per my opinion security premium is not a part of accumalated profits , is it so ?

CA CHINTAN AJMERA

CA CHINTAN AJMERA (Expert)
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30 August 2009 Agree With Experts

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 October 2009 If the company distributes dividend, question of section 2(22)(e) does not arise.

Security premium will not form part of accumulated profits.

Dharmesh k. Dubey

Dharmesh k. Dubey (Querist)
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16 October 2009 thanx sir finally m satisfied wid ur ans.

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