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 .
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.
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.
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 ?
CAclubindia
