SEC 2(22)(e)
This query is : Resolved
26 July 2010
whether share premium is included in accumulated profit u/s 2(22)(e) of i tax act.Please let me know about this one.
regards
kamal khaitan
regards
kamal khaitan
26 July 2010
Please visit this link
https://www.caclubindia.com/articles/deemed-dividend-section-2-22-e-of-income-tax-act-1961-6121.asp
https://www.caclubindia.com/articles/deemed-dividend-section-2-22-e-of-income-tax-act-1961-6121.asp
26 July 2010
No Share premium is not Included in Accumulated Profits for the purpose of Sec 2(22)(e). When there is a statutory bar on the share premium account being used for distribution of dividend, the deeming provision of Section 2(22)(e) cannot apply.
Section 2(22) of the Act has used the expression 'accumulated profits', 'whether capitalized or not'. This expression tends to show that under Section 2(22) it is only the distribution of the accumulated profits which are deemed to be dividends in the hands of the shareholders. By using the expression 'whether capitalized or not' the legislative intent clearly is that the profits which are deemed to be dividend would be those which were capable of being accumulated and which would also be capable of being capitalized. The amounts should, in other words, be in the nature of profits which the company would have distributed to its shareholders. This would clearly exclude return of part of a capital to the company, as the same cannot be regarded as profit capable of being capitalized, the return being of capital itself.
Citation: Deputy Commissioner Of Income Tax vs Maipo India Ltd. on 7 March, 2008.
For detail case law check following link---
http://www.indiankanoon.org/doc/1442166/
Section 2(22) of the Act has used the expression 'accumulated profits', 'whether capitalized or not'. This expression tends to show that under Section 2(22) it is only the distribution of the accumulated profits which are deemed to be dividends in the hands of the shareholders. By using the expression 'whether capitalized or not' the legislative intent clearly is that the profits which are deemed to be dividend would be those which were capable of being accumulated and which would also be capable of being capitalized. The amounts should, in other words, be in the nature of profits which the company would have distributed to its shareholders. This would clearly exclude return of part of a capital to the company, as the same cannot be regarded as profit capable of being capitalized, the return being of capital itself.
Citation: Deputy Commissioner Of Income Tax vs Maipo India Ltd. on 7 March, 2008.
For detail case law check following link---
http://www.indiankanoon.org/doc/1442166/
26 July 2010
Share premium income is excluded from the purview of sec 2 (22) (e)
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Capital gain from sale of house property
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- LC charges in relation to Asset purchased should be Capitalised ?
- Transporter Declaration form
- Copyright software
- Regarding TDS Applicability For Director Remuneration
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- Opting our of sec 44AD
- GST Treatment of Insurance Commission for Existing GST Holder
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
