Sec 2(22)(e) deemed dividend

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ankit palore (Querist)
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24 November 2012 xltd has given loan and advance of Rs. 20 lacs to miss. puspha who is shareholder with 15% holding in F.Y. 2009-10. x ltd having reserve and surplus of Rs. 96 lacs as on 31st march, 2010. now my querry is what is affect of same on both assessee i.e 1) on x ltd 2) miss Puspha.

two different condition:
1) if miss. puspha repaid loan amount in same year.
2) if miss. puspha repaid loan amount in next F.Y.

please reply.
thanks in advance.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 November 2012 Can't escape from the clutches of section 2 (22(e) even if loan is squared up in same or subsequent year.
Supreme court decision is Ms.P. Sarada's case reported in (1998) 96 Taxman 11 may be referred.

ankit palore

ankit palore (Querist)
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26 November 2012 thank you sir.

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