Section 2 (22) (e)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 November 2011 The condition of sec 2 (22) (e) of deemed dividend applicable to co. & the director i.e. pvt co, shareholders holding more than 10% shares & the co having accumulated profit all above conditions are satisfied. The co advance loan to director on which co charge interest 12% p.a. the object of co is transportation whether sum advance will be chargeable u/s 2 (22) (e) as deemed dividend in the hands of director.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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02 November 2011 Yes Sec 2(22)(e) will be applicable. Had the company's main object been lending money (i.e. NBFC Company) the section would not have applied.
(Money advanced as loan by company substantially doing money lending business could not be treated as deemed dividend under section 2(22)(e) [CIT vs. V. S. Sivesubramaniam (1997) 141 CTR (Mad) 34])

Now the director of the company will be subject to sec 2(22)(e) and the loan amount will be added to his/her income.

Also read article from below link for a better understanding of the Sec....

https://www.caclubindia.com/articles/details.asp?mod_id=6121

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 November 2011 Interest bearing advances are also covered under deemed dividend subject to the satisfaction of the conditions mentioned in section 2(22)(e) of the IT Act,1961.

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