Section 2(22)e

This query is : Resolved

Sonia (Querist)
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02 February 2009 Sir,
i my co. i had seen a debit balance in some of the Directors name(Under Unsecured loan a/c).
The Co. had paid to 3rd party Rs 10lakh, Which is actually a short of Personnel liability of Director.
THE ENTRY is:
Director a/c Dr 100000.
To XYZ & co. 100000.

Will this attract the sec of Deemed dividend.(if yes then how & if No then why)...Plz sir help me out...
Thankyou Sir.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 February 2009 If the company is private limited and the director is a share holder,holding not less than 10% of the voting power,the said payment made by the company is on behalf of or for the individual benefit of the director and hence it is a deemed dividend to the extend of accumulated profits of the company.Accordingly section 2(22)(e) attracts. Citation:- CIT Vs.G.Narasimhan (1999)236 ITR 327.

C A GROUP COACHING

C A GROUP COACHING (Expert)
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03 February 2009 yes it will be treated by the ITO as deemed dividend, there are ways out but depends upon a detailed study of your case HOW THE EXIT HAS TO BE PRESENTED & TAKEN

CHANDRAKANT AMBANI
BOMBAY
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