Accumulated Profits with reference to Sec.2(22)e

Dear Sirs,

                 1)  Please let me know as to what all items are included in "Accumulated profits--with respect to Sec.2(22)e-Deemed Dividend"

                  2) Will the Securities premium be included in accumulated profits for the purpose of Sec.2(22)e-Deemed Dividend"?

                  3)Suppose a Pvt. Ltd. Co. has advanced Rs.20,00,000  to one of it's directors having more than 10% Voting Power in it , and if the company has Cumulative Profit & Loss A/c balance has 30000, then what amount shall be taxed as 'Deemed Divedend' in the hands of the Director? (The company's share capital is Rs.1,00,000 and Sec. Premium Rs.40000)

                  Thanks

Replies (2)

1) For section 2(22)(e), accumulated profits includes all profits of the company upto the date of distribution or payment

2) Securities Premium is not accumulated profits (P.K.Badiani v. CIT (1976) 105 ITR 642 (SC))

3) Deemed Dividend - Rs. 30000

Dear Madam,

               Can you also kindly confirm as to  what amount shall be taxed as 'Deemed Divedend' in the following case:

Suppose there are 2 directors in a Pvt. ltd. Co. and one of them is given a Loan of Rs.10,00,000 and the other Rs.40,00,000 by the Co.

The Accumulated profits of the Co. is Rs.30000

Please let me know as to ,to what extent 'Deemed Dividend' will be attracted to each director.Is there any specific ratio for it?

Thanks

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