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Corporate dividend tax

Ketan Kapoor (Audit) (124 Points)

20 March 2012

Hi Everyone.

Suppose a Co. is paying the self assessment tax of some individuals on behalf of them,and then showing the said payment as unsecured loan in its balance sheet, can this be taken as deemed dividend?

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2 Replies

Devendra (Chartered Accountant) (4780 Points)
Replied 20 March 2012

Yes. It can be considered as Deemed Dividend u/s 2(22)(e). It shall be taxable in the hands of the assessee to whom the loan is given and shall be taxable under the head Income from Other Sources.

Regards,

Devendra Kulkarni

Sonam Bidasaria (CA) (770 Points)
Replied 21 March 2012

It can be treated as deemed dividend only if those individuals are holding more than 10% stake in the Company.(Unlisted Public Company and Private Llimited Company)