deemed dividend

601 views 2 replies

Gokul

Consultant

36 Points Posted on 01 June 2011

Hi All,

For Income Tax purpose Income from Dividends of indian company is not taxable from 1-4-2003 as The dividend distribution tax (DDT) will be payable by company/mutual fund u/s 115-O.However, deemed dividend as defined in section 2(22) of Income Tax Act will be considered as ‘income from other sources’.

Can you tell me what exactly deemed dividend means and how it is different from normal dividend.

Thanks,

Gokul.

Replies (2)

Sunshine

Helping All

10575 Points Posted on 01 June 2011

Hie,

As per section 2(22)(e)....in case an assessee has substantial interest in a closely held company (holding a minimum of 10% of shares)...

a)the company extends any loan or advance to the assessee then that amount of loan will be treated as deemed dividend and taxable under income from other sources to the assessee..

b)if the assessee is also a substantial interest holder in another firm/AOP/BOI(minimum 20% share of profit) and the company extends any loan or advance to that firm/AOP/BOI , then that loan or advance will be treated as deemed dividend and taxable under income from other source in the hands of the assessee...

Regards

CS,CA F,Numrologi TusharSampat

CS CA F Numerologist Astrologer Graph

85935 Points Posted on 01 June 2011

Originally posted by : Sunshine...
	Hie, As per section 2(22)(e)....in case an assessee has substantial interest in a closely held company (holding a minimum of 10% of shares)... a)the company extends any loan or advance to the assessee then that amount of loan will be treated as deemed dividend and taxable under income from other sources to the assessee.. b)if the assessee is also a substantial interest holder in another firm/AOP/BOI(minimum 20% share of profit) and the company extends any loan or advance to that firm/AOP/BOI , then that loan or advance will be treated as deemed dividend and taxable under income from other source in the hands of the assessee... Regards