Please let me know, whether a comany can take its Director's land with building on rental basis and pay rental advance and monthly rent to the Director. Whether the rental advance and the rental income is deemed dividend as per Sec 2(22)(e) for the Director?
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Deemed Dividend
Replies (1)
1.The Rental income, etc. has to be adjusted against the remuneration of the director...
2.If the contractual agreement between the director and the company specifies such payment as the part of the payment to the director, then the same shall be allowed..
3.You should also check the limit specified under Sec.309 & 198 of the Companies Act, 1956.
Still something above then it should be considered as the deemed dividend u/s.2(22)(e), and the following would be into effect :
a) TDS u/s.194 by the Company.
b) the same would not be liable to DDT(Sec.115-O) for the company
c) It won't be exempt u/s.10(34) and it would be added to the normal income the director.
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