Deemed dividend 2(22)(e)

a private limited  is a partner in a partnership firm. so during the year it made a capital contribution in that firm. will investment by way of capital contribution be considered as deemed dividend? 

Replies (4)
Quick Summary
This discussion examines whether a capital contribution made by a private limited company to a partnership firm constitutes a deemed dividend under section 2(22)(e). The key consideration is whether the firm itself is a shareholder in the company. If the shareholders and partners are the same individuals, the firm might be considered a beneficial owner. However, a capital contribution is generally distinguished from an advance or loan, which could negate the applicability of the section.

Check if the firm is shareholder in the company?

If no, no question of applicability of the section.

the shareholders in private limited and other partners in the firm are same. so will not firm be covered as beneficial owner although it does not hold stake in the company directly?

Yes, but when it is capital contribution, and not advance or loan, the same can be negated. 

Fresh infusion of capital by way of promoters contribution in case they are majority to the stake.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register