Deemed dividend

Dear members

A Private ltd company has share capital of Rs . 1 Lakh and Rs. 2 Cr as share premium under the head reserves and surplus having A & B as shareholders and directors with 50% shareholding. Now this company advances Rs. 2 Cr to a partnership firm( in which both A & B are partners with 50% share). Wil this transaction come under the perview of Deemed Dividend u/s 2 (22)(e).

As per my view since this does not comes under the definition of "Accumulated Profits" the same should be outside the perview of Deemed dividend.

An Expert opinion in this regard shall be highly appreciated

Regards,

 

CA Rajesh Poddar
Rajesh R. Poddar & Co.
Chartered Accountants
 
Shop No. 3, Shanti Kunj Apts,
Off J.P.Road, near P.K. Jewellers,
Andheri West, Mumbai 58
Landmark: Navrang Talkies
Email: rajeshpoddarceo @ yahoo.com
Email: raj1676 @ yahoo.com

 

 

 

 

 

 

Replies (1)

in the above example if this private limited company becomes a partner in this partnership firm with say 50 % profit sharing ratio. in other word the "A" & "B" partners transfers their shares to this private ltd company and this transaction is reflected under the head Investments in the Balance sheet of the pvt ltd company. Is this transaction correct and outside the perview of the deemed dividend as the company is now partner in the partnership firm and the money is advanced to it

Please reply

 

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