Deemed dividend

Facts:

1)X Ltd is the holding company of Y Ltd

2)Y Ltd is the subsidiary of X ltd

3) X Ltd gave loan to Y Ltd

In simple terms, Dividend is a payment made by the company to its shareholders.

In the above instance, its the shareholder who is giving loan to the company.

Hence, the question of it being dividend or deemed dividend does not arise.

If Y Ltd had given loan to X Ltd, it could be treated as deemed dividend as defined in sec 2(22)(e) of the IT Act

Hope this helps you!!

Thanks.  I wish I need to clarify my point clearly.

1) X is a private limited company.

2) The company gave loan to Y another private limited company.

3) X-company has 85% shareholding in Y (private limited company).

4) Whether the loan given by X-company to Y is deemed dividend or not?

5) If so, in whose hands the amount to be taxed?