A group has 2 diversified business. 1 Business is textiles, the other Business is Food Products. The textile has funded the fodd products in the earlier years from 2000 to 2007. Now the food products is in loss from day 1, so it is not able to repay the fund back to textiles. The Textile has 2 division A and B. But the Balance Sheet is Textile as a Whole. Only P&L is for 2 divisions seperately. Now the textile business is going to demerge. The funds funded from Textile is shown in the head Loans and Advances. I have a doubt, if the amount is written off as bad debts, is tax attraative under sec 2 (22 e)? Please guide me. Also is tax attracted for the food products as it is income for that business. Also upon demerger, can this amount which is in the head Loans and Advances be transferred to B Division's (Resulting company's) Balance Sheet as the food products and B Division are going to be under the same share holders and directors.
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Income Tax 2(22 e)
Replies (1)
Income Tax is levied on a person like a company, firm etc.. and not on a group.
Please write the Status and entities involved in your query more clearly.
Question of deemed dividend can be decided on the basis of shareholding at various stages.
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