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Issue u/s sec 2(22)(e)

CA Harshvardhan Bhardwaj (M.com, CA,CS,CMA) (114 Points)

09 September 2012

whether relatives holding includes for considering the substantial holding u/s sec2(22)(e) of the shareholder.???

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2 Replies

CA Ruben Balooni (Professionalism ™) (1324 Points)
Replied 09 September 2012

Yes if the assessee is the Beneficial Owner of those shares.

- Ruben Balooni

CA Saiyum khan (Practicing CA) (685 Points)
Replied 10 September 2012

As per section 2(22)(e) the condition is only beneficial owner of the shares ot the extent of 10%. If the person is not the beneficial owner of his / her relatives holding then the same would not be clubbled for hte purpose of 10%.

The said clause has been pasted below for ready reference.

any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) ⁹⁴[made after the 31st day of May, 1987, by way of advance⁹⁵ or loan to a shareholder⁹⁵, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits⁹⁶