X Pvt. Ltd. became of shareholder in Y Pvt. Ltd. on 26-5-2006 by purchasing 100 shares from existing shareholder and a sum of Rs. 1 Lakh was advanced to Y Pvt. Ltd. by X Pvt. Ltd. The “A” shareholder of X Pvt. Ltd. having 90% of shares, also became shareholder on 26-05-2006 in Y Pvt. Ltd. by purchasing 33% shares from existing shareholder in Y Pvt. Ltd.
The Y Pvt. Ltd. has filed Annual Return of Financial Year 2005-06 in R.O.C. in April-2008 and X Pvt. Ltd. and “A” both has been shown as shareholder of Y Pvt. Ltd.
In the Assessment u/s 143(3) of X Pvt. Ltd., the Advance of Rs. 1 Lakh has been assessed as Deemed Dividend u/s 2(22)(e) of I.T. Act. Is it justified?
CAclubindia
