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Sec 2(22) e of income tax act

Others 750 views 2 replies

S.Rajalakshmi

student

29 Points Joined October 2009

Sir,

One of Our Client( a closely held company) have granted loan to another Company(which is also a closely held company) in which the Director of the Company having Substantial interest

Also the Director holds more than 10% of voting power in the company which granted the loan.

What are the implications under Sec 2 (22) e of income tax act ?

What are the other implications under the other laws or any other section in income tax act

Replies (2)

Dipjyoti Majumdar

CA in service & CS. dipmaj@

3469 Points Joined June 2011

The implication is that if section 2(22)(e) is attracted then the grant of loan will be treated as deemed dividend and dividend distributiion tax will be needed to be paid.

Thanks,

Guest

as per sec2(22)(e) , amount of loan given by co. is deemed dividend to the extent to which co possesses accumulated profit and shareholder is liable to pay tax on that amount.