Section 2(22)(e)

If the person having substainial interest reapys the Advances befor ehe obtains such interest then section 2(22)(e) will not attract however if his account shows debit balance after holding such interest then such amount shall be tac=xed in the hands of the employees as deemed dividend

I do not agree with jay Botha ji,

 Loan received by person before becoming a registered shareholder of the lender company can not be treated as deemed dividend u/s. 2(22)(e).

Please refer to: Sagar Sahil Investment (P) Ltd. 120 TTJ 925

Dividend is always in relation to shareholder and when person is not a valid shareholder den sec 2 (22)e is not applicable at all.

well Mr Ketan , even I qouted the same that if the the account shows advances received from the substainially interested share holder then only section 2(22)(e) will attract

And thanks for the case law it removes any doubts.

We have to see the status at the time of tsking s losn

Thank u all for your answers..so i guess my view was correct that it becomes a loophole in the provision for planning purpose..!!