Tax on payment to shareholder

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CA. Rashi Goyal

Chartered Accountant

512 Points Joined December 2008

Hi,

A loss making company having accumulated losses paid a sum of Rs. 50 Lakhs to his wholly owned holding company. Can anybody tell what would be the accounting treatment for the same and its tax implications.

Regards

Rashi Goyal

Replies (1)

MD

AAA

122 Points Joined February 2011

Accounting treatment and tax implications will depend on the nature of transaction for which the holding company has received Rs. 50 lakhs.

If your query is relating to deemed dividend then the provisions of section 2(22) of Income-tax Act, are not applicable as the payment is paid from accumulated losses.