23 September 2009
As per section 2(22) (e) of the Income Tax Act, any loan or advance given by a company to a shareholder holding not less than 10% voting power shall be deemed dividend to the extent of accumulated profit. our querry is whether a shareholder shall be holding 10% voting power as on date of disbursement of loan or at any time during the previous year
11 October 2009
The share holder should have at least 10% voting power ON THE DATE the advance or loan is given to him.
If the loan is given to a concern in which the shareholder is a member or a partner and in which he has a substantial interest, then for calculating substatial interest, he should AT ANY TIME DURING THE PREVIOUS YEAR benefically entitled to at least 20% income of the concern.
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