2(22)e

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CA vineet agarwal (Querist)
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13 December 2009 IF X CO. IS A SHAREHOLDER IN Y CO.HOLDING 27% SHARES AND SHAREHOLDER OF X CO.(>10%)HOLDS 17% SHARES IN Y CO. AND X CO. GIVES A LOAN TO Y CO. IS 2(22)e attracted???

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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14 December 2009 A inclusive definiton of the term "dividend" has been given in sec 2(22)(e) of the Income tax Act,1961 that attracts some type of receipts in tax net. Explanation 3(a) to sec 2(22)(e),in which shareholder has substantial interest, receives any payment from a closely held co in which such shareholder is holding not less than 10% of voting power, then, such receipt would be treated as deedmed dividend in the hands of shareholders(ACIT vs Bhaumik color p ltd) ITA No.5030/M/04. If these conditions satisfies, deemed dividend will attract otherwise no. Accordingly, You will have to decide.