Deemed dividend
This query is : Resolved
05 March 2013
Dear Experts,
The facts of the case is as follows.
Mr. A & Mr. B are 2 individuals, both A and B hold 20 % shares in C Pvt. Ltd.
Moreover, there is a company called D Pvt . Ltd. where in both A & B holds 50% shares each.
Now C Pvt. Ltd. wants to give loan to D Pvt. Ltd.
My Queries are
1) Does this proposal attract the provision of Deemed Dividend u/s 2(22)e , if yes on which amount??
2) What is the best legal route to escape the incidence of deemed dividend.
Thanks & Regards
The facts of the case is as follows.
Mr. A & Mr. B are 2 individuals, both A and B hold 20 % shares in C Pvt. Ltd.
Moreover, there is a company called D Pvt . Ltd. where in both A & B holds 50% shares each.
Now C Pvt. Ltd. wants to give loan to D Pvt. Ltd.
My Queries are
1) Does this proposal attract the provision of Deemed Dividend u/s 2(22)e , if yes on which amount??
2) What is the best legal route to escape the incidence of deemed dividend.
Thanks & Regards
05 March 2013
Person Covered under this Section….…..
Any shareholder who is a beneficial owner of 10% or more of Voting power of the Company (but the shares shall not be entitled to a fixed rate of dividend, whether with or without a right to participate in profits); Or [See Note 9]
To a concern (includes {HUF, Firm, AOP or BOI, Company}) in which such shareholder is a partner or a member , AND;
Has substantial interest (when entitled to 20% or more of the income of such concern).
So as per your case it is Considered as Deemed Dividend 2(22)(e) of The Income Tax Act, 1961
Any shareholder who is a beneficial owner of 10% or more of Voting power of the Company (but the shares shall not be entitled to a fixed rate of dividend, whether with or without a right to participate in profits); Or [See Note 9]
To a concern (includes {HUF, Firm, AOP or BOI, Company}) in which such shareholder is a partner or a member , AND;
Has substantial interest (when entitled to 20% or more of the income of such concern).
So as per your case it is Considered as Deemed Dividend 2(22)(e) of The Income Tax Act, 1961
05 March 2013
Mr. Sanket,
Is there any legal way out to avoid yhis incidence of deemed dividend
Is there any legal way out to avoid yhis incidence of deemed dividend
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