deemed dividend 2(22)(e)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2009 there r 2 pvt companies

companies a and b

company a has 2 shareholders x and y 50% each

while company b has 3 shareholder x ,y 10% each and balance company a

now company a incurrs some expense on behalf of company b

will it come under the scope of 2(22)(e)???????

if yes company a shereholders i.e x and y will have to bear the tax as per the above referred section.

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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03 December 2009 Since the share holder (company a) has incurred expenses it cannot be treated as dividend. However the said expenses can be treated as loan given by company a to company b.