deemed dividend 2 22 e

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Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2010 One of client during assessment proceeding for A.Y 2008-09 wants to disclose income (deemed dividend) and praying for relief of penalty.

The amount of loan accepted from the company is more than the accumulated profits of the company.

the shareholding of director is more than 10% in the co.

Question is whether the whole accumulated profits should be considered as deemed dividend or his share in accumulated profits will be considered as deemed dividend.

my another question is whether the co should pay any penalty in respect to non deduction of TDS on deemed dividend u/s 194

Advice whether assessee should disclose or not........pls reply soon

Aditya Maheshwari

Aditya Maheshwari (Expert)
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01 December 2010 The whole accumulated profits should be considered as deemed dividend.

See if you can convince theA. O. That provisions of 2(22)(e) do not apply.

Also you could show that the said amount was paid for some advance for purchase of property or thier likes so as to not attract deemed dividend.