A is an individual having two good profit making Pvt. Ltd. companies B Pvt. Ltd and C Pvt. Ltd.
A is planning to incorporate an NBFC Company in which entire equity will be held by B Pvt. Ltd. and c Pvt. Ltd in 50% each.
Queries:
1. Does this proposal attract the provisions of Deemed Dividend u/s 2(22)e. if Yes on which amounts. 2. What is the best legal route to escape the incidence of deemed dividend.
As per my knowledge substantial interest means holding 10% or more shares in a company by an individual. is there any chnage in this % in last budget.
09 September 2011
No it will not attract provision of deemed dividend in case of share issue but at any time if in books of NBFC the debit balance is reflected of B ltd. & C Ltd. it will amount to deemed Divided.
The best legal route to transfer the shares on individual and family member name and invest in NBFC by them only.
Substantial interest is 20% or more combine holding.
10 September 2011
Section s(22)(e) talks about payment of money to the shareholders having certain percentage in the company. If you are investing in NBFC then it will not attract.
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