Deemed dividend

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2012 Dear sir,
Loan given by private limited company to a Director`s relative and company have a credit balance in profit and loss account.

is above loan treat as Deemed dividend

CA. Nirmal Ghorawat

CA. Nirmal Ghorawat (Expert)
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14 May 2012 Hi

You have stated insufficient facts.

1. Loan to shareholder having more than 10% shareholding in a closely held company qualifies as deemed dividend.

Additionally, the loan may be to a concern in which such shareholder has a substantial interest or may be to another person for the benefit of such shareholder.

Accumulated profits include Credit Balance in P & L A/c and also other items.

A comprehensive study of all facts put together is required to determine an amount as deemed dividend.

You may visit http://canirmalg.wordpress.com/2010/02/02/deemedividend/