Section 2(22)(e) of Income Tax Act

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Querist : Anonymous

Querist : Anonymous (Querist)

21 December 2009 Whether deposit given by a private limited company to its director for purchase of flat will be treated as deemed dividend?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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21 December 2009 Yes, if he is holding 10% or more shareholding in the company. It does not matter for what purpose the loan has been given to him.

CA Gangadhar Mishra

CA Gangadhar Mishra (Expert)
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21 December 2009 mr surendra pl elaborate this, suppose the company has taken a loan and given to directors say same amount or less and the company is a loss company ie. the reserve & surplus is negative (dr bal.), in this case whether sec-2(22)(e) deemed dividend applicable.

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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21 December 2009 No, since the deemed dividend is considered only upto the accumulated profits in the hands of the company.

CA Gangadhar Mishra

CA Gangadhar Mishra (Expert)
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22 December 2009 thank you

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2009 Surendra Sir,
I have 1 doubt...
If the company has granted deposit to its director, say Mr. A to purchase flat & the same flat is taken on lease by the company from director Mr. A to provide accomodation to the same director Mr. A, can the deposit above will be considered as Deemed dividend u/s 2(22)(e)?

Querist : Anonymous

Querist : Anonymous (Querist)

08 July 2010 thanx