M/s. Large Scale Co. Ltd. has accumulated profits of Rs.100 lakhs as on 31.3.2009. The company has incurred losses of Rs.40 lakhs upto 30.9.2009. Mr. A holds 60% equity of the said company and Mr. B holds 30% of the equity. The company has given an advance of Rs.50 lakhs to Mr. A in October 2009 which was fully returned back by Mr. A in December, 2009. Thereafter the company gave Rs.50 lakhs advance to Mr. B. What would be deemed dividend in the hands of Mr. A and Mr. B.?
DEAR MOHAMMED,
Since irt is aPublic company, i m asssuming it as acampany in which public is not substanially interested-
In October entire 50 Lakhs is treated as "Deemed Dividend in the hands of A, since balance of profits would be Rs. 60 Lakhs,
Now, at the time of loan to B - 10 LAKHS +/- Profits/Loss for Oct, Nov & December will be treated as deemed dividend
YOGESH KAPOOR AND ASSOCIATES
New Delhi
B.Com
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