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DeemedDividend Concept

santosh (article) (77 Points)

04 June 2007

can any one please tell me about the comcept of deemed dividend and its accounting treatment

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3 Replies

Sunil (82 Points)
Replied 04 June 2007

Gud Day!! Santosh!!! This deemed dividend concept is purely a concept of Tax nd not an accounting concept. There's no accounting entry for that... The deemed dividend concept is defined in Sec. 2(22)(e) of the income tax act. This concept is being introduced to avoid misuse of the corporate veil proivded to the Company. Certain amounts paid to certain specified persons will be treated as Deemed dividend concept.. Its purely a tax concept and not an Accounts concept.. Keep Smiling Sunil

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akhil (article trainee) (35 Points)
Replied 05 June 2007

deemed dividend means dividend which is understood in the ordinary sense of the word alongwith the definition under section 2(22)of income tax act,1961.its basically a distribution by the company to the extent of its profits whether capitalised or not.