Dear Mohan,
Please see response in respect of your quaries:
(i) Whether the Borrower on whose Loan taken amount , if TDS @ 10% is made by the Lender in terms of Sec.2(22)(e) of I.T.Act, can claim credit for adjustment against his (borrower's) tax liability?
RE: yes absoutelty lender can do claim credit very rightly of any tax deducted in his name , he has all right to recover /take credit of such tax.
However fact you have mentioned here is incomplete as you have not disclosed that lender here is a domestic company or foreign company.
Since if it is a domestic company , in that case would not require to deduct TDS on the deemed dividend u/s 2(22)(e).
So in your case assuming it's a foreign company.
(ii) If the Lender Company has not declared any dividend can the Lender Company appropriate the Deemed Dividend Tax as a Dividend Tax ?
RE: I understand there you wanna to ask whether lender company laible to paid DDT on this deedmd dividend
since as per your (i) question above , you have mentioned that TDS has been deducted by lender while disbursing the loan as per the deemed dividend u/s 2(22) (e) and as i have explained above in your question that only foreign company required to deduct the TDS so we are assuming that lender is a foreign company.
DDT has been leveid under the section 115 O and it is not applicable on foreign company. So lender in your case not required to paid the DDT on deemed dividend tax.
(iii) Advice - the appropriate Section for TDS @ 10% made in terms of 2(22)(e) by the Lender who never declared or distributed Dividend is to be remitted?
RE: Mohan , I am getting from where your question is coming up , you wanna to say that since in terms of section 2(22)(e) lender never paid dividend then how TDS could be deducted on the payment he never made or required to be made since these all are DEEMING FICTION.
In Income tax act, section 194 is the relevant section through which lender enforce to deduct the TDS on dividend amount declared /distributed (INCLUDING deemed dividend u/s 2(22)(e). So when lender is disbursing the loan amount, lender would calculate the dividend amount as per the provision of the section 2(22)(e) and deduct the TDS amount accordingly from the loan amount.
Hope above response serve the purpsoe.
Thanks
CAclubindia
