Question ID : 31676

Deemed Dividend u/s 2(22)(e) or not ?

A closely held private limited company is having 2 shareholders each having 50 shareholding. The company incurs some business expenditures including incorporation expenses of LLP which has to be ultimately borne by LLP. The expenditures incurred by the company on behalf of LLP is shown as LoanAdvance to LLP in the books of company. The aforementioned 2 shareholders of company are also 50-50 partners in LLP. So whether the debit balance of LLP shown as LoanAdvance in the books of company would be treated as deemed dividend us 2(22)(e) of the I.T. Act?

posted by NIKITA LONGWANI on Jun 5 2018 12:00AM