As per Section 2(22)(e), loan/advances given by a private company to a concern in which its shareholder has substantial interest, then to the extent of accumulated profits held by the private company (capitalised accumulated profits not included), it shall be considered as deemed dividend taxable in the hands of shareholder. A person is deemed to have a substantial interest:
A. If he holds 20% of the voting power (equity shares) in the company;
B. If he is beneficially entitled to 20% or more of the income of such concern.
C. Either (a) or (b)
D. None of these.
Answer:C
As per Section 2(22)(e), loan/advances given by a private company to a concern in which its shareholder has substantial interest, then to the extent of accumulated profits held by the private company (capitalised accumulated profits not included), it shall be considered as deemed dividend taxable in the hands of shareholder. A person is deemed to have a substantial interest:
A. If he holds 20% of the voting power (equity shares) in the company; B. If he is beneficially entitled to 20% or more of the income of such concern. C. Either (a) or (b) D. None of these.