Loan to Directors
hussain
(Querist) 07 September 2009
This query is : Resolved
Sir,
i have asked query on 05/09/09 about loan to directors but still i have not receive any answer.
My Query is that the private company has paid a loan to directors and it has been recoverd in neat financial year but the income tax department says that is a deemed income in the hand of directors there is rule that can be save the tax of the following.riven
piyush sharma
(Expert) 07 September 2009
dear
If the loan is given then your company must have proof that all the money is recovered. when the money is recovered it could not be considred as income as money has been returned by the director. Simple rule is when the money is not in the pocket of dircetor then how can it be the money of director.riven
Vineet
(Expert) 11 December 2009
It is immaterial whether loan has been refunded by the directors or not,
Under deemed dividend provisions of Act u/s 2(22)(e) any loan or advance given by a company to any shareholder having beneficial shareholding of 10% or more is treated as dividend in the hands of recipient to the extent of accumulated profits of the company till the date of advance.
So Mr Sharma, I T Department is absolutely correct in its stand in the given circumstances.
