Deemed dividend

As per the provisions of s 2(22)(e) of the Act, the payment made by the company on behalf of, or for the individual benefit of any such shareholder is also assessed as “Deemed dividend” — as held by VishakapatnamTrib in ACIT v YV Rajasekhara Babu — In favour of: Others.

The payments made by the company to disburse the loan liability of the directors directly can be assessed as deemed dividend. However, the question of determination of the quantum of accumulated profits that were available in the hands of the company is required to be examined afresh. Thus, the matter is remitted to the Assessing Officer.

Decided on: 6 September 2011.