Loan to Directors

hussain (Querist) 16 September 2009 This query is : Resolved
Sir,
Sir,
The company as given loan to directors in financial year 2005-06 and it was recoverd by deducting from remunaration in the finacial year 2006-07.for that the ITO says that the company is closely a private company and in that year the profit is about 15lac and the director holds 79% share in the company so as per ITO provision of sec 2 (22) (e) of the act the above loan is ti be treated as deemed divided.
so there any hope to save from tax.

riven

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Vineet (Expert) 13 December 2009
There is no way the Director can be saved from the clutches of deemed dividend tax.

It is one of the deadly provisions of the Act which very few people realise until they are caught in the web.

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