Loan to Directors

hussain (Querist) 09 September 2009 This query is : Resolved
Sir,
as per incometax disallowed the loan as per provision of sec (2)22 (e)of the act says that is to be treated as deemed dividend.
riven

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A V Vishal (Expert) 09 September 2009
Kindly come out clearly on facts of the case, under different laws the treatment of loans differs, only on facts your query can be answered.riven

Manish Singh (Expert) 15 September 2009
since yours is pvt company, ask the AO how could it be a company where public is substantially interested.
since the burden of proof of denying the exemption lies on the AO as it has been held in some judgments. ask the O for reasons why they are teating it under the said section.riven

Vineet (Expert) 08 December 2009
What is your query?

The provisions of section 2(22)(e) are applicable to all companies irrespective of their status. The AO will not disallow loans as they can never be claimed as deduction in the hands of company. The only thing he must have done is to treat them as dividend income in the hands of recipients which is legally permissible if the facts of the case support his case.

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