Deemed dividend rules for closely held company loans and advances, with business and intra-group exclusions Loans or advances by a closely held company may be treated as deemed dividend when paid to a shareholder holding at least 10% voting power, to a concern in which such shareholder has substantial interest, or for the shareholder's individual benefit, to the extent of accumulated profits. The rule applies only to companies in which the public are not substantially interested, and certain business advances, set-offs, and specified cross-border intra-group transactions are excluded. The commentary also notes that repayment does not change applicability and that trade advances in commercial transactions are outside the provision.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Deemed dividend rules for closely held company loans and advances, with business and intra-group exclusions
Loans or advances by a closely held company may be treated as deemed dividend when paid to a shareholder holding at least 10% voting power, to a concern in which such shareholder has substantial interest, or for the shareholder's individual benefit, to the extent of accumulated profits. The rule applies only to companies in which the public are not substantially interested, and certain business advances, set-offs, and specified cross-border intra-group transactions are excluded. The commentary also notes that repayment does not change applicability and that trade advances in commercial transactions are outside the provision.
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