Granted an interest free loan of ₹ 5 Lakh on 04-08-2023 to Meena, an individual holding 15% equity shares of the company. She repaid the loan in full to the company on 15-02-2024.
CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2024
Granted an interest free loan of ₹ 5 Lakh on 04-08-2023 to Meena, an individual holding 15% equity shares of the company. She repaid the loan in full to the company on 15-02-2024.
Answer & Explanation:
As decided in the case of Tarulata Shyam vs. CIT (1977) 108 IT R 345(SC), that even if a loan is repaid before the end of the previous year, the section will be attracted. Hence interest free loan given to Meena not being in the normal course of business of the company will be treated as deemed dividend..
Topics: Corporate Tax Planning
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