What is Deemed dividend u/s 2(22)(e)

Concept of deemed dividend u/s 2(22) (e):

If any sum by way of loans and advances, advanced by a closely held company (company in which the public are not substantially interested) to its beneficial shareholder holding at least 10% of the voting power/shareholding or to any concern in which such shareholder is a member, or a partner and in which he holds at least 20% of the shareholding/voting power, to the extent of accumulated profits of such closely held company, are considered as deemed dividends.

Deemed dividend is illustrated through below example:

Taxability of Deemed dividends

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If any sum of money is received by an Individual or HUF without any consideration and the aggregate value of which exceeds Rs. 50,000 during the previous year, then the whole sum is chargeable to tax.

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