Few Points on Deemed Dividend.

Ø  Applicable only for closely held company i.e only private limited companies.

Ø  Include Foreign Company  - refer Gautam Sarabhai v CIT (52 ITR 921).

Ø  Not include Notional or book entry. There must be actual outflow of cash. Refer, GR  Govinda Raju v CIT 90 ITR 13.

Ø  Not include share application  money.

Ø  Following are not  Dividend.

(a)    Imprest Balance with Directors.

(b)    ICD

(c)    Trade Advances.

Ø  Current year profit cannot be included in Accumulated Profit.

Ø  DDT and TDS not applicable.

Ø  Share Premium not included in Accumulated Profit.

Ø  Not extended to related parties.