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Which type of dividend distribution results in deemed dividend income under the Income Tax Act?
  • a)
    Dividend distributed from accumulated profits to shareholders.
  • b)
    Distribution of debentures to preference shareholders.
  • c)
    Distribution of shares during a company's merger.
  • d)
    Payment of interest on loans to shareholders.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Which type of dividend distribution results in deemed dividend income ...
Payment of any sum by a company to a shareholder or concern in the form of an advance or loan, where the company possesses accumulated profits, results in deemed dividend income under the Income Tax Act. This prevents individuals from using such transactions to avoid tax on dividends.
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Which type of dividend distribution results in deemed dividend income under the Income Tax Act?a)Dividend distributed from accumulated profits to shareholders.b)Distribution of debentures to preference shareholders.c)Distribution of shares during a company's merger.d)Payment of interest on loans to shareholders.Correct answer is option 'D'. Can you explain this answer?
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