Loan from director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 October 2010 Can a private ltd Co. accept loan in cash from its director?Also can the expenses of a company be paid by its director and be shown as unsecured loan from director in the books of the company?will Sec 269 of Income tAX Act apply?

Ankur Garg

Ankur Garg (Expert)
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26 October 2010 Yes a private company can accept loan from its directors. The same is exempt from the definition of deposit.

Regards

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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26 October 2010 Section 269SS of the Income tax Act,1961 squarely cover cash loan from Directors.

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Guest

Guest (Expert)

27 October 2010 Companies act, 1956

There is restriction in companies act,1956 for pvt ltd companies to accept loan from directors.

Income Tax Act,1961

Section 269SS: No person shall take or accept any Loan or Deposit from any person otherwise than by way of an Account Payee Cheque or an Account Payee Draft, if:

The amount of Loan or Deposit, or
If any Loan or Deposit was taken earlier and has remained unpaid (whether repayment has fallen due or not), then the amount of such Loan or Deposit together with interest, or
The aggregate amount of (1.) and (2.)

is Rs. 20,000/- or more.

Expenses of a company paid by its director, Treat as unsecured loan from director in the books of the company.