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SECTION 295

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(Querist)
12 April 2010 Dear my query is

if a public company is making investment in a pvt company and the pvt company gives investment money to director as loan whether section 295 is applicable on public company?

director of the both company are same.

Regards
sanjay
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Jagruti (CS)

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Jagruti (CS) (Expert)
12 April 2010 Section 295 states that making directly or indirectly loan or giving guarantee to another for loan provide to director. Thus, investment do not fall under Section 295

However, intention of making investment is important. If the main intention to grant loan via Pvt Company than it may fall in Section 295 as it includes indirect loan to Director.
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Rasesh

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Rasesh (Expert)
12 April 2010 If Loan is given by Private Limited to the Director, then 295 is not applicable.

Try to route the transaction in such a way that the nexus is difficult to prove.
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CA Ravi Sisodia

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CA Ravi Sisodia (Expert)
12 April 2010 Agree with Both Experts.
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