21 March 2011
Hi...Could any body tell me whether sec.297 shall attracts if a compnay give loan to the trust where both trust and company having the same person as directors and trustee,if is not so than is there any section where compliances need to be done....and what are the compliances..
22 March 2011
In the first instance the applicability of Section 297 comes into effect only for transactions involving sale, purchase or supply of goods, materials or services. Loans are not covered under this section. Section 295 is the relevant section concerning loan to directors,etc.
Second, even though Section 295 deals with loan to directors, etc. loan to the trust is not covered under that Section.
Loan to trust by a company having common director will attract Section 299, 300 and 301.
I also feel that Loan to Trust may fall under Inter corporate loans under Section 372A. Other experts in the forum please confirm if this opinion is right.
CAclubindia
