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padam singhvi

padam singhvi (Querist)
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13 July 2010 can a pvt ltd co& give loan to his director or loan taken from director or any other

Aditya Maheshwari

Aditya Maheshwari (Expert)
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13 July 2010 If the director is holding more than 10% in the company then loan given to him will be taxed u/s 2(22)(e) in the hands of the director.

Loan can be taken from director and shareholder in case of a private limited company.

Ankur Garg

Ankur Garg (Expert)
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13 July 2010 Yes a private company can give loan to its director and can take loan from its director.

Loan to director is governed by section of 295 which is not applicable to a private company.

Thanks

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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13 July 2010 AGREE WITH EXPERTS.
WOULD LIKE TO ADD THAT IF THE PVT LTD COMPANY IS A NBFC WHOSE MAIN BUSINESS IS GIVING LOAN FOR INTEREST, LOAN CAN BE GIVEN TO DIRECTORS WITHOUT ATTRACTING SEC 2(22)(e).

Aditya Maheshwari

Aditya Maheshwari (Expert)
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13 July 2010 Further in addition to the above there must be reserves in the company for attracting provisions of Section 2(22)(e) also. If no balance in reserves like P & L A/c and general reserve then also provisions not applicable.

mohinder kansal

mohinder kansal (Expert)
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13 July 2010 reply of ankur garg is not correct. all other three - agreed

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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13 July 2010 Mohinder Ji how can you say reply of Ankur Ji is not correct?
He correctly pointed out that "Loan to director is governed by section 295 which is not applicable to a private company." and "a private company can give loan to its director and can take loan from its director (if it is not subsidiary of a public limited company)." His view were from point Companies Act point of view. And our reply threw light on Income Tax perspective. So i think his reply is correct. Can you throw some light on in support of your views?

mohinder kansal

mohinder kansal (Expert)
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14 July 2010 My dear, no need to be so aggressive pl. this query is being raised by Mr. Singhvi for income tax purpose only and reply is only straight and simple.I refrred all three replies, if these combined conditions are there, loan given to directors may be added to their respective income, that's it

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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14 July 2010 I do agree that Singhvi question was for IT purpose but the same needs to replied looking towards all the relevant provisions of companies as well as Income Tax Act as the query mentioned was to give and take loan and a further clarification is always better. And also as u say half knowledge is dangerous, it could turn out that the person might not refer companies act for that matter. So nothing wrong in the reply.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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14 July 2010 Mohinder Ji i was not aggressive in my comment.....I just said you could have avoided saying "reply of Ankur garg is not correct". We all are professionals and should respect our fellow professionals.
Hope you will understand.

mohinder kansal

mohinder kansal (Expert)
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15 July 2010 you are aggressive in your behaviour, it is again clear from your above post. as far as respect to professional is concerned, i always respected my co-professional since last 30 years of my professional carrier which will continue till last. anyway i am very thankful for reminding me of my duties by your kind advice. thanks again.