Applicability of section 297

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2012 Suppose a director of a company purchase building from other company in which he is a director and the business of the other company is selling of building will section 297 of companies act 1956 will apply?

Ajay Mishra

Ajay Mishra (Expert)
Follow

18 February 2012 Hi

Section 297 does not apply to:

1. Giving or taking loans.
2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.
3.Contract between two public Companies.
4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]
5.Contract for employment of relative of director.
6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]
7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]
8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]

Regards

Jiten Gupta

Jiten Gupta (Expert)
Follow

18 February 2012 Yes section 297 will come into picture for the above transaction BUT:

If the transaction is at prevailing market price then section 297 not be applicable.

Further if company is in the business of regular trade with other company (relative company) then also 297 will not be attracted provided value of transaction is not more than Rs. 5000 in a single year..

Regards

Upgrade to CAclubindia Pro. Subscribe Now!

Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2012 Hi Jitendra

Can u please provide any support for this?