Loan or advance given to and taken from director, related co

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kapil kakra (Querist)
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30 July 2012 what are the compliances that are to be complied with in case of unlisted public company and private company makes loan or advances or take loan from director or related company or individuals

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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30 July 2012 tedious to disclosed here.. approach ca, cs for better help.

kapil kakra

kapil kakra (Querist)
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30 July 2012 thanks lokesh sir, but i believe it not to be so tedious to answer as you are considering it.

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Unnikrishnan

Unnikrishnan (Expert)
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30 July 2012 Sir,

In brief, a transaction of a Loan given to director/related cos or loan accepted, by public co/ pvt cos

the main section that has to be kept in mind is Section 295 of the companies Act.(in case of public co)

Further compliance requiremtns could come under Sec 372A of the Companies Act (in case of public cos)

Also, in the point of view of the director, care should be taken to see if application of Section 2(22)(e) of the Income tax is attracted.

Additional points to be considered is applicablity of Sections 269SS and 269 T of the income tax act(in case loan is given in cash in excess of Rs 20000).

For reporting purposes, care should be given to consider the requirements of Accounting Standard 18

If you are paying interest on the loan, consider the applicability of Sec 40A(2) of the Income Tax Act on such interest(whether the rate is unreasonable or not)