12 March 2008
Ours is a pvt. ltd. co. Kindly tell me that whether we can give interest to the unsecured loans taken from the Directors of the pvt. ltd. co. also tell me that whether those unsecured loan taken from the Directors of the pvt. ltd co. can be repaid. Although we have secured loan taken from Banks. Please answer my query from the point of view of income tax as well as companies act.
13 March 2008
UNDER COMPANY'S ACT THERE ARE NO RESTRICTIONS FOR LOANS TO OR FROM DIRECTORS NOF PVT. LTD. COS. EVEN INT. PAYMENT IS NO ISSUE IF YOUR ARTICLE PERMIT LOANS FROM AND INT. TO DIRECTORS . BUT COMPLY WITH TDS ON INT. PROVISIONS. AS FOR BANKS, PL. VERIFY LOAN AGREEMENTS WITH BANKS WHICH USUALLY STATE THAT UNSECURED LOANS FROM DIRECTORS ARE SUBORDINATE TO BANK LOANS AND AS SUCH NEITHER INT. NOR LOAN REPAYMENT CAN BE MADE BEFORE THE SAME IS DONE FIRST IN FAVOR OF BANK LOANS. R.V.RAO
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