personal exp charges co.'s exp

This query is : Resolved

vijendra (Querist)
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17 December 2009 hi every1

please solve my query
one of our cleint, which is a co.
has paid to another co. Rs. 10 lacs as a payment to install a lift system in his under repair bunglow. such payment is made from the account of Co. also the three directors of co. lives in that bunglow as a memeber of joint family.
i think it is not valid

please guide me
also tell me ground from invalidity or validity ground

CA.Balakrishnam.V

CA.Balakrishnam.V (Expert)
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19 December 2009 It is the duty of auditor u/s 227 of companies act to state in report -

whether transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company

whether personal expenses have been charged to revenue account

on observation of above case, it shows that the company as no valid relation with the transaction. so the auditor as to qualify in this report