Sale of immovable property to director

This query is : Resolved

Guest

Guest (Querist)

28 December 2010 Sale of immovable property to the one of director, who is relative. For sale consideration lacs as book value after depreciated.

What are the consequences and what are the formalities to be followed as well as company law and income tax.

Is it require any EGM or Board meeting is enough.

Please reply if any body could send the details with soft copies would be appreciated

udit sharma

udit sharma (Expert)
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28 December 2010 Hi...

Section 297 of the Companies Act, 1956 is not applicable in case of a contract for sale of immovable properties.

However, such a transaction shall fall within the scope of section 299 of the Companies Act, 1956.

At the Board Meeting, before the Board considers this transaction, the interested Director shall initmate the Board that he is indirectly interested in the transcation as it involves sale of immovable property to his relative and his presence shall not be counted for the purpose of counting the quroum of the meeting, nor he shall be entitled to participate in the discussion or vote on this business in the Board Meeting as oer the provisions of section 300 of the Companies Act, 1956. Section 300 of the Companies Act, 1956 is not applicable to an Independent Private Company.

Since the provisions of section 299 of the Companies Act, 1956 is applicable, an entry of the transaction will have to be made in the Register maintained u/s 301 of the Companies Act, 1956 within 7 days from the receipt of the particulars of the contract at the registered office of the Company or within 30 days from the date of entering into contract, whichever is later.

The said register shall be placed at the next BM and shall be signed by all the Directors present.

I cant comment on the provisions of Income Tax Act, 1961 which have to be complied with.

Regards

CS Udit Sharma