28 November 2009
Case: ABC (P) Ltd is showing share apllication money under the head unsecured loan
Qurey:
1.Whether company can show amt. of share application money received under the head unsecured loan and if yes ,then what will be he impact as per income tax act and companies act ?
28 November 2009
you can not treat as share application money until you taken in unsecured loan.
Its to be transfer in share application money and issued share to that party.
If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum from the expiry of the one hundred and thirtieth day:
28 November 2009
As i know that the share applcation money must be shown between share capital and Reserve and Surplus head.If the company is showing the share application money in the head of unsecured loan then what will be the conseuquences?
29 November 2009
In Companies Act: If share application money is shown as unsecured loan by a pvt ltd co., provisions of sec. 58A shall be applicable. You then have to check, whether this application money was received from the person falling outside the purview of definition of deposit given in Companies (Acceptance of Deposit) Rules 1975, as amended. In Income Tax: You have to show in 3CD annexure prepared U/s 269SS & if repaid than in 269T also. If share application money is in excess of Rs.20000/- per applicant, it is also be voilation of IT Act, if you classify it under unsecured loans.
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