Unsecured loans in private company

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PALLAVI SOMANI (Querist)
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29 February 2012 hello friends..........
i want to know that can a private company take unsecured loan by its shareholders with respect to income tax act,1961...

Krishna Mohan

Krishna Mohan (Expert)
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29 February 2012 Please be clear; whether the Pvt. Company want to take unsecured loan from it's shareholders or the shareholders want to take unsecured loan from the Company?

PALLAVI SOMANI

PALLAVI SOMANI (Querist)
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29 February 2012 company want to take unsecured loan to its shareholders.........

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Krishna Mohan

Krishna Mohan (Expert)
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29 February 2012 Yes; The company can take unsecured loan from it's shareholders. However, Section 269SS and 269T are applicable. The company has to keep in mind the above two sections at the time of accepting or repaying the loan. Moreover, the interest on the above unsecured loan should not be unrealistic; otherwise, the AO may tend to treat the excess interest as deemed dividend.