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Director's Personal Expenses Like Foreign Travels

Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)

30 September 2010

Dear All,

Is there any provision that if the company agrees to pay Director's personal expenses in a Board resolution then same is deductible under Income Tax Act and also under Companies Act 1956.

what is the implication or any way out.

Thanks

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4 Replies

CA. Abhishek K. Pandey (Manager (Advance)) (901 Points)
Replied 30 September 2010

I don't think that will be allowed.

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Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)
Replied 05 October 2010

Hi,

If Company pays the foreign travelling exp (personal) of the Director and same is taxed in the hands of Director as a Perquisite then will it be allowable expenditure in the hands of company.

Thanks

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 05 October 2010

An amount which is already taxed in the hands of the director cannot be taxed in the hands of the company.So, it is very much allowed

CA Atul (Tax Manager) (294 Points)
Replied 25 December 2010

Company can allowed foreign expense but only when that expenses incurred for business pupose by its Director's under section 37(1) of the Income-tax Act, 1961.