Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

intelligent doubts

27 March 2019

Read section 447's proviso

Amount involves LESS THAN
1. 10 LAKH or
2. 1% of T/O
WHICH EVER IS LOWER. And no public interest

NOW for example my turn over is zero so 10 lakh or 1% of zero (0). How can lower of zero.

I think this situation is no possible because of t/o is not seen zero.

Reply
Follow
Share

6 Replies

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 27 March 2019

sec 447 of which act ?

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Vijay Boliya (220 Points)
Replied 28 March 2019

😂😂 We are in company law app. 447 of company act. Second proviso of section 447

1 Like

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 28 March 2019

Ok got your query.
The law says that if a person has made Fraud of Rs. 10 Lakhs or 1% of turnover, whichever is lower, then he shall be punishable for fraud u/s 447 of companies act.

Let me help you with an example :

Scenario 1 :
Fraud amount: 1Lakh
Turnover of company : 90Lakh
1% of turnover : 90,000
in this case he shall be punishable u/s 447 as he has done fraud of more than 90,000.

Scenario 2 :
Fraud amount: 1Lakh
Turnover of company : 2 crore
1% of turnover : 2,00,000
in this case he shall NOT be punishable u/s 447 as he has done fraud of less than 2,00,000 and less than 10 Lakh.

Scenario 3 :
Fraud amount: 11 Lakh
Turnover of company : 12 crore
1% of turnover : 12,00,000
in this case he shall be punishable u/s 447 as he has done fraud of more than 10,00,000.

Scenario 4 :
Fraud amount: 5,000
Turnover of company : 0
1% of turnover : 0
in this case he shall be punishable u/s 447 as he has done fraud of more than 0 in this case.

1 Like

Vijay Boliya (220 Points)
Replied 28 March 2019

First Bro understand section then proviso.
Section says that the amount of froud is MORE THAN 10lakh or 1% of t/O. WHICH EVER IS LOWER. Than big penalty impose for FROUD. FOR example 10 lakh or 1% is 90, 000 then the penalty imposed because of 90,000 amount of froud (whichever is lower) big penalty. (section penalty)

NOW see what about LESS THAN 10 lakh or 1% of t/o. Now moove on proviso if froud involved less than 90,000 then proviso's penalty impose.

Both Penalty are different
One is for more than 10 lakh or 1% which ever is lower.
Second is for lower of above. (section 's penalty imposition amount.)

1 Like