Loan form Directors

Page no : 2

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 27 December 2010

Dear Ankit,

Your right. Nidhi ji plz check definition of "banking and financial services” under service tax act.

Dear Jaideep,

Mr. Sajay ji is right as its a general business of NBFC to provide the loan so according to me get exempted under sec. 297 (but strictly complied with sec. 297 conditions i.e. interest rate)

Other views are solicited.

with warm regards,

Aman Kumar Jain

LL.B., M.Com, ACS

AMAN JAIN & ASSOCIATES,
COMPANY SECRETARIES
B-15, SECOND FLOOR,
LAJPAT NAGAR-I,
NEW DELHI-110024
Mob. No. +91.97174.900.58
+91.93137.82.760

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Jaideep (Service) (1368 Points)
Replied 27 December 2010

Thanks to all for participating in discussion.

J. Manivannan (Advocate & IP) (242 Points)
Replied 27 December 2010

Said loan treated as Inter-Corporate Deposit...............having common director between two companies (Lender and borrower) please ensure that section 295 is not violated ...................

regards

manivanann

Jaideep (Service) (1368 Points)
Replied 27 December 2010

Manivannan, Sir

Thanks for your valuable comment.

In this case loan is provided by private company which is exempt under section 295(2)(a)(i)

Regards

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 28 December 2010

Section 297 is not applicable in the instant case. Taking loan from a company having common directors is outside the purview of this section.

As regards treating of loan as a service, providing of loans by a banking company may amount to service but Section 297(2)(c) specifically excludes such transactions from the scope of this section. Loans provided by non-banking institutions/ individuals will not be considered as providing service. If the lending company is a private company, Section 295 is not applicable. However if the lending company is a public company having common directors the applicability of Section 295(1)(c)(d)(e) needs to be checked.

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