CA. Anshul Bajaj (Taxation Head) (173 Points)
12 January 2010Dear Friends,
If a person is a Full time Director in a company and gets Salary From the company, and Later on THe director starts a Propreitor \Ship in the same field, and Provides Services to the Company in which he is a director then wat Precations he is suppose to take at the time of Finalisation of Books of accounts if Turnover exceeds 40,00,000 or less........!!
Wat Disclosure require in sec 40A(2) of Income Tax act
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Dear Ansul,
I hope u r talking for Private Co's only otherwise massive compliances requiresin case of public company under Companies Act 1956..
Ya u r rite Sec 40A(2)(b) , Disclosure would be given by the Auditor of the Company in his Tax Audit Report...
Further as far as AS goes the information needs to be disclosed as a footnote to Balance Sheet(both Co as well as Individual) in terms of AS-18 Related Party Transanctions.......
sanjay kumar
( tax consultant)
(90 Points)
Replied 13 January 2010
no additional disclosure is needed in the accounts of the proprietorship business.....
so far the accounts of the company is concerned as the transaction involves... in which one of the director is interested ....apart from the disclosure under section 40A(2)(b) in the tax audit report ....and disclosure requirement with repect to AS 18....certain secretarial compliances are needed tooo..... entries in register of contracts is required to be made ....another matter that is to be seen is that whether the company comes within the ambit of obtaining compliance certificate from the company secretary if so then the certificate has to mention that the company has entered into contracts falling within the purview of sec 297....yes ...board has to sanction this tranction ....besides this will be mentioned in the statutory audit report that ...the particulars of contracts or arrangements reffered to in section 301 of the Act have been entered in the register maintained under that section .....
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