the director of the co. has purchased some foreign currency for his personal use and the payment for the same has been made by the co. in the books of the co. the said sum of money is standing in the name of the director as loan/receivable. whts the treatment for this
14 Replies
Kalpesh Mutha
(B.com, F.C.A, C.S)
(239 Points)
Replied 21 December 2010
I think you can book it as Foreign travel expenses if he has purchased the currency for travel purpose
JEEVAN KUMAR JAIN
(MANAGER ( ACCOUNTS ))
(55 Points)
Replied 21 December 2010
Yes, You can book as foreign travel expenses subject to co's guideline if any.
Thanks,
Jeevan Jain
CA ASHISH GUPTA
(FCA, LL.B., MBA)
(390 Points)
Replied 21 December 2010
The amount can not be booked as travel expenses, whereas it is being used for personal purpose. If you claimed it, it will be disallowed.
Secondly If the company have allocable surplus, then section 2(22) (e) will be applicable and it will be treated as deemed dividend.
Sivaguru SM
(Tax Consultant)
(235 Points)
Replied 21 December 2010
Yes! it will be treated as deemed dividend or it will be disallowed. The director can give a cheque in favour of co. equal to that amount. In individual account it may be treated as travel expenses.
Divya K S
(CA)
(289 Points)
Replied 21 December 2010
Deemed Dividend arises only in case the director is also a shareholder & is having a substantial interest in the company, ie, holding more than 20% of shares of the company. If he is not a shareholder then deemed dividend does not arise.
C.A. Sanjay Bhatia
(CA)
(496 Points)
Replied 21 December 2010
As company has paid on Behalf of director,so it wll definately be considered as loan to the director which have to be paid back.
Company can't book this as expense
Accountant
(professional)
(182 Points)
Replied 21 December 2010
| Originally posted by : Sanjay Bhatia | ||
 |
As company has paid on Behalf of director,so it wll definately be considered as loan to the director which have to be paid back. Company can't book this as expense |
 |
since it is for personal exps..
CA ASHISH GUPTA
(FCA, LL.B., MBA)
(390 Points)
Replied 22 December 2010
@ Hitesh : Generally the directors of Pvt. Ltd. co. holds more then 10% shares. I have made reply indicating the provision, nt possible to write whole rule. Again 10% shareholding required to attract 2(22)(e), not 20%.
One more thing even if directors return the amount, 2(22)(e) will apply.
mustafa
(student)
(134 Points)
Replied 22 December 2010
if possible adjust with the remuneration payable
Samir
(Manager)
(21 Points)
Replied 22 December 2010
As company has paid on behalf of director & director is an employee of the company. any payment by the company on behalf of emplyee is considered as loan to employee & is recoverable form employee.
So it wlll be considered as loan to the director which company has to recover from director (employee)
CA. Santosh Prajapati
(Practice)
(97 Points)
Replied 24 December 2010
agree with ashish, it is 10%, and it is payable once its come u/s 2(22)(e).
CA. Santosh Prajapati
(Practice)
(97 Points)
Replied 24 December 2010
as it is a personel expenditure u can not book the same in the books of a/c as a travelling expenditure. it will get disallowed
Rajesh Kumar
(Accountant)
(21 Points)
Replied 28 December 2010
It will be a Loan, which is given by company to its director. So it will be assest of the company and director has to be paid it....Rajesh Bansal
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