09 October 2013
Unsecured loans from relative party- 297 or 293 (1) (d) Following sections affected Sec 292 power of boards 372A if related party is company 295 if related party is director- loan to director Deemed dividend under income tax act. S.293(1)d – if borrowing exceeds capital – Shareholders approval
Rate of interest - ? According to 372A interest rate shall not be lower than the prevailing bank rate. While 40A(2)(b) holds that the A.O is at the discretion of disallowance of any excessive or unreasonable expenditure made by the assesses to the parties as given in the section. So he might or might not disallow based on his discretion. Hence best is to take the prevailing bank rates prescribed by RBI Act. Section 297 applies to all companies, public as well as private. BOARD’S CONSENT AND CENTRAL GOVERNMENT’S APPROVAL FOR CERTAIN CONTRACTS IN WHICH PARTICULAR DIRECTORS ARE INTERESTED [Sec. 297] Accounting standard AS- 18 related party also apply.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
09 October 2013
Sorry but i dint get your point .
Can you please elaborate more without taking interest into consideration
1. Giving or taking loans. 2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}. 3.Contract between two public Companies. 4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975] 5.Contract for employment of relative of director. 6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956] 7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975] 8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]
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