Dipti Mehta (NA) (46 Points)
01 January 2013A Private Limited Company has two directors. Both directors are are related with each other, they are brother and sister.
Profit for 2012 - 2013 is expected to be Rs 10 lakh.
The current office primises is leased from the father of the directors, for which monthly rent is paid. Registered agreement is all done.
They also wish to rent another office in different city for three months which is owned by there mother.
Is it okay to do it? If not, when what should be done about it?
Ankit Mehra
(Service)
(176 Points)
Replied 01 January 2013
Yes it is ok and there is no problem in doing the same..
CA Lokesh Pokharna
(CA (Ahmedabad Bhilwara Chittorgarh))
(4128 Points)
Replied 02 January 2013
In my opinion there is requirement of board's santion as per sec. 297 ...
Ankit Mehra
(Service)
(176 Points)
Replied 02 January 2013
Dear Lokesh sec.297 will not attract in this case..
Terry
(ceo)
(59 Points)
Replied 02 January 2013
in case the rent is excessive and not reasonable, it will not be okay and attract disallowance. if you want i can share judgements to the effect
Dipjyoti Majumdar
(CA in service & CS. dipmaj@ rediffmail.com )
(3468 Points)
Replied 03 January 2013
From Company law angle, there are no major compliances as section 297 is not attracted. Transactions of immovable properties are outside the scope of section 297.
From accounts/taxation assessment view, several disclosures are to be made in notes to account, tax audit report , AS 18 complaince etc.
Regards,
CAclubindia
