372A

Save Share

This query is : Resolved

Guest

Guest (Querist)

28 May 2010 A holding co. is meeting out the expenses of the Subsidiary and debiting to Loans and advances.

It is not a wholly owned subsidiary.

whether it is a loan for the purpose of Section 372A?

Please clarify

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

28 May 2010 Only loans given to wholly owned susidiary is exempt not otherwise. Hence it is a loan given for the purpose of Section 372A if the holding company is not a private company

Guest

Guest (Querist)

02 June 2010 The said comapany is Public Ltd.

And Sec 372A is applicable.

In the said case they are maintaining two separate a/c by the following names:

1.Subsdiary-Expenses recoverable
2.Subsidiary-Loan a/c

only for the second one they are charging interest.

So is there a violation of Sec 372A in the first one i.e expenses a/c

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

02 June 2010 I think it would be a current account transaction i. e. business transaction and no a loan transaction and hence it should not be violative of Section 372A.

If the limit as specified in the section is being crossed then you can pass a resolution in the general meeting for granting loans in excess of the limits specified so that u do not face any problem in future if u cross the limit.

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now