Advance to directors

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varsha (Querist)
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14 August 2013 sir .... i want to the treatment of advance given to directors on account of exps by pvt co in cash (exceeds Rs.20000 ) ... what will the treatment of that as per it act & and co act ..... ????

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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14 August 2013 as per it act if given in cash still it will not be disallowed as it is capital loan amount and will be later paid back by director.

as per co act it will be adjusted in directors loan a/c.

varsha

varsha (Querist)
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14 August 2013 sir ... if it is given to directors for incurring exps ... for attending meetings &some other business exps. then ?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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14 August 2013 then it is not loan it is advance for business purpose and not personal loan, even for reimbursement of exp for business purpose it will not be personal loan.

varsha

varsha (Querist)
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14 August 2013 thanks alott ....

Ganeshbabu K

Ganeshbabu K (Expert)
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14 August 2013 1)it can be accounted as imprest advance

2)it will be okay if you have given amount as advance..but while booking expenditure if you pass expenditure in a single day more than 20000 it will be disallowed 40A(3)

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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14 August 2013 Advance to director and later repaid is not an exp and hence sec 40A(3) is not attractable.

CA PARTH SHAH

CA PARTH SHAH (Expert)
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01 September 2014 There will be violation of section 2(22)(e) of the Income tax act and it will be deemed dividend and taxable in the hand of directors

Ganeshbabu K

Ganeshbabu K (Expert)
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02 September 2014

Advance given to meet expences may not create any problem with company act

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