The problem is aw follows: There are two directors in a Pvt. Lt company. One of the directors requested for transfer of x amount to another PVT. ltd company where he is also one of the directors. The directors are mother and son and no creditors as the company is new. The accountant simply transferred the x amount say Rs. 1,50,000 to that company, say in January 2020. It was detected now. If we treat this as drawings then it should be treated as remuneration and TDS had to be deducted which has not been done. How do we treat this transaction in the books of accounts?
17 April 2020
if the amount is transferred directly to the Company's account , same is treated as loan given to another body corporate and provisions of sections 186 are to be followed. As per this A Private Limited Company cannot give loan towards any other individual or body corporate which is beyond
60% of its Paid-up Capital + Free Reserves + Security Premium, or
100% of Free Reserve + Security Premium; which ever is more.
In case this limit is exceeded, prior approval by means of special resolution in general meeting is needed.
18 April 2020
i suggest you to treat this money as advance given to supplier in this financial year and take money back in order to avoid all kind of litigations as per Companies Act, 2013 and Income Tax Act, 1961.
27 April 2020
GST provisions are not applicable on receipt of advance money. Moreover, as per INCOME TAX act, 1961 no such money eligible for deduction of tax
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