Companies act,income tax and other consequences
This query is : Resolved
17 February 2013
Dear all
the query is as follows
one company directors asked me that ??
i have one own land i would like construct the house on that own land with the company money and he told that i should not repaid any money to company again
please let us clarify the what is the consequent of this transaction
as per the Provisions of companies act and income tax act
CA Pavan
the query is as follows
one company directors asked me that ??
i have one own land i would like construct the house on that own land with the company money and he told that i should not repaid any money to company again
please let us clarify the what is the consequent of this transaction
as per the Provisions of companies act and income tax act
CA Pavan
17 February 2013
For income tax, there are two possibilities:
1. the AO disallows the expense in company's assessment on the grounds that the expense is not related to business of the company.
2. If the director doesn't want to repay, it is but natural that the amount spent by the company for construction of the house be added to director's remuneration and taxed accordingly.
1. the AO disallows the expense in company's assessment on the grounds that the expense is not related to business of the company.
2. If the director doesn't want to repay, it is but natural that the amount spent by the company for construction of the house be added to director's remuneration and taxed accordingly.
18 February 2013
Thank you for information nikil but again it will be taxable as deemed dividend and specify the any resolutions required for that one along with the supporting section
18 February 2013
Pavan,
whether deemed dividend triggers or not depends on the equity holding by the director. In absence of information in this regard, I can't comment!
whether deemed dividend triggers or not depends on the equity holding by the director. In absence of information in this regard, I can't comment!
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