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Director's personal expense paid by company

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Prateek (Querist)

31 May 2017 If Personal Expense of Director is paid by Company then either we can disallow it in the Income Tax Computation or transfer the payment entry itself to Director's Current A/c in books. Which treatment is more appropriate in accordance with Income Tax Act and Companies Act.

Nischit Sanghavi

Nischit Sanghavi (Expert)

02 June 2017 When company pay Director personal expenses it means company have to bare it. this is general meaning while doing so. So if you disallow it while computing tax it would be better. If you know that director will pay then you crate an assets. but if director does not pay in the same financial year then it will be treated as Loan to director and provisions of deemed dividend would be applicable. So first option is better.

Prateek

Prateek (Querist)

03 June 2017 Thanks for the clarification Sir

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