Loan

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Mohammed (Querist)
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24 November 2010 Can a Private Company give a loan to an Individual or Directors of there company?

Thanks in advance!!!!

CA Pramod Jain

CA Pramod Jain (Expert)
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24 November 2010 ya it can.

udit sharma

udit sharma (Expert)
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24 November 2010 Hi...

Agreed with expert! Provisions of section 295 of the Companies Act, 1956 are not applicable to an indpendent Private Company i.e. a Company which is not a subsidiary of a Public Company......

Best Regards

Udit Sharma

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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24 November 2010 Yes no problem in giving loan to an Individual or Directors of the Pvt Ltd co which is not a subsidiary of a Ltd Co. section 295 is applicable to a public company or a private company, which is a subsidiary of a public company.

Mohammed

Mohammed (Querist)
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24 November 2010 Dear Experts,

I have a doubt that why a company can give a loan to an individual who he doesnot know and when its main line of business differs?

Please assist

CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)
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24 November 2010 In my opinion, the Private LimitedCompany can give loan only to the Directors or the Shareholders of the said Company.

Message likes : 1 times

CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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24 November 2010 @mohammed,
Loans may be given to employees, officers of the company,or to the directors..... etc.,

Message likes : 1 times

Ajay Mishra

Ajay Mishra (Expert)
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25 November 2010 Agreed with Mr. Madhusudan............

Mohammed

Mohammed (Querist)
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25 November 2010 Thanks a lot to all for there valuable feedback, it cleared a huge doubt of mine.

AMAN Gupta

AMAN Gupta (Expert)
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30 November 2010 I am agreed with the above replies of all experts. But, if pvt. ltd. co. gives loan to its member then it can be treated as deemed dividend u/s 2(22)(e) of the Income Tax act, 1961 and the company will also have to deduct TDS on it u/s 194 of the said Act. But. if it is a loss making company and do not have accumulated profits then these provisions will not be applicable.

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