Payment of rent to related parties (director)

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vikram (Querist)
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04 June 2015 Mr. A is a director in 2 private ltd companies.

He has got a plot in on which he wants to built a building and want to give the premises on rent to above two Companies. The rent has not yet been decided.

Can both companies pay rent to Mr. A? What would be the implications under the New Companies Act and under the Income Tax Act. Is there any monitory ceiling to pay rent to a related party.

Chetan Patankar

Chetan Patankar (Expert)
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04 June 2015 What is the composition of the Board?
Are there any disinterested Directors on the Board?

vikram

vikram (Querist)
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05 June 2015 No. The board is only composed of family members. No disinterested directors. In this context, is a board resolution sufficient to validate the payment?

Chetan Patankar

Chetan Patankar (Expert)
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05 June 2015 As per Sec. 174, Disinterested quorum of Board is required.

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