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CA Vishal kapoor (Querist)
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10 December 2010 HI,
I want to know that how the company can use there reserves & surplus accumulated during previous years.
I mean if a Co Named XYZ private Limited having 2 Directors named X & Y. The Directors having a share Capital of rs 5lac each.Company transfer the profit of each year into the Reserve & Surplus a/c having a balance of (say)8lac.
Now the Director want to use the balance of Rs 8lac for there own purpose or for company purpose.
Now My question is whether director use these funds same as capital of directors just like partnership firms or there are some other provisions regarding the same.
Directors want some funds from company for personal purpose.

Kindly Help.

Thanks in Advance..

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 December 2010 Simply dont. If directors use the accumulated profit for their personal purpose and if their shareholding is 10% or more they will fall in the trap of Sec 2(22)(e) i.e. Deemed Dividend and any amount which they take for personal use will be added in their income and they will have to pay tax on that.

CA Vishal kapoor

CA Vishal kapoor (Querist)
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11 December 2010 sir.if company want to utilize these funds.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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11 December 2010 For what purpose company wants to utilize these funds?

CA Vishal kapoor

CA Vishal kapoor (Querist)
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11 December 2010 Sir,
First of all thanks 4 ur valuable replies.

Sir i want to know for what purpose company can utilize these funds.The company which i am taking about, have 2 directors.Now they want 2 utilize these funds.I am the Internal Auditors of that Firm & dont have exact idea about this kind of problem.

Plz Help

Regards

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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13 December 2010 Utilize these funds for expansion or if surplus funds make investments.

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