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Pvt company and loans & advance

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20 October 2011 A Pvt Ltd make entered in to contract with B Ltd. For accomplishing this contract A Pvt Ltd also contract with Mr. X to manage and maintain the activity. Mr. X give Rs. 10 lakh to A Pvt Ltd. as (a) Security Deposit, (b) Capital Contribution in that particular activity. The contract provides that Mr. X will receive a cirtain predicide amount as salary say 50000 per month and 50% share in net profit from that activity.
Whether this security deposit or capital contribution will fall under the category of loans or advance from non relative person of director.
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CS Suraj Arora

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CS Suraj Arora (Expert)
21 October 2011 Dear Hitendra

Security Deposit can be shown in Head Current Liabilities if this liability is for less than 12 months...

it can be shown under unsecured if it goes for beyond 1 year.

if you think how loans can be taken by pvt ltd from non related then rule 2(Vi)of the Acceptance of Deposit rules exempt security deposit from the definition of Deposit.
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