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salary by directors as % of profit

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(Querist)
04 June 2011 Dear Sir,

There are two directors in a private limited company, both of whom have invested equal amounts in the company. They have entered into an agreement that each of them will draw 50% of Profit every month as their remuneration.

Is this agreement OK and will the assessing Officer accept it as the company will have no profit left.

Thanks,

Virendra Sahdev
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CS Bijoy

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CS Bijoy (Expert)
04 June 2011 According to me the Director's remuneration should not be more than 5% of the last three financial year profit but they received more than, so i think it is not possible.
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