Security deposit by the company on behalf of its director

This query is : Resolved

RAJIV VIJ (Querist)
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16 April 2011 Dear Sir,
My Query is whether security deposit(rent) by a pvt ltd. co. on behalf of its managing director(have no share allotted to him) for his personal lease deed with the landlord is taxable as perquisites in his hand? shall it be treated as interest free loans to director? can company book this amount as security deposit ( rent) in its books in Current assets?

Rajeev Vij

CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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19 April 2011 Since the security deposit is paid on personal lease deed of director with landlord, it is taxable in following manner

1) It can be taxed as perquisite in hands of director and TDS should be deducted U/s 192 by the company.

2) If it is treated as interest free loan to the director. perquisite will be added to the extent of interest rate of SBI on personal loan on the first date of financial year.

Moreover, the amount is not security deposit (rent) to be paid by the company. if company is opt to pay such amount as perquisite therefore it should be shown as part of salary expenses else it can be shown under Loan & advance to director under current assests.

RAJIV VIJ

RAJIV VIJ (Querist)
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25 April 2011 Thank You Mr. Krishna K Neeraj

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