A company incorporated on 20th December, 2018 and after some days it purchased a dealership of any automobile company and made payment of Rs. 1,50,00,000/-. That time Company has no Bank Account because it was in opening process. That payment done by the individual account of directors/shareholders. What are the impacts of such transactions ?? What consequences company will have to face in future ?? How to set off this amount or it will be considered as Pre-incorporation expenses ??
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Dealership amount paid by directors instead of company
Replies (3)
This amount cannot be set off as a preliminary expense since it is not related to the incorporation of the company. It's a pre-incorporation expense by the director which cannot be claimed by the company. However, if the dealership right is transferable then the director can transfer it to the company for a similar amount and then it can be shown in the books of the company as an expense post incorporation. By this way, the entries in the books of directors for payment of dealership will be nullified by the amount received from the company. Further, in the books of the company, there will be an expense post incorporation which can be claimed legitimately.
it can be set as unsecured loan given by directors in favour of the company for the interest of the company.
Thank you sir
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