Forfieture of share application money

There is no provision under companies act for forfeiting the sahre application money pending allotment. If the company fails to issue shares then the company has to return all the money with interest.

Thanks for reply. The company has no fund, how it will be squired-up? If we continue showing share application money in balance sheet, the case regularly selected by CASS for limited scrutiny. 

In that case, as per my opinion, if the amounts were taken through banking mode, then it can be shown as Loan obtained and the persons who have given money they need to be convinced for such treatment and agreement to be made like that according to their consents. But if the amounts were taken for Cash, it will attract penalty under income tax act if it shows that Loan obtained.

This is totally my opinion. Other experts' comments are appreciated.

Since company shows the loan from director/shareholder, it is violation of coporate act and income tax department will assume it as fresh loan and will come under scrunity criteria.

I don't think accepting loan from Director/Shareholder violates any provisions under the Companies Act. Company can accept loan from the abovementioned persons but can't accept from Partnership Firm, HUF.

Please refer the following link:

https://www.quora.com/Can-a-private-limited-company-take-loans-from-a-shareholder-who-is-not-a-director-under-the-provisions-of-the-Companies-Act-2013