Loan by Company to LLP

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Chartered Accountant
454 Points Posted on 21 January 2020

The Company has advanced loan to a LLP wherein the relative of its director is a Partner. Is this allowed under Companies Act? Further, is it taxable under any provision of Income Tax? 

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On 21 January 2020 at 18:30 Report
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This discussion clarifies whether a company can provide a loan to an LLP where a director's relative is a partner. It confirms this is generally not permitted under the Companies Act. However, if the loan is genuine, there should be no tax liability under the Income Tax Act, specifically referencing Section 2(22)(e).

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CS
755 Points Posted on 22 January 2020

No not allowed under the companies Act

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On 22 January 2020 at 13:09
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Chartered Accountant
94 Points Posted on 22 January 2020

If the Loan is Genuine in Nature then there is not tax liability in Income tax.

Reference section 2(22)(e)

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On 22 January 2020 at 18:33

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