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Personal Expenses of Directors

Senty (CA Final ) (133 Points)

29 December 2009

Hi.....

How to account for the personal expenses of the Director of the Private Ltd company??????????????

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7 Replies

Anil Sankar V (CA) (1877 Points)
Replied 30 December 2009

personal expense of the director of a pvt company cannot be deducted as per income tax & accountancy unless if they are agreed as per the contract.....

1 Like

Amir (Learner) (4016 Points)
Replied 30 December 2009

Look there are 2 things as regards to Personal Expenses of Director:-

1) IF COMPANY HAS SPECIFICALY AGRRED TO BEAR THE PERSONAL EXPENSES OF DIRECTOR THAT IS TO SAY THAT THERE IS NO MANIPULATION TO INCREASE THE EXPENSES, THEN IT IS ALLOWED AS DEDUCTION IN INCOME TAX AND NO ADDITIONAL RESPONSIBILITY IS THERE ON THE AUDITOR..

2) IF PERSONAL EXPENSES HAVE BEEN DEBITED TO PROFIT/LOSS A/C AS A MEANS TO REDUCE PROFIT THAT IS TO SAY THERE IS MANIPULATION, THEN SUCH EXPENSES WILL NOT BE ALLOWED AS DEDUCTION UNDER INCOME TAX..FURTHER AUDITOR IS REQUIRED TO CLEARLY MENTION THE FACT IN HIS REPORT OR QUALIFY IT AS MAY BE APPROPRIATE.

1 Like

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 31 December 2009

Originally posted by : Amir
	Look there are 2 things as regards to Personal Expenses of Director:- 1) IF COMPANY HAS SPECIFICALY AGRRED TO BEAR THE PERSONAL EXPENSES OF DIRECTOR THAT IS TO SAY THAT THERE IS NO MANIPULATION TO INCREASE THE EXPENSES, THEN IT IS ALLOWED AS DEDUCTION IN INCOME TAX AND NO ADDITIONAL RESPONSIBILITY IS THERE ON THE AUDITOR.. 2) IF PERSONAL EXPENSES HAVE BEEN DEBITED TO PROFIT/LOSS A/C AS A MEANS TO REDUCE PROFIT THAT IS TO SAY THERE IS MANIPULATION, THEN SUCH EXPENSES WILL NOT BE ALLOWED AS DEDUCTION UNDER INCOME TAX..FURTHER AUDITOR IS REQUIRED TO CLEARLY MENTION THE FACT IN HIS REPORT OR QUALIFY IT AS MAY BE APPROPRIATE.