Loan To Directors Under Section 185

admin — Mon, 22 May 2017 08:08:11 +0000

Section 185 of the Companies Act, 2013 imposed a ban on loans to directors, their relatives and partners. The main intention of Section 185 is to ensure that directors who hold a fiduciary position with respect to shareholders do not misappropriate the funds of the company for their own benefits.

Public companies were allowed to grant loans, guarantees and securities subject to Central Government approval and private companies were exempted under Section 295 of the former Companies Act, 1956.

Private Companies were facing problems due to stringent provisions of Section 185 while carrying out operations. So, Government exempted private companies from entire Section 185 to ease the compliance requirement vide notification dated 5th June, 2015.

Companies (Amendment) Act, 2017

Government substituted entire Section 185 by way of Companies (Amendment) Act, 2017 to promote ease of doing business. The original Section 185 specified more exhaustive list to which Companies can’t give loans, guarantee and securities. Thus, at par with the global company laws, the provision has been amended to remove the prohibition to an extent and provides for the passing of shareholders’ resolution for granting of loans, guarantees, and securities to entities in which directors are interested.

There should be no investment in the concerned company from any other body corporate;
The company should not have any borrowings from banks, financial institutions and other bodies corporate equal to or more than twice its paid-up share capital, OR Rs. 50 crores, whichever is lower; and
There should be no subsisting default at the time of making such transaction, and that the company should have the capability to pay off the loan.

Income Tax Department To Refund Late Fee If Wrongly Charged!

admin — Sun, 12 Mar 2017 08:14:36 +0000

The income tax department has conceded there has been an inadvertent error while processing income tax returns (ITR) of partners of firms whose accounts are liable to be audited. The taxman has assured that it will rectify the error on its own and expel the late fee charge.

For other individual ITR filers, the last date was July 31 however was extended to August 31.

Section 234F was introduced to ensure timely filing of returns of income. However, inadvertently, the ITR utility also levied the fees on the partners of the partnership firms, whose due date for ITR filing are linked with that of the partnership firm. Now amending the inadvertent error, the Income-tax authorities have decided to remove the penalty charged u/s 234F.

Documentation Of ITR

For the financial year 2018-19 (evaluation year 2019-20), all working accomplice of a firm whose records are required to be examined should document their ITR by September 30, 2019 which was later extended to October 31. For those living in Jammu and Kashmir and Ladakh, the last date has been additionally extended to November 30.

All persons including Individual, HUF, company, partnership firms, etc are liable to pay late filing fees under Section 234F, if the ITR is filed after their respective due dates.
For those filing ITR after the due date but within 31 December are charged ?5,000 and the penalty increases to ?10,000 January onwards.

Franchising – BRISUN Law Firm

Loan To Directors Under Section 185

Companies (Amendment) Act, 2017

Income Tax Department To Refund Late Fee If Wrongly Charged!

Documentation Of ITR