Company law
Aashish
(Querist) 04 April 2012
This query is : Resolved
Sitting to non-executive Director:
Sitting fees is paid in terms of section 310 of the Companies Act, 1956. Since the said section does not apply to private company, is that means that a private company can pay any quantum of sitting fees to its directors...???
Would your answer will differ in the following cases:
A) Articles being silent.??
B) Articles states Board is authorised to pay sitting fees as may be decided from time to time...
Raj Kumar Makkad
(Expert) 04 April 2012
Board can decide the fee as there is no any definite guiding rule for this purpose.
Shonee Kapoor
(Expert) 05 April 2012
Nothing to say.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
C. P. CHUGH
(Expert) 07 April 2012
Although Act does not provide any ceiing on sitting fee to be paid by a private company to its directors, still it has to reasonable and logical, otherwise it would fail the test of reasonable expenditure in the hand of the company and can be disallowed in companies assessment. it would be fatal in two ways, being expenditure disallowed the company would pay tax at maximum marginal rate whereas the directors who received sitting fee would already have discharged theit tax laibilites as per rates applicable to their income.
Be cautious while claiming exhorbitant sitting fees. It otherwise does not serve any purpose, private companies are not better than Proprietorship or Partnership Entities and all incomes/losses are of those directors.
C. P. CHUGH
(Expert) 07 April 2012
PS :More-over Finance Act 2012 has now provided deduction of tax at source on such fees paid/payable to directors.
Aashish
(Querist) 09 April 2012
Thank you experts...
