Loan to Directors

hussain (Querist) 07 September 2009 This query is : Resolved
sir,
But as per law the private company can't give loan to directors.so the income tax department claim that is divided and disallowed the loan.riven

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Arul Kumar (Expert) 07 September 2009
As per Section 295 (2) of the Companies Act 1956, the restriction on loan to directors shall not apply to private companies. It is applicable if such private company is subsidiary of public company or it is a banking company.riven