Limit - Director's travelling expenses

[Adoni Raghavendra]

Is there any limits to be restricted for a 'Private Limited Company' for incurring expenses under the head 'Directors' Travelling Expenses' for personal and official tour as per 'company act 1956 and as per Income Tax Act, 1961. Please Brief me with related case laws if possible.

[Surender Gupta]

Any expenses which are booked to the accounts as expenses must be reasonable and related to business activity. Neither the companies act nor the income tax act allows personal expenses. You may also refer to related accounting standard issued by ICAI in this regard. Obviously the issue is debatable to the extent that sometime it is difficult to distinguish what is personal and what is official.

AI Summary

Directors' travelling expenses must be reasonable and business-related; personal travel cannot be booked as business expense. Directors' Travelling Expenses must be reasonable and related to business activity; neither the Companies Act nor the Income Tax Act permits personal expenses to be booked as such, and accounting standards should be consulted, though distinguishing personal from official travel can be factually difficult.