Wood Limited has received - 4,00,000 as a non-interest bearing security deposit under a contract of employment, from its employee Mr. Cotton. Mr.…

According to Rule 2 (1) (c) (x) of the Companies (Acceptance of Deposits) Rules, 2014, any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit, is not considered as deposit. In the above case, the amount of 4,00,000 received by Wood Limited from Mr. Cotton under the contract of employment with the company being non-interest bearing security deposit, will be considered as deposit in terms of sub-clause (x) , since the amount is more than his annual salary of 3,85,000.