22 December 2010
Mr. D is 20% Beneficial share holder of U Ltd.(Closely Held Co.) as well 15% Beneficial share holder of P Pvt.Ltd.(Closely Held Co.) U ltd holds 40% Share holding in P Pvt. Ltd.
Now If P Pvt. Ltd. Receive Loan and advances(suppose U ltd has sufficient accumulated profit) from U Ltd.
While calculating substantial interest: Direct holding of Mr. D in P pvt. ltd is 15% Holding through U ltd 40%*20%= 8% so total holding = 15+ 8 = 23%
Is this calculation is valid. Please quote case law if any.
23 December 2010
How can we say that indirect holding can't be added while calculating Substantioal interest? Since law is silent. Would you elaborate please.
CAclubindia
