2 companies with Same Director at same premises

Save Share

This query is : Resolved

Quick Summary

This discussion addresses the statutory implications for two private limited companies that share the same director and premises. The core concern is the potential for related party transactions when inventory and fixed assets are consolidated, and assets are used for production across both entities, even if billing occurs through only one. Experts confirm that both IT and GST provisions for related parties will apply, highlighting the need for careful compliance to avoid future assessment issues.

Sharath

Sharath (Querist)
Follow

29 February 2020 Hello Experts,

I'm an accountant working in Pvt Ltd, We have separate 2 pvt ltd companies in separate location but now the management taken decision to shift the inventory & FA to one location. Please let me know the statutory implication on this. For both the companies same directors.

In future there may be chances that FA will be used for the both company production activity, as a professional accountant i have made some points to management, but still i seeking best points from experts. sa that management should not blame me for future assessment issues.

Request all the experts to let me know the IT, GST & other statutory implications.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

29 February 2020 Not a problem to save the expenses they may be doing. It's companies with same management no problem will arise unless they are doing any tax avoidance.

Sharath

Sharath (Querist)
Follow

29 February 2020 Sir,

Both companies will be under one shed, there may be chances that FA of other company may be used for production, but the billing will happen in one company...

Please suggest whether both companies will come under related party transaction or not.? if yes what are the GST and IT tax implication?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

29 February 2020 Yes both the companies are related party. Provisions of related party applicable under GST and IT.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now