Definition of relative

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Saloni Hingad

Saloni Hingad (Querist)

15 July 2014 Sir,I want to know the definition of relative u/s 40A(2)(b) in case of HUF

Nikhil Kaushik

Nikhil Kaushik (Expert)

16 July 2014 read 40A(2)b) jointly with section 2(41). all the members of the HUF and if any person covered under 2(41).

Rupesh Jain

Rupesh Jain (Expert)

16 July 2014 Section 40A(2)(b) in The Income- Tax Act, 1995

(b) The persons referred to in clause (a) are the following, namely:-
(i) where the assessee is an individual any relative of the assessee;

(ii) where the assessee is a company, any director of the firm, association of persons or company, partner of the Hindu undivided family firm, of member if the association or family, or family, or any relative of such director, partner or member;

(iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual;

(iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member;

(v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member;

(vi) any person who carries on a business or profession,-
(A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or

(B) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person. Explanation.- For the purposes of this sub- section, a person shall be deemed to have a substantial interest in a business or profession, if,-
(a) in a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and

(b) in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the profits of such business or profession.

1. Prior to its omission, the proviso, as amended by the Finance (No. 2) Act, 1971, w. e. f. 1- 4- 1972, read as under:" Provided that the provisions of this sub- section shall not apply in the case of an assessee being a company in respect of any expenditure to which sub- clause (i) of clause (C) of section 40 applies

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