Related party transaction

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Nishad S Dani (Querist)
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19 November 2014 If ABC Incorporation (foreign Company) is holding 100% in XYZ Ltd and XYZ Ltd is holding 60% in PQR Ltd then whether ABC Inc. & PQR are related party under Customs Valuation Rules??? PQR is importing CG from ABC Incorporation.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 November 2014 PQR ltd is subsidiary of ABC Corp. So it falls within the ambit of related party

Nishad S Dani

Nishad S Dani (Querist)
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19 November 2014 Thanks for the Reply. But Sir can you please tell me under which clause it will come under following definition.

(2) For the purpose of these rules, persons shall be deemed to be "related" only if -

(i) they are officers or directors of one another"s businesses;

(ii) they are legally recognised partners in business;

(iii) they are employer and employee;

(iv) any person directly or indirectly owns, controls or holds five per cent or more of the outstanding voting stock or shares of both of them;

(v) one of them directly or indirectly controls the other;

(vi) both of them are directly or indirectly controlled by a third person;

(vii) together they directly or indirectly control a third person; or

(viii) they are members of the same family.

Explanation I. - The term "person" also includes legal persons.

Explanation II. - Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 November 2014 (iv) and (v)
.
.
.

Nishad S Dani

Nishad S Dani (Querist)
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19 November 2014 ok. Got it. Thank you very much.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 November 2014 You are welcome.
.
.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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30 May 2015 Agreed with the reply given by joglekar ji

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