Related party transaction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2015 On a plain reading of Section 188 of the companies act 2013, it is provided that

'Nothing in this sub section shall apply to any transaction entered into by the company in its normal course of business other than transactions which are not on an arm's length basis'

Here we assume that Intra group (associate-subsidiary or part of same group) transaction between companies are being done with proper TP markup and in ordinary course of business.

So if the Intra company transactions are done with transfer pricing markups, will it be considered as per 'arm's length basis' and therefore need not require the board approval as it is being done with TP ??

Pratik Shah

Pratik Shah (Expert)
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20 July 2015 Yes..generally a company who is complying with TP rules, transacts on arm's length basis (you must be knowing TP comes only when there is transaction between Indian entity and foreign entity).

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