Related Party Transaction
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 August 2010
Whether following is covered by related party transaction to be reported in Notes to Accounts?
An Indian Pvt Ltd. Company is subsidiary of Canadian Company and its directors are also in Canada. The Co is managed by a person designated as Country Head of the Indian Co. Such a person is also a director of domestic co. Whether the transactions between these companies(subsidiary & domestic) are liable for related party transaction.
An Indian Pvt Ltd. Company is subsidiary of Canadian Company and its directors are also in Canada. The Co is managed by a person designated as Country Head of the Indian Co. Such a person is also a director of domestic co. Whether the transactions between these companies(subsidiary & domestic) are liable for related party transaction.
12 August 2010
As per AS 18,parties are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions.
In the given example the country head of the subsidiary of the Canadian Company is also the Director of another Domestic Company.Hence these are (subsidiary & Domestic) are related parties.
In the given example the country head of the subsidiary of the Canadian Company is also the Director of another Domestic Company.Hence these are (subsidiary & Domestic) are related parties.
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 August 2010
Should the above transaction be liable for section 40A(2)?
14 August 2010
As per the following sub-clause Sec 40 A(2) is applicable.
Sec 40 A (2)(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;
Sec 40 A (2)(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;
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