Sales to sister company
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 August 2011
Pl. advise on the following:
There are two company say "A" and "B"
both are partners where partners of A are not partners of B.
But they are blood relatives.
Pl. advise can we route ALL the sales to customer from company "A" to "B" to customers
Is there any commercial restriction with respect to income tax/vat/central excise..?
Experts pl comment and advise.
There are two company say "A" and "B"
both are partners where partners of A are not partners of B.
But they are blood relatives.
Pl. advise can we route ALL the sales to customer from company "A" to "B" to customers
Is there any commercial restriction with respect to income tax/vat/central excise..?
Experts pl comment and advise.
Preety Parik
(Expert)
29 August 2011
1. It has be ensured that sales from A to B has to be at prevailing market rates.
2. You have mentioned only the directors holding in each company. Also common shareholding in the companies have to be checked.
3. Check applicability of interconnected undertakings as per Central Excise Act. If the companies fits in the definition of interconnected, transfers has to be made at 110 per cent of cost if the total sales are to related unit.
4. Under Income Tax, see the provisions of Sec 40a(2). Also transactions between related transactions are to be reported in Form 3CD.
2. You have mentioned only the directors holding in each company. Also common shareholding in the companies have to be checked.
3. Check applicability of interconnected undertakings as per Central Excise Act. If the companies fits in the definition of interconnected, transfers has to be made at 110 per cent of cost if the total sales are to related unit.
4. Under Income Tax, see the provisions of Sec 40a(2). Also transactions between related transactions are to be reported in Form 3CD.
Dhirajlal Rambhia
(Expert)
07 August 2023
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