Section 40A2 of Income Tax Act 1961
This query is : Resolved
13 August 2010
Dear All,
As per section 40A 2 of Income Tax Act Substantial Interest is Defined as anyone who Holds more than 20% of Voting Rights (in case of Company).
I wanted to know whether this limit of 20% given is Individually or collectively.
For eg: if a Company is paying any amount to someone who is not relative of Director but is holding 15% voting rights and also paying some other person who is holding 12% voting rights. Is the section attracted in this case...?
Thanks in advance
As per section 40A 2 of Income Tax Act Substantial Interest is Defined as anyone who Holds more than 20% of Voting Rights (in case of Company).
I wanted to know whether this limit of 20% given is Individually or collectively.
For eg: if a Company is paying any amount to someone who is not relative of Director but is holding 15% voting rights and also paying some other person who is holding 12% voting rights. Is the section attracted in this case...?
Thanks in advance
13 August 2010
Substantial interest is to be viewed individually. So in the cited example, since each persons interest is being less than 20%, 40A(2) will not attract.
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