Consolidation

Friends,

           I here present the sample balance sheets of two companies,

_________A Ltd__________                   ___________B Ltd___________

Share capital - 5,00,000                            Share capital - 1,00,000

Investments in Bltd - 80,000                     Investmentts in A ltd - 2,20,000

In the above situation Bltd is the subsidary of the A ltd with cross holiding in it.

Bltd acquired shares on - 1/1/2008

Altd acquired shares on - 1/1/2010

and on 1/1/2011 - A ltd declared buy back of shares @ 20% of its share capital and then the shares were bought back from the general public.

in such a case the current share capital on 1/1/2011 of A ltd is - 4,00,000

If we consider the above situation here Altd is a subsidary of the Bltd and Bltd is a subsidary of the Altd

Is such kind of holding allowed in India, If yes can I get reference of any section (or) any rule (or) any judgement which allows such things, If such holding is not allowed then any SEBI rule which do not accept such type of holding (or) any section of the comanies act (or) Any rule (or) Any judgement by the supreme court (or) any notification by the MCA, etc.