Relative for sec.40A(2)

Only directors and their relatives are covered under sec. 40A(2) and not other key management personnel of a company. A company enters into a contract with a person who happens to be a relative of its CEO. Is it covered under sec. 40 A (2)? Though this transaction is a related party transaction as per AS 18, it is not one as per IT Act. Does this transaction require disclosure in form 3 CD?

Regards.

Ca Sanjay Baheti

Replies (2)

From the act

 

The persons referred to in 40A(2) are the following, namely :

(i) where the assessee is an any relative of the assessee; individual

(ii) where the assessee is a any director of the company, partner company, firm, association of the firm, or member of the as so of persons or Hindu unciation or family, or any relative of divided family such director, partner or member;

(iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual;

(iv) a company, firm, association of persons or Hindu undivided family having 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;

(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;

(vi) any person who carries on a business or profession,

(A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or

(B) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person.

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