Sec.40A(2)(b)-Payments to Relatives

Nayan Bauwa (CA) (49 Points)

30 December 2008  

X was senior employee in ABC Ltd till 31st Dec 2008. W.e.f. 1st January 2009 he becomes director of the ABC Ltd. His wife was paid some fees as consultancy charges on 1st October 2008 (i.e. on a date when Mr.X was an employee and not director).

Please let me know whether this trasaction will fall into the category of payments to relatives u/s.40A(2)(b) of the income tax Act and should the Auditor mention this trasaction in his report for the F.Y.2008-09.

Thanks in advance.