Two company by same director

Ca final student (student) (139 Points)

17 July 2014  

Dear Members,

                     Good morning to you all.This is Sucheta here,a CA Final student.I work in a company in which there are two directors having 50-50 % share.Now my employer has also created a new company in which my employer is a director having 99.99 % shares.However in both the companies he is the only concerned person who signs all the documents.My query is that since he is the same director in both the companies it would be a related party concern so is it possible that both the companies can transact with each other and the later company can raise the bill?.Is there any disallowance u/s 40A OR ANY OTHER SECTION.Please help me members its urgent

Thanking You.