What may be implications of transaction where a comp has invested in mutual funds of investor comp.?


Aditya (-)     13 July 2019

Aditya
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 41 points

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Suppose there are 2 companies, "ABC Ltd." and "XYZ Ltd.". XYZ Ltd. has taken ownership of ABC Ltd. by acquiring more than 50% of their equity share capital. Just after this, the ABC Ltd. has invested the entire amount received on transfer of shares, in the mutual funds of mutual fund business subsidiary of XYZ Ltd. ABC Ltd. has not disclosed in their annual report of FY 2018-19 the details of such investment, only disclosed that they invested the amount in a mutual fund. From the point of view of fraud investigation, what may be the implications of such transactions for XYZ Ltd.? Any taxation impact? What are your comments on such transactions?

One thing I understand by doing so, the company has acquired ownership of a company and yet retained the amount of investment.




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