QUERY:-
A Private Ltd Company(X), is into manufacturing & it purchases certain raw materials from its sister companies(A,B,C,D&E). The Shareholders & Directors of X company are also Shareholders & Directors of A to E companies, holding substantial interest in A to E companies.
The X Company is not holding any share in A to E companies All transactions are domestic transactions. Transactions by each company with X company is below threshold limit . But the cumulative figure of all the companies(A to E) taken together crosses the threshold limit. These transactions were reported in Form 3CD under sec. 40A(2)(b), clause, company wise.
I have taken a stand that the provisions of sec 92BA of the IT Act is not applicable to the X company in this situation as the transactions by the said companies individually taken did not cross the threshold limit, for following reasons. that singular word “person” has been used in the limbs of the section 92BA besides the closing phrase “Aggregate of such transactions” with reference to each entity.
(i) any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A; (ii) any transaction referred to in section 80A; (iii) any transfer of goods or services referred to in sub-section (8) of section 80-IA; (iv) any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-IA; (v) any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable; or (vi) any other transaction as may be prescribed, and where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of Five crore rupees
Pl offer your opinion.
Asked 8 years ago in Income Tax
