Budget 2012 Income Tax: Sec 40A(2)(b) amended to include related companies

Amendment proposed in Budget 2012 in definition of related persons u/s 40A(2)(b) to include a company in which the assessee company has a substantial interest.

In plain terms where a company has substantial interest in another company, then any transactions between them are required to be reported in tax audit (if applicable) and is subject to determination of value keeping in mind the market value of the transactions and an assessing officer can make additions on this ground, if the transactions are not found to be accordance to market value.

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