Deposits u/s 58a

This query is : Resolved

archana shah (Querist)
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21 October 2011 if a A Company comes into contract with B Pvt. Ltd. in which directors are common and comes u/s 297 of the act. the paid up capital of A Company is more than 1 crores and the company sells or purchase the goods on prevailing market rate.

My query is that if A Company gives advance to B Pvt. Ltd. for the business transaction, then it comes under rule 2(vi) of the Companies (Acceptance of Deposits) Rules, 1975.

CS Suraj Arora

CS Suraj Arora (Expert)
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21 October 2011 Dear Arhana

No doubt advances given in the normal course of business does not come under purview of deposit.and rule 2(vi) exempt this type of advances to be called as deposit.

But as far as 297 is concerned after considering your case i feel you can not absolve your self that the transaction is at prevailing market prices.