Transaction Between 2 Sister Concerns

This query is : Resolved

Saurabh Masih (Querist)
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13 May 2010 I want to know whether the transaction between 2 sister concern companies both are private limited are allowed or not

CA Shiv

CA Shiv (Expert)
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13 May 2010 There is no limit for the transactions and the amount involved between two sisters concern... But there are some provisions in income tax which is affected by it.... So sometime have to limit the amount to be safe from IT....

taxindiaconnect

taxindiaconnect (Expert)
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13 May 2010 There is no limits in Income tax on transaction between two sister concerns. Only issue I see is that the discloser of revenue expenditure paid to sister concern is required under section 40(a)(2)(b)of IT Act. The ITO / AO has power to examine the transaction whether this is correct or excessive. if he finds excessive may disallow the expenditure in the hands of the company which has claimed the expenditure.

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Mahesh Babu

Mahesh Babu (Expert)
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13 May 2010 Agree with Rajesh.
if the transaction is not related to Section 40(a)(2)(b), then take care of Section 2(22)(e).