Section 2(22)(e)

Section 2(22)(e) is applicable only to companies in which public are not substantially interested Wherin the payment has been made:
1) either to the person specified therein, or
2) to any concern in which such person have substantial interest, or
3) to any other person for direct or indirect benefit of such person.

i.e. to companies which are commonly known as closely held companies.
Section 2(18) of the Act defines a “Company in which public are substantially interested”.
Section 2(22)(e) does not apply to
 - listed companies,
 - government companies,
 - section 25 companies,
 - companies having no share capital and declared by Board,
 - mutual benefit finance companies declared by Central Government to be a Nidhi or Mutual Benefit society,
 - companies in which one or more co-operative societies hold at least 50% voting shares throughout the year, etc.

For applicability it is necessary to satisfy the conditions viz:

1) wher the payment is made to any concern -
(a) a person is a shareholder holding not less then 10% of shares having voting rights of the lending company,
                 AND
(b) such shareholder also has substantial interest (holding not less then 20% shares with voting rights) in the recepient company.

In the above case it clear that Private Company "A" is holding 100% shares of Private Company "B", hence there is no shareholder who may be a shareholder of Private Company "A" but such person is definatly not a shareholder with substantial interest in Private Company "B".

Therefore this case would not be covered by the provisions of u/s 2(22)(e).