will Sec 2(22)(e) get attracted

karthikeyan.v (Chartered Accountant) (523 Points)

25 May 2010  

Dear learned friends

please note the following points

1) A Ltd is a Closely held company

2)M/s X is a Registered Firm

3) All the Share Holders are partners in the firm

4)M/s V Ltd owes money to the tune of 2 Crores to A.Ltd

5) Since the money is not forthcomming-A Ltd askes V. Ltd to suppy Wind MIll To M/s X for the amt

6)V Ltd supplies the Wind Mill to M/s X

7)A Ltd Debits M/s X and Credits V Ltd.

8)M/s X Debits Wind MIll Asset and Credits A Ltd

9) V Ltd Debits A Ltd and Cedits Sales

Now is the important Part of the Transcaction

10) M/s X Gives Loan to All the Partners to the Extent of 1.20 Crores

11) The Partners using this loan invests as Share Capital in A Ltd.

Now my question is,

1) will Sec 2(22)(e) get attracted in this transcation

2) Any other provision will be attracted

Thanks in anticipation of a reply

karthi