Supply to related person

[Kaustubh Karandikar]

‘Son’ is a director of XYZ Pvt.Ltd. and ‘Father’ is a director of PQR Pvt. Ltd. If 1) XYZ is supplying goods exclusively to PQR, what should be the valuation method being related persons? 2) XYZ is partly supplying goods to PQR and partly to unrelated buyers in that case what should be the valuation method in case of supply to PQR?

AI Summary

Valuation Method for Related Companies: Director Son and Director Father in Focus; Invoice vs. Open Market Value Explained. A query was raised regarding the valuation method for goods supplied between two companies where a 'Son' is a director of one and a 'Father' is a director of the other. If XYZ Pvt. Ltd. supplies goods exclusively to PQR Pvt. Ltd., and they are considered related persons, the valuation should be based on the invoice if credit is eligible, otherwise, the open market value applies. If XYZ supplies to both PQR and unrelated buyers, the same valuation principles apply. Replies emphasized ensuring reasonable valuation and suggested validation with facts before implementation.