APPLICABILITY OF SECTION 297(1)

[HIMANSHU JARIWALA]

XYZ PVT. LTD. is going to sell its product to ABC INDUSTRIES a PARTNER SHIP FIRM in which DIRECTORS of XYZ PVT. LTD. are PARTNERS whether SECTION 297 (1) is applicable and permission of central government required? Paid Up Capital of XYZ Pvt. Ltd. is above Rs. 1.00 crore.

[Guest]

Yes section 297(1) is applicable and permission of central government is required.

 Regards,

Anish Lodha

AI Summary

Related-party transaction: sale to a partnership with company directors as partners requires central government permission under Section 297(1). A sale by a company to a partnership firm where the company's directors are partners qualifies as a related-party transaction under Section 297(1) when the company's paid-up capital exceeds the statutory threshold, and such transactions require prior central government permission before they are entered into.