Substantial interest in a company under Section 2(32) means:
ABeneficial ownership of 20% or more equity with voting rights
BHolding 10% or more shares
CBeing a director
DHolding any preference shares (per relevant Section)
Answer & Solution
Correct answer: A. Beneficial ownership of 20% or more equity with voting rights
1. Section 2(32) defines 'substantial interest' as beneficial ownership of equity shares with not less than 20% voting power.
2. The reckoning is at any time during the previous year.
3. Relevant for Section 40A(2) disallowance and other anti-avoidance provisions.
_Source: ICAI BoS CA Final Paper 7, Ch 1 "Basic Concepts"_
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