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Two persons are 'related' under Sec 15 if (one of the conditions):
AThey both reside in the same city
BThey share office space
CThey have the same auditor
DOne is an officer or director of the other's business
Answer & Solution
Correct answer: D. One is an officer or director of the other's business
1. Explanation to Sec 15 lists the relations: (i) officers/directors of one another's businesses; (ii) legally recognised partners; (iii) employer-employee; (iv) one controls ≥25% of voting stock; (v) one controls the other; (vi) both controlled by a third; (vii) family members.
2. Sharing an auditor or city is not a 'related' criterion.
3. Related-party supplies are valued under Rule 28 (open market value / kind / 110% cost).
_Source: ICAI BoS CA Final Paper 8, Ch 5 "Value of Supply", §Sec 15 Explanation (a)_
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