Expansion of definition of ‘related parties’ for domestic transactions

Section 40A (2) (a) provides for disallowance of expenditure/part of expenditure payable/paid to related party‘in domestic transactions, considered by the as excess or unreasonable having regard to the fair market value thereof.

Section 40A (2) (b) provides for relations which shall be considered as related parties‘for the above purpose.
           One such relation under above provisions is of a company, firm, AOP or HUF having               substantial interest (more than 20%) in the business/profession of the concerned assesses or any director/partner/member of such company, firm, AOP or HUF, or any relative of such director/partner/member.
It is now proposed to also include a company in which the above mentioned company (which has substantial interest in assessee) has substantial interest.
While this amendment has not be appropriately worded, it does not include cases where a person other than a company viz. firm, AOP or HUF has substantial interest in another company or any other entity.
Also, the provisions of this section shall not apply to cases where the aggregate amount to related party‘ is Rs.5 cores or more, for which the transfer pricing provisions are proposed to be made applicable.