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Jayanta Bandyopadhyay   31 May 2024

Profit round tripping

One unlisted public ltd Co [ family controlled] & other family members form LLP, who in turn buy from this Co mostly and engage in retail Business. LLP's profit goes to all partners and that Co.

Is it ethical? Round tripping ? Consolidation of accounts and profit treatment. 

Please guide



Learning

 3 Replies

T. Kalaiselvan, Advocate (Advocate)     31 May 2024

Round tripping is an unethical process using which a company can derive sales and revenue figures that may not be genuine yet appear to be real. In this mechanism, a company sells all its assets to the other individual or entity. Doing this, the sales figures of the former increases to a significant level.

You may have to visit the partnership deed or articles of assocaition for initiating proper legal action to get proper legal remedy

P. Venu (Advocate)     01 June 2024

You have not posted the material facts or the conttext for this query.  Or, just a hypothetical query?

Jayanta Bandyopadhyay   01 June 2024

Sir, it is not an hypothetical case.

Family Head and his son's are having unlisted public ltd Co and they being Director and employee draw salary and take profit.

Along with respective Spouses and daughter have LLP and they buy from mkt but mostly from own ltd Co and directors of that Co as well as Co itself being partner of LLP draw profit and salary.

Trust clarity is there


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