Corporate deposit
ABHIJEET PARIKH
(Querist) 06 March 2012
This query is : Resolved
HI all member of lawyer club india
I have a urgent query which i came across which is as under Can A Company and its subsidiary allowed to make a deposit with financial institution ie both of their names are to reflect in the deposit receipt kindly also lemme know provision and can financial instituion take this kind of deposit
Regards
Abhijeet
Guest
(Expert) 06 March 2012
Do you mean to say that only one of the companies (holding or the subsidiary) would make deposit and the names of both to appear as depositors?
ABHIJEET PARIKH
(Querist) 06 March 2012
Yes a holding company will make a deposit but also wants the name of the subsidiary to be reflected
Guest
(Expert) 06 March 2012
Income/assets of the holding and the subsidiary companies have to be shown separately in their individual p&L Account and Assets & Liabilities account, not only for the purpose of statutory audit, but also for the purpose of Tax Audit.
With reference to your clarification, in that case, how the subsidiary company proposes to show the source of income without transfer of funds to its account by the holding company or by actual accrual of income through its business transactions, and further, how interest income is proposed to be have accrued without investment of a single rupee by the subsidiary company?
Another vital question arises, at the time of maturity, which one of the company would draw the deposit amount to ultimately account for the same in its account, whether the holding or the subsidiary company?
C. P. CHUGH
(Expert) 07 March 2012
In case of orporate Deposits,the same can be made in the name of a deposited from whose source the deposit has come from. Hence in the absence of contribution from subsidiary, joint holding is not desirable. Banks may permit such joint holding as for them and for all statutory purposes in the case of joint holding, first named holder is real depositor. The same may cause problem under income tax with regard to source of deposit and taxation of income arising out of such deposit. A corporate depositor can neither nominate or assign its rights without cosideration to any other person including a susidiary company.
