Answer the following with regard to appointment of auditor : (ii) A, a practising chartered accountant has business relationship with XYZ Hotels Ltd. The hotel used to provide services to A frequently on the same price a

Section 141 (3) of the Companies Act, 2013 read with Rule 10 of the Companies (Audit and Auditors) Rules, 2014 provides that a person shall not be eligible for appointment as an auditor of a company when he has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company. The term business relationship shall be construed as any transaction entered into for a commercial purpose except - commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm under the Act and the Chartered Accountant Act, 1949 and the rules or the regulations made under those Act; commercial transactions which are in the ordinary course of business of the company at arm's length price like sale of products or services to the auditors, as customer, in the ordinary course of business, by companies engaged in the business of telecommunications, airlines, hospitals, hotels and such other similar businesses. Since the transaction is at the arm length price so Mr. A can be appointed as an auditor of XYZ Hotels Ltd.