9911796707
TMI Blog2016 (5) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view, the amount $ 732.385 is towards investment in share capital of the subsidiary outside India and the transactions are not in the nature of international transaction referred to section 92-B of the IT Act and transfer pricing provisions are not applicable as there is no income as well as there is no mutual agreement between the companies for such payment of interest. Moreover, the subsidiary company also disclosed as ‘interest free' In the similar situation with uncontrolled transaction, the allottee company in normal course of transaction will not be expected to receive any interest leave away the international transaction. Without any certainty or any agreement on receiving any interest but merely relying on the accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated such outstanding Share Application Money as an international transaction since the subsidiary company has shown in their financial statement as unsecured loan, interest free and repayable on demand. and re-characterized the above outstanding Share Application Money as Loan and provided for Arm's Length Price interest at the Prime Lending Interest (PLI) rate of 12.5%. 3. The Assessee preferred reference before Dispute Resolution Panel, inter-alia on the following: a. since the investments are in the nature of share application money, it cannot be treated as loans and advances. b. the investments are towards equity to a great extent is borne out from the fact that shares have actually been allotted to the assessee in the immed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted transaction as "international transaction" in terms of Section 92B of the Income Tax Act. 2. Without prejudice to above ground of appeal, the Ld. AO/TPO/ DRP further erred in re-characterizing the Share Application Money as Loans and Advances. 3. Without prejudice to grounds of Appeal (1) and (2), the Ld AO/TPO/DRP further erred in applying the rate of 12.5% as the PLI Arms' Length Price." 7. The ld. AR submitted that the whole transfer made to the subsidiary company are only towards share application and subsequently shares were allotted, major amount of shares were issued within the year and balance unallotted amount of $ 732385 were treated by the subsidiary as unsecured loan due to the fact that the subsidiary com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al transaction referred to section 92-B of the IT Act and transfer pricing provisions are not applicable as there is no income as well as there is no mutual agreement between the companies for such payment of interest. Moreover, the subsidiary company also disclosed as 'interest free. Moreover, in the similar situation with uncontrolled transaction, the allottee company in normal course of transaction will not be expected to receive any interest leave away the international transaction. Without any certainty or any agreement on receiving any interest but merely relying on the accounting method and disclosure of the subsidiary in their financial statement cannot lead to this transaction as international transaction which require ALP adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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