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TMI Blog2018 (12) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... d heavily relied on this explanation. Having regard to the nature of entire arrangement and the different transactions, noted above, in our opinion, the said explanation would not cover the present situation. As noted, the present case is a simple one where the money was routed through the AE by the assessee for the purpose of acquisition of distributorship. This is not a case of either financing or landing or advancing of any moneys. The back to back agreements, the contents thereof and most significantly, the fact that neither at the point of payment nor at the point of refund of money, the AE retained the same for any significant period of time, in our opinion, would be crucial. This transaction did not result into diversion of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the assessee has interest bearing borrowed funds in its books and had given advance to AE, and further that foreign exchange gain or loss was likely to arise in the transaction to the assessee company, since advance was given in foreign currency, which would have a bearing on the profits, income, losses and assets of the assessee company? 3. The appeal relates to the Assessment Year 2009-10. The Revenu's objection to the order of the Tribunal is that the Tribunal erroneously came to the conclusion that in relation to the transaction entered into by the respondent assessee with its associated enterprise ( AE for short) machinery under Chapter X of the Income Tax Act ( the Act for short) could not be invoked. 4. Briefly stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al has committed serious error in holding that the present is not a case giving rise to transfer pricing mechanism. He submitted that the assessee had made interest free advances to AE. Such amount was retained by AE for long time. The advances were made by the assessee out of its borrowed funds on which the assessee was paying considerable interest. The assessing officer, therefore, correctly invoked the transfer pricing mechanism. In this context, learned counsel drew our attention to the explanation to Section 92B of the Act. 6. On the other hand, learned counsel Mr. Mody for the assessee opposed the appeal contending that the entire transaction has to be seen as a whole. The Revenue cannot bifurcate different events for isolated cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had, therefore, established that the transaction of giving advance to the AE was for no other purpose except for acquiring the rights in respect of the said Hollywood films. 9. The Tribunal also examined the bank statements of the assessee as well as its AE. From such statements, the Tribunal concluded that the amount in question never remained with the AE. The same was immediately transferred to Citi Gate. Similarly, whenever the amount was refunded by the Citi Gate, the same was also routed through the AE without any retention time by the AE. 10. On the basis of such findings, the Tribunal came to the conclusion that there was no diversion of income and therefore, the transfer pricing provisions would have no applicability. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price. Section 92A pertains to meaning of associated enterprise. Section 92B pertains to meaning of international transaction. 15. Sub-section 1 of Section 92 provides that any income arising from an international transaction shall be computed having regard to the arm's length price. Sub-section 1 of Section 92B reads as under:- (1) For the purposes of this section and sections 92, 92C, 92D and 92E international transaction means a transaction between two or more associated enterprises, either or both of whom are nonresidents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other, transaction having a bearing on the profits, income, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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