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2018 (3) TMI 1849 - HC - Income TaxTP Adjustment - adjustment under section 92 of the Act with respect to a transaction between the holding company and 100% subsidiary company with respect to advance on which no obligation to charge interest existed and the adjustment made under section 92 resulted into a notional income and not real income - addition on account of interest can only be made on real income and not on notional income - HELD THAT:- Chapter X of the Act, is an antiavoidance measure and not an antievasion measure. It is not premised on the basis that the transactions entered into between the parties suffers from under/over invoicing. It accepts the value shown in the books of the Assessee. However, the value of the transactions by legislative mandate is brought in line with the consideration which would pass between two independent parties i.e. nonrelated/ nonassociated enterprises. In fact, when the new provisions viz: Section 92 to 92F of the Act was introduced w.e.f. Assessment Year 200203, the Explanatory Notes to the Finance Act, 2001 explained its objectives. The Legislature has introduced a special provisions in respect of International Transactions to bring the income to tax having regard to Arms Length Price (ALP). In such case, the parties are obliged is to establish the ALP of the International Transactions entered into between the two AE is to bring to tax the real income i.e. the correct price of the transactions, shorn of, the price arrived at on account of relationship. It means the real income on application of a new measure. The object of the Transfer Pricing Officer is to put a stop to capital erosion and transfer of profits from one taxable territory to another taxable territory. No substantial question of law.
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