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2016 (8) TMI 415 - AT - Income TaxAddition on account of non-charging of interest on advance given towards supply of equipment by the assessee to its AE - Held that:- The assessee has made advance of 10% of the contract price to its AE for offshore supply contract. The TPO was of the view that interest should be charged on such advances to AE. The TPO charged interest on advance paid by the assessee against supply of machinery as if such advance is loan to its AE, therefore interest is to be charged on such advance. The TPO has not brought any material on record to suggest that this is only a loan and therefore interest is to be charged. The TPO re-characterized the whole transaction and this is not permissible without any materials or evidence suggesting that such advance is only a loan. The assessee has made advance of 10% of the contract price to its AE for offshore supply contract. The TPO was of the view that interest should be charged on such advances to AE. The TPO charged interest on advance paid by the assessee against supply of machinery as if such advance is loan to its AE, therefore interest is to be charged on such advance. The TPO has not brought any material on record to suggest that this is only a loan and therefore interest is to be charged. The TPO re-characterized the whole transaction and this is not permissible without any materials or evidence suggesting that such advance is only a loan. - Decided in favour of assessee.
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