TMI Blog2016 (5) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 method and disclosure of the subsidiary in their financial statement cannot lead to this tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,73,82,624.00 3387182 2.1 Of the above amount of USD 3387182, shares worth USD 2654797 were allotted and the balance amount of USD 732385 were share application money pending allotment as on 31st March 2011. Shares on the above value was allotted on 15th March 2012. 2.2 The Ld. Transfer Pricing Officer (TPO) and Assessing Officer (AO) treated 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 Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed the assessment u/s 143(3) rws 92CA(4) r.ws. 144C(13) of the Act by determining the income of the assessee at ₹ 32,14,25,453/- as against the income of ₹ 32,05,37,113/- admitted by the assessee. 6. Aggrieved, the assessee is in appeal before us raising the following grounds of appeal: 1. The Ld. TPO/DRP erred in treating the Share Application Money, being a share investment related 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repayable on demand in their financial statement. In the next AY, the subsidiary company has allotted the shares on 15/03/2012. Now, can these transactions be treated as international transaction, which qualifies for ALP adjustment. In our 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. Moreover, in the similar situation with uncontrolled tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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