Appeal on Transfer Pricing Adjustment - Focus on Substantial Question of Law

The High Court of Calcutta heard an appeal regarding a transfer pricing adjustment on interest-free funds provided by the assessee to its subsidiary. The appellant contested the adjustment, arguing that the funds were advanced as quasiequity from its own resources. The Court directed the appeal to focus solely on the substantial question of law raised by the appellant. The respondent waived the issuance of notice, and procedural instructions were given for the filing of documents. The Court disposed of the application for stay and ordered the parties to receive a certified copy of the order upon completion of formalities.

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Issues: Transfer pricing adjustment on interest-free funds advanced to subsidiary.

Analysis:
The High Court of Calcutta, comprising Justice I. P. Mukerji and Justice MD. Nizamuddin, heard the appeal concerning a substantial question of law arising from the tribunal's order dated 14 September 2018 in ITA 2225/Kol/2017 for the assessment year 2013-14. The appellant, represented by Mr. Asim Choudhury, Mr. Nilanjan Bhattacharjee, and Ms. Aesa Dey, questioned whether transfer pricing adjustment for interest income could be made on interest-free funds provided by the assessee to its subsidiary. The funds were advanced as quasiequity from the assessee's own resources to safeguard its interests, and the corporate guarantee would not be invoked upon conversion to equity.

The Court directed the appeal to be heard solely on the substantial question of law raised by the appellant. The respondent, represented by Mr. P. K. Bhowmick and Mr. Madhu Jana, waived the issuance and service of notice of the appeal. The advocate-on-record for the appellant was instructed to file informal paper books by 3rd February 2020, providing a copy to the advocate-on-record for the respondent at least three days before the hearing scheduled in March 2020. The Court disposed of the application for stay (GA No. 1239 of 2019) and ordered the supply of a certified photocopy of the order to the parties upon completion of all formalities.

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