TaxTMI 
TaxTMI 
An Individual holds 95% of the share capital of a company in the UK. He has given an interest free loan to it without interest. Whether Transfer pricing adjustment on account of interest will be made to the income of the individual. The loan has been given out of the savings of the individual without borrowing any sum from the market.? Whether the Individual who is not engaged in any other business in India except as a MD of a company wherein also he holds 95% of the equity, be treated as 'enterprise' so as to be covered in the definition of 'Associated Enterprises. . The sources of his income are: Salary as MD, Income from House Property, Dividend etc. (No business Income)
International Taxation
LALIT MUNOYAT
Transfer pricing adjustment on imputed interest may arise for a major shareholder lending interest-free, despite no business income. Whether an individual shareholder who holds 95% of a foreign company and provided an interest-free loan is subject to transfer pricing adjustment on imputed interest, given the lender has no business or profession income and earns only salary, house property and dividends; expert opinions in the record are divergent on applicability and on whether the individual qualifies as an enterprise or associated enterprise for transfer pricing. (AI Summary)
