2016 (5) TMI 1437

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.... case are that the assessee has made a payment to its subsidiary, Kar Holdings (Singapore) Pte Ltd. a sum of Rs. 15,73,82,624/- (in USD 3387182) towards share capital, the details of which are as under: Date of Remittance Amount Remitted (in Rs.) Amount Remitted (in USD) 06/05/2010 13,51,124.00 32182 11/06/2010 52,16,200.00 110000 02/07/2010 10,15,81,800.00 2165000 27/09/2010 1,73,66,000.00 380000 20/12/2010 1,60,23,000.00 350000 23/03/2011 1,58,44,500.00  350000 Total 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....

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....applicability, arm's length interest has to be determined by the TPO after considering whether a third party would have treated such advances pending for capital subscription as interest bearing advance, taking into consideration pure commercial factors, the management, capital and control relationship between the parties. 4. The Dispute Resolution Panel (DRP) directed the AO to rework the interest based on number of days from the date of investment to the accounting year end. 5. As per the directions of the DRP, the AO 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 Rs. 32,14,25,453/- as against the income of Rs. 32,05,37,113/- admitted by the assessee. 6. ....

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....AR also submitted that TPO/AO is not justified in applying the rate of 12.5% as PLI for ALP. 8. The ld. DR relied on the orders of DRP and AO. 9. Considered the submissions of both the parties and perused the material facts on record as well as the orders of revenue authorities. There is no dispute that the assessee had remitted $ 3387182 towards investment in share capital. The shares were allotted to the extent of $ 2654797 in the same AY. The subsidiary company has treated the balance remittance as interest free unsecured loan and 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 q....