TaxTMI 
TaxTMI 
2019 (3) TMI 263
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....an international transaction and thereby applying transfer pricing provisions. 3. At the time of hearing, the AR of the assessee submitted that the issue is covered in favour of the assessee by the Delhi Bench of the Tribunal in the case of the assessee itself for assessment year 2008-09 reported in 51 ITR(T) 499 (Del). Hence, he prayed that following the same, the adjustment made of Rs. 4,73,64,439/- should be deleted. 4. The ld. DR concurred with the above submissions of the AR of the assessee. 5. After considering the rival submissions and perusing the materials available on the record, we find that in the instant case, the assessee has advanced share application money of Rs. 2,23,57,60,800/- to its associated enterprises. The AO/DRP....
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....tated in Ground No. 2, Bharti Airtel Ltd.'s case (supra) has also been relied in support of the primary issue for the proposition that the activity of interest free advances ultimately to be converted into equity by a holding company to a subsidiary company does not give rise to an international transaction." 8. Further, we find that the Hon'ble Bombay High Court in the case of PCIT Vs PMP Auto Components Pvt. Ltd. in ITA No. 1248/2016, order dated 28.01.2019 where the assessee had entered into a transaction of purchase of share of shares of an AE, has held that The TPO could not have treated such transactions as a loan and charge interest thereon on notional basis. In view of the above, we set aside the order of the Assessing Officer ....
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....ffirmed findings of the Commissioner of Income Tax (Appeals) deleting addition of Rs. 5,33,01,263/- made by the Assessing Officer as being contrary to law and in particular Section 36(1)(iii) of the Act. The Tribunal observed that investment in subsidiaries/ joint venture companies was one of the main objects of the respondent-assessee and hence expenditure in the nature of interest incurred for the purpose of making investments cannot be disallowed under Section 36(1)(iii) of the Act. 7. Apart from the incongruities in the reasoning and calculations made by the Assessing Officer referred to in the order of the Commissioner of Income Tax (Appeals), which have been accepted by the Tribunal, the issue raised is covered against the Revenue b....
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....other Income Tax Authorities should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the High Court and other authorities should have enquired as to whether the interest-free loan was given to the sister company (which is a subsidiary of the assessee) as a measure of commercial expediency, and if it was, it should have been allowed. 27. The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. ....