2024 (5) TMI 101

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....efore, same were heard together and disposed of by way of this consolidated order. 3. The brief facts are that the assessee is engaged in the business of providing aviation services to scheduled airlines, business and people who own or operate air craft as well as to the country's defense services. It provides engineering, asset management, safety and technology solutions to the commercial and solutions to the aviation industry. Here in this case reference to the ld. TPO was made to determine the international transaction with the AE. The ld. TPO on going through the Article in Form 3CEB notice that M/s. Mac Air Sales Ltd is an AE of the assessee group based in Mauritius, which is engaged in aviation consultancy. Assessee holds 26% of th....

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....or more of such enterprises. The above mentioned transactions were in the nature of the investment in the form of equity/quasi equity. This investment is made in the AE as start-up investments so as to promote the business in the Asian region to enable the assessee company to support the international customers for aircraft sales and/or acquisition consultancy. It is to submit that a mere lending of interest free working capital loan itself cannot constitute an international transaction unless it has a bearing on the profits, income, losses or assets. In the present case the assessee company has extended the interest free working capital loan as a start-up support and according to the RBI approvals. The debt equity ratio of AE East....

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....and secondly, in the notice ld. AO has not specified the charge under which claim he has proposed to initiate the penalty proceedings. Even while levying the penalty he has levied on both the charges which cannot be sustained. On merits he submitted that, firstly in Form 3CEB assessee has categorically mentioned that entire loan was extended from own funds of the assessee and secondly, these were in the nature of investment in the form of equity / quasi-equity as part of investment so as to promote business in Asian region. Thus, under these circumstances, no interest was charged and there was no bearing on the profit of the assessee company. 7. On the other hand, ld. DR submitted that Explanation 7 is clear that if adjustment made by th....