TaxTMI 
TaxTMI 
2026 (4) TMI 1295
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....ee has raised following grounds of appeal "1. On the facts and circumstances of the Appellant's case and in law, the Ld. DRP/Ld. A.O. has erred in referring the Appellant's case to the Id. TPO in contravention to the jurisdictional requirement, as laid by the CBDT Instruction 3 of 2016, for the reason mentioned in the impugned direction order or otherwise. 2. On the facts and circumstances of the Appellant's case and in law, the Ld. DRP/Ld. A.O. erred in confirming the action of Ld. TPO in making adjustment of Rs. 22,82,876/- on account of interest free loan given to M/s. Avaada MH Buldhana Private Limited ('Avaada MH Buldhana) and Rs. 3,62,413/- to M/s. Avaada MHKhamgaon Private Limited ('Avaada MHKham....
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....other." 3. The rival submissions of both the parties have been heard and record perused. The Ld. Authorised Representative (AR) of the assessee submits that grounds of appeal raised by assessee is covered by the decision of the Tribunal in Avaada MH Khamgaon Vs ITO (ITA No. 5183/Delhi/2024) dated 03.09.2025, which is also one of the group companies of assessee. The Ld. AR of the assessee submits that assessee-company has not commenced its business and all the expenditure incurred by assessee is charged to capital work in progress (WIP), thus, assessee has not earned any income hence, there was no occasion for shifting the profit from holding company to associated company/associated enterprises. Relevant part of financial statement of ass....
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....ee has its group company/subsidiary/associated enterprises including Avaada MHKhamgaon and Avaada MH Buldhana and others. During the relevant Financial Year for consideration the assessee has given interest free loan to its one of AE that is Avaada MH Buldhana and no bench-marking provided by the assessee. The assessee also given loan to its other AE namely Avaada MH Khamgaon and charged interest @ 8.5%. The Assessing Officer referred the matter to TPO for computation of arms-length transaction with Avaada MH Buldhana and Avaada MH Buldhana. The TPO while passing the order applied 3.00% mark-up by adopting other method and thereby suggested upward adjustment in respect of transaction of interest free loan to Avaada MH Khamgaon. As no intere....
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....(AEPL). He observed that Associate Enterprises (AE) have not charged any interest upon the loan advanced from AEPL. The TPO observed that the holding company has shifted the profits to its subsidiary company where lower tax regime being followed. Upon verification, the assessee submitted that the assessee has not earned any profit during the year, therefore, no question of more than ordinary profit come into the question. Accordingly, the TPO applying the provisions of section 115BAB he came to the conclusion that the AE extending capital without return on it is effectively showing less than ordinary profit. Hence, the AE should have charged interest at the average rate @ 7.061% plus margin of 4.25% equal to 11.311% whereas VSMPL has charge....
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....me of Income Tax Act. If assessee did not take benefit of this section, it does not mean other provision of Income Tax Act will not apply to it. Adjustment made for decreasing the loss is as per other provisions of the Act, that allow decreasing the claim and carry forward of loss, if it has been found that excess loss has been claimed by the assessee. In view of the same, no infirmity is found with order of the AO." 6. Aggrieved, assessee is in appeal before us. 7. At the time of hearing, ld. AR of the assessee submitted that there is no sales recorded by the assessee as the project is under construction stage and all the expenditure till 31.03.2021 are disclosed as capital work-in-progress. As there is no profit during t....
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....BAB, income earned under this Chapter will be charged @ 15% and if any additional income as per First Proviso it is chargeable @ 22% and any deemed income based on sub-section (6) of the Act, the same is chargeable @ 30%. He raised the issue that during the year, assessee has not earned any income rather it incurred loss and also the assessee has not commenced the business. That being the case, the provisions of section 115BAB are not applicable and he prayed that the same may be deleted. 8. On the other hand, ld. DR of the Revenue supported the findings of the lower authorities. 9. Considered the rival submissions and material placed on record. We observe that assessee has not commenced its business and all expenditure in....