| COURT: | ITAT Ahmedabad |
| CORAM: | Pramod Kumar (AM), S. S. Godara (JM) |
| SECTION(S): | 92CA, Rule 10B |
| GENRE: | Transfer Pricing |
| CATCH WORDS: | notional interest, Transfer Pricing |
| COUNSEL: | Gyan Pipara |
| DATE: | July 7, 2015 (Date of pronouncement) |
| DATE: | July 10, 2015 (Date of publication) |
| AY: | 2007-08 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| Transfer Pricing: Even if the loan to the 100% subsidiary is intended to be a long term investment in the subsidiary and it has a crucial role to play in the assessee's business plans, it cannot be treated as "quasi capital". The ALP of the loan has to be determined on the basis of LIBOR interest | |
The expression ‘quasi capital’ is relevant from the point of view of highlighting that a quasi-capital loan or advance is not a routine loan transaction simplictor. The substantive reward for such a loan transaction is not interest but opportunity to own capital. As a corollary to this position, in the cases of quasi capital loans or advances, the comparison of the quasi capital loans is not with the commercial borrowings but with the loans or advances which are given in the same or similar situations
Recent Comments