{"id":6901,"date":"2013-06-04T12:28:05","date_gmt":"2013-06-04T06:58:05","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=6901"},"modified":"2013-06-04T13:04:11","modified_gmt":"2013-06-04T07:34:11","slug":"vijai-electricals-ltd-vs-acit-itat-hyderabad-transfer-pricing-provisions-do-not-apply-i-to-an-investment-in-share-capital-of-overseas-companies-ii-to-transactions-where-there-no-income-has-a","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/vijai-electricals-ltd-vs-acit-itat-hyderabad-transfer-pricing-provisions-do-not-apply-i-to-an-investment-in-share-capital-of-overseas-companies-ii-to-transactions-where-there-no-income-has-a\/","title":{"rendered":"Vijai Electricals Ltd vs. ACIT (ITAT Hyderabad)"},"content":{"rendered":"\n\n
Click here to download the judgement (vijai_electricals_transfer_pricing_shares_notional_income.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nTransfer pricing provisions do not apply (i) to an investment in share capital of overseas companies & (ii) to transactions where no “income” has arisen
\n<\/strong><\/p>\n

The assessee invested Rs. 21 crores in the share capital of its overseas subsidiaries. The AO completed the assessment without making any transfer pricing adjustment. The CIT revised the assessment u\/s 263 on the ground that the transaction was an \u201cinternational transaction<\/em>\u201d u\/s 92B and that the AO ought to have referred the matter to the TPO to determine whether the investments were made at arm\u2019s length. The assessee filed an appeal before the Tribunal in which it argued (i) that an investment in the share capital of another company was not an \u201cinternational transaction<\/em>\u201d u\/s 92-B and (ii) as there was no “income<\/em>“, the transfer pricing provisions did not apply. HELD by the Tribunal upholding the plea: <\/p>\n

An amount paid for investment in share capital of subsidiaries outside India is not in the nature of an \u201cinternational transaction<\/em>\u201d as defined in s. 92-B. Transfer pricing provisions are not applicable to transactions where there is no income (Circular No. 14, dated 22\/11\/2011, Dana Corporation<\/a><\/strong> 321 ITR 178 (AAR) & Amiantit International<\/strong> 322 ITR 678 (AAR) referred)<\/p><\/blockquote>\n

\nNote<\/strong>: On the point that transfer pricing provisions do not apply where there is no \u2018income<\/em>\u2019 see the contrary view in Perot Systems<\/strong><\/a> 130 TTJ 685 (Del) & the series of judgements<\/a> on “notional interest<\/em>”\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

An amount paid for investment in share capital of subsidiaries outside India is not in the nature of an \u201cinternational transaction<\/em>\u201d as defined in s. 92-B. Transfer pricing provisions are not applicable to transactions where there is no income (Circular No. 14, dated 22\/11\/2011, Dana Corporation<\/a><\/strong> 321 ITR 178 (AAR) & Amiantit International<\/strong> 322 ITR 678 (AAR) referred)<\/p>\n

Read more ›<\/a><\/div>\n

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