| |
| The Tax Publishers2020 TaxPub(DT) 5612 (Pune-Trib) INCOME TAX ACT, 1961
Section 92C Section 924B
Section 94B containing specific thin capitalization rules and GAAR came into force with effect from 1-4-2018 and assessment year under consideration was 2013-14. Accordingly assessee's case fell in the general provision of accepting the transaction as such and not in the exception requiring recharacterization of transaction of debt into equity and, therefore, no disallowance was warranted.
|
Transfer pricing - Determination of ALP - Recharacterization of debt into equity - Applicability of capitalisation rule
Assessee-company issued debentures to its AE abroad which were eventually redeemed. TPO changed the complexion of transaction from borrowing to equity by resorting to the thin capitalization rule and the GAAR and accordingly, disallowed interest payment on debt capital after having observed abnormal thin capitalization. Held: Section 94B containing specific thin capitalization rules and GAAR came into force with effect from 1-4-2018 and assessment year under consideration was 2013-14. Obviously, these provisions were not applicable and resultantly the TPO could not have altered the form of the transaction. Accordingly, assessee's case fell in the general provision of accepting the transaction as such and not in the exception requiring recharacterization of transaction of debt into equity and, therefore, no disallowance was warranted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 37(1) Section 40(a)(ii)
 SUBSCRIBE FOR FULL CONTENT
|