Viraj Solar Maharashtra Private Limited Vs ITO, 8(3)(1), Mumbai

Parties Involved

Facts Summary

The assessee, Viraj Solar Maharashtra Private Limited, is a company primarily engaged in the business of generating solar power. It has group companies/subsidiaries/associated enterprises including Avaada MHKhamgaon and Avaada MHBuldhana. During the relevant financial year, the assessee provided an interest-free loan to Avaada MHBuldhana and charged interest at 8.5% to Avaada MHKhamgaon. The Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) for computation of arm's-length transactions. The TPO applied a 3.00% mark-up and suggested an upward adjustment for the interest-free loan to Avaada MHKhamgaon. The assessee argued that it had not commenced its business and all expenditure was charged to capital work-in-progress, hence no profit was earned to shift to associated companies. The assessee relied on a previous Tribunal decision involving a group company, Avaada MH Khamgaon Private Ltd Vs ITO.…

Legal Issues

• 1. Whether the DRP/AO erred in referring the assessee's case to the TPO in contravention of jurisdictional requirements.
• 2. Whether the DRP/AO erred in confirming the TPO's adjustment of interest-free loans.
• 3. Whether the DRP/AO erred in making the adjustment of interest on loans by considering a specific rate.
• 4. Whether the DRP/AO erred in initiating penalty proceedings under section 270A.
• 5. Whether the transactions with associate enterprises are specified domestic transactions under section 92BA.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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