Recharacterization of strategic investment in preference shares and Overseas Direct Investment (ODI) in offshore entities as loans to AE under TP additions thereto

Facts:

Assessee made strategic offshore investments in preference shares and in share application money with its AE's as part of its Overseas Direct Investments. TPO characterized these share investments as loans to AE and imputed interest on the same as additions under TP. DRP upheld the same. On higher appeal -

Held in favour of the assessee that the ODI investment need not be recharacterized as loans to AE and the additions are uncalled for.

Applied:

DCIT v. Aegis Limited (2019) 104 CCH 0116 (Mumbai High Court)

Cairn India Limited v. ACIT (2018) 196 TTJ 0628 (Del.) : 2018 TaxPub(DT) 7832 (Del-Trib)

Case: GVK Power and Infrastructure Ltd. v. Dy. CIT 2023 TaxPub(DT) 1841 (Visakhapatnam-Trib)