Xylo Pvt. Ltd.(Xylo) is an Indian company. Yen Inc., (Yen) is a private company incorporated in the USA and its income is not chargeable to tax in…

Xylo Pvt. Ltd.(Xylo) is an Indian company. Yen Inc., (Yen) is a private company incorporated in the USA and its income is not chargeable to tax in India. Both are promoted by Mr. Aryan who holds 30% equity share capital and voting power in both Xylo and Yen. The balance sheet of Xylo as on 31 st March, 2025 is as follows: Liabilities Amount (₹ million) Assets Amount (₹ million) Paid up capital 250 Fixed Assets 700 Loans: 800 Investments 300 From Yen Inc. 620 Cash and bank balance 200 From others 180 Current liabilities 150 Total 1,200 Total 1,200 Additional information: (i) The loan was advanced by Yen Inc. to Xylo on 1st July, 2024 in rupee terms and carries 6.5% p.a. rate of interest. For borrowers with similar risk profile who are not associated enterprises of Yen Inc., it advances loan at 4% p.a. interest rate. (ii) Xylo has maintained such information and document in respect of the international transaction as has been prescribed under section 92D but has not reported the transaction as an international transaction. Xylo does not make any adjustment to its total income on account of application of provisions of Chapter X of the Income-tax Act, 1961 in its return of income. From the information given above, choose the most appropriate answer from MCQ 5 to MCQ 9 below: