A Ltd., an Indian company, borrowed money from B Inc. in Country B, C Ltd. in Country C, D Inc. in Country D and E Ltd. in Country E, the details of…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2025
A Ltd., an Indian company, borrowed money from B Inc. in Country B, C Ltd. in Country C, D Inc. in Country D and E Ltd. in Country E, the details of which are given hereunder- Lender Amount borrowed by A Ltd. Interest paid in the P.Y.2024-25 Is it an Associated Enterprise of A Ltd.? B Inc. 15 crores 1.50 crores Yes C Ltd. 25 crores 2.50 crores No D Inc. 25 crores 2.50 crores Yes E Ltd. 15 crores 1.50 crores No B Inc. has provided guarantee of loan taken by A Ltd. from C Ltd. D Inc. has deposited 15 crores with E Ltd. Earnings before Interest, Tax and Depreciation of A Ltd. for A.Y.2025-26 is 10 crores. What is the interest to be disallowed under section 94B for A.Y.2025-26?
(A) 1 crore
(B) 3 crores
(C) 4 crores
(D) 5 crores

Suggested Answer and Working Notes:

Correct Answer: Option (D)

5 crores

Topics: Transfer Pricing, Profits and Gains of Business or Profession

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic