Edison Ltd., Cochin Edison Ltd., Cochin, is a company engaged in trading activities. It is an associate of Moon Inc. of USA. The annual consolidated group revenue of Moon Inc. is USD 2,000 million for the accounting year 2021-2022 (TT buying rate on the last day of the accounting year is 1 USD = ₹75). Edison Ltd. is one of the constituent entities of Moon Inc Group. (being an international group). The annual turnover of Edison Ltd. always exceeded ₹ 600 crores which included 100 crores being the volume of transactions with associated enterprises outside India. During the financial year 2021-2022, some of the significant transactions entered into by Edison Ltd. are: (1) **Dividend received:** Edison Ltd. has 27 percent equity shareholding in Mc Dermott LCC of USA. It received dividend of ₹ 90 lakhs on 5th February, 2022. It declared Interim dividend of ₹ 40 lakhs on 5th October, 2021. It has income only under the head 'Profits and gains from business or profession' (computed) ₹ 125 lakhs for the assessment year 2022-23 and has opted for section 115BAA. (2) **Transfer Pricing adjustment:** Edison Ltd. imported raw materials from its associated enterprise located in Sri Lanka in the previous year 2019-20. The ALP determination by applying the most appropriate method resulted in upward revision of its income by ₹140 lakhs. Edison Ltd. has not contested the variation and does not want to do secondary adjustment. (3) **Digital advertising:** In order to attract new age customers, Edison Ltd. decided to use digital advertisements for its products. In this connection, it entered into agreement with Tatla Pte of Singapore on January 1, 2022. Tatla Singapore could organize digital advertising space for Edison and Edison paid ₹ 6 lakhs on 5th February, 2022 towards online advertisement of its products to Tatla Pte of Singapore. Edison was not aware of the provisions of Equalisation Levy and accordingly had not remitted the same at the time of payment. An Internal audit conducted in April highlighted this lapse. It remitted the equalization levy amount on 30th April, 2022 as soon as the findings of the Internal audit were known. (4) **Business Trust:** Edison Ltd. had certain infrastructure project. In order to monetize the same, it contributed those into 'Edison InvIT' and listed the same in accordance with the SEBI guidelines. Edison InvIT is eligible to be treated as a 'business trust' (registered as an infrastructure trust under SEBI Regulations 2014) for the purposes of the Income-tax Act. Edison InvIT paid interest of ₹ 15 lakhs to a non-resident investor out of the interest income received by it from a SPV. (5) **Purchase of Software:** Edison Ltd. acquired a ready to use software from Clinton Inc. of USA for 15 lakhs. It also solicited the services of Bimsys Co Ltd., Bengaluru to add some features in the software so purchased to make it perfectly usable for its business. It paid ₹ 5 lakhs to Bimsys Co Ltd. Tripathi, General Manager, Edison Ltd. Tripathi joined as General Manager of Edison Ltd. in December, 2021. He was in Country 'P' for 10 years and used to visit India in every financial year for a stay of 100 days. He returned to India permanently in March, 2021. During the previous year 2021-2022, he has been in India throughout. He has income both in India and Country P. There is no DTAA between India and Country P. The following are the details of the income (in INR) for the year ended 31st March, 2022: Salary from Edison Ltd. (after standard deduction) 24,00,000 Consultancy income in India (computed) 5,00,000 Income from property in Country 'P' 3,00,000 Agricultural income in Country 'P' 2,00,000 Business loss in Country 'P' (converted in Indian currency) (4,00,000) Dividend from companies in Country 'P' 5,00,000 Rate of tax in Country P (without any basic exemption limit) 15% Note: Income in Country P converted in INR. Ashok (P) Ltd., Mumbai Ashok (P) Ltd., Mumbai is a related party of Edison Ltd. It is engaged in manufacture of medical diagnostic equipments. Ashok (P) Ltd. has accumulated reserves and surplus exceeding ₹100 crores. Its holding company (i.e., Bimal Co Ltd.) located in State Z has working capital crunch. The Board of Directors of Ashok (P) Ltd. have drawn a plan of action to pump money in Bimal Co Ltd. and the plan is as under: Incorporate a company by name AB Co Ltd. in Country W (which is a low tax jurisdiction) with Ashok (P) Ltd. having 10% share capital and Bimal Co Ltd. to have the balance 90% of equity. The company AB Co Ltd. would have no business activity. It was decided that Bimal Co Ltd. would transfer fraction of its shares in AB Co Ltd. as and when it requires money to Ashok (P) Ltd. at 50 times to 100 times more than its cost of acquisition. The capital gain is tax-free in both Country Z and Country W as per domestic laws. Choose the correct alternative for the following MCQs: (5 x 2 = 10 Marks) You are required to answer the following issues: