**Case Study 1** Mega Ltd., Delhi Mega Ltd. is a subsidiary of Lion Pte. of Singapore which has 60% of the share capital in Mega Ltd. Pacific inc. of USA has 80% shareholding in Lion Pte. of Singapore. The Board of Directors of Pacific Inc. decided to sell its entire shareholding in Lion Pte. to Dean Jones Inc. of USA. The book value of assets of all the companies always exceeded ₹100 crores. For the financial year 2022-23, Mega Ltd. had to pay interest of ₹70 lakhs to Atlanta Inc. of Country Z for the rupee denominated bonds issued in February, 2019 and ₹80 lakhs by way of interest to Indiana Ltd. of Country W in respect of rupee denominated bonds issued in May, 2020. On both the occasions, Mega Ltd. issued rupee denominated bonds outside India after complying with all the requirements of relevant laws/regulations. Mega Ltd. required working capital assistance of ₹10 crores and solicited help from its buyer Mini Pte. of Canada. The total borrowings of Mega Ltd. was ₹20 crores before seeking assistance from Mini Pte. The goods manufactured by Mega Ltd. are sold by Mini Pte in African countries. In order to provide working capital assistance, Mini Pte. deposited money in a bank account and based on that, a bank guarantee was given to advance money to Mega Ltd. by SBI, Mumbai. The interest on loan was @ 9% per annum. In return for the guarantee, Mega Ltd. had to pay 0.5% of the loan annually to Mini Pte as guarantee fee. Similar such facility was offered by Super Inc. Canada at 0.2% of the loan as guarantee fee. Mega Ltd. sold 50 lakhs units of Goods manufactured for ₹2,000 per unit to Mini Pte during the previous year 2022-23. Similar goods were sold to others in Canada for ₹2,100 per unit. Mega Ltd. allowed 3 months credit period to Mini Pte and whereas for other buyers it allowed 1 month credit period. Cost of capital may be taken as 8% per annum. The EBITDA of Mega Ltd. for the year ended 31.03.2023 was ₹12 crores. Interest paid to SBI for the loan was ₹95 lakhs and interest in respect of other borrowings from unrelated parties was ₹300 lakhs for the year ended 31.03.2023. Mega Ltd. has been exporting its goods to Chat Ltd. of UK as per the agreement entered into by them. Every year, the exports exceeded ₹100 crores. Now, due to increased demand of products of Mega Ltd., the terms of trade between Mega Ltd. and Chat Ltd. had to be revisited and accordingly, a fresh agreement for 7 years was entered into on 10.09.2022. The Board of Directors of Mega Ltd. apprehend that the transfer price adjustment may be required in the light of the fresh agreement entered into by the parties. Based on the pending assessments and litigation before Assessing Officer and CIT (Appeals), they want to analyse the possibility of entering into advance pricing agreement with rollback benefits. **Laxman, Managing Director** Laxman, the Managing Director of Mega Ltd. is a resident of India. His brother Anand left India in 2015 for employment in USA and he is a non-resident. Both invested in Real Estate Investment Trust (REIT) in September, 2020. REIT received dividend of ₹120 lakhs from ABC Ltd., a special purpose vehicle in which the Business Trust has 90% shareholding. Both Laxman and Anand have 10% of the units in the Business Trust. ABC Ltd. has not opted for section 115BAA. In December, 2018, Anand bought 600 Global Depository Receipts (GDRs) of Maxima Ltd., India. These GDRs were issued in accordance with the notified scheme of the Central Government against the company's initial issue of shares. Anand purchased GDRs in foreign currency through an approved intermediary. In October, 2022 Anand sold 400 GDRs outside India to Ramesh a citizen and resident of a country outside India and the balance 200 GDRs to Rajini, a resident and but not ordinarily resident in India. **Ravinder, Marketing Manager of Mega Ltd.** Ravinder, Marketing Manager of Mega Ltd. (looking after business interests in Europe and America) is born and brought up in USA and is a citizen of USA. His parents and paternal grandparents were born and brought up in USA but his maternal grandparents were born in Dhaka, Bangladesh before 1930. He visited India every financial year from 1st November to 31st January. **Parthiv, CEO of Mega Ltd.** Parthiv a management graduate from Harvard University was employed in Tomato LLP of Country S since June, 2014. He came to India on 15.11.2022 and joined as CEO of Mega Ltd. Parthiv was in India before he left for overseas education in December, 2010 and was subsequently employed outside India. There is no income-tax on the salary income earned from Tomato LLP in Country S. He earned interest income of ₹2,40,000 (net) in Country Q and salary income of ₹9 lakhs up to the date of his return to India in the financial year 2022-23. Tomato LLP is wholly owned and managed by Deepak and his family who are residents and living in Mumbai. Salary income of Parthiv from Mega Ltd. up to 31.03.2023 was ₹13,50,000 (computed as per provisions of the Income-tax Act, 1961) Parthiv acquired shares in listed companies which were sold in the financial year 2022-23, the details of which are given below: Name of company No. of shares Date of acquisition Cost of acquisition per share Date of transfer Sale price (per share) FMV as on 31.01.2018 Mango Ltd. 200 30.10.2016 ₹2,000 25.01.2023 ₹5,000 ₹4,000 Almond Ltd. 200 10.01.2018 ₹3,000 10.03.2023 ₹3,500 ₹2,500 Walnut Ltd. 100 15.07.2017 ₹2,000 22.03.2023 ₹3,500 ₹3,800 He has paid STT both at the time of purchase and at the time of sale. Parthiv has opted for the provisions of section 115BAC.