Avaada Mhkhamgaon Private Ltd. Vs ITO (ITAT Delhi)
No Business, No 115BAB: Pre-Operative Stage Can’t Trigger 115BAB Adjustments – No Income, No Concessional Tax Provisions – Notional Interest & Profit Shifting Theories Rejected- 115BAB Cannot Apply Without Business Commencement:
Avaada Mhkhamgaon Private Ltd Vs ITO., ITA No.5183/DEL/2024
Avaada Sustainable RJProject Private Ltd Vs ITO., ITA No.4884/DEL/2024
Avaada Sataramh Private Ltd vs ITO ITA No.4916/DEL/2024
Assessment Year: 2021-22 – Date of Order: 03.09.2025
Delhi Tribunal in a batch of appeals involving Avaada Mhkhamgaon Pvt. Ltd., Avaada Sustainable RJProject Pvt. Ltd. & Avaada Sataramh Pvt. Ltd. deleted transfer pricing adjustments on loans & EPC contracts, holding that Section 115BAB concessional tax provisions cannot apply when business has not commenced & no income has arisen.
Avaada group companies filed returns declaring losses, as projects were still under construction & all expenditure was capitalized as work-in-progress. AO/TPO alleged profit shifting & made TP adjustments- ₹8.75 lakh on loan from Viraj Solar Maharashtra Pvt. Ltd. (interest imputed at 11.311% vs. 8.5% paid) & ₹1.13 lakh on loan from Avaada Energy Pvt. Ltd. (interest imputed though no interest paid). Further TP adjustment on EPC contract with Avaada Ventures Pvt. Ltd. in case of Avaada Sataramh Pvt. Ltd. DRP upheld additions, citing Section 115BAB and profit shifting concerns.
