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of <h1>Court Upholds Tribunal Decision on Share Adjustment and Interest Issue</h1> <h3>Pr. Commissioner of Income Tax-7 Versus M/s. PMP Auto Components Pvt. Ltd.</h3> Pr. Commissioner of Income Tax-7 Versus M/s. PMP Auto Components Pvt. Ltd. - [2019] 416 ITR 435 (Bom) Issues:1. Whether the Tribunal was correct in deleting the adjustment of excess money paid for acquiring sharesRs.2. Whether the Tribunal was correct in upholding the deletion of the adjustment of interest chargeable on deemed loan transaction with PMP BakonyRs.Analysis:Issue 1 - Excess Money Paid for Acquiring Shares:The case involves the respondent investing an amount to acquire shares of its subsidiary company, which had a fair market value lower than the amount paid. The Revenue sought to tax the excess payment under transfer pricing provisions. The Tribunal rejected this, citing the decision in Vodafone case where it was held that investment in shares is on capital account and does not trigger transfer pricing provisions. The Revenue argued that as an international transaction, transfer pricing adjustments should apply. However, the Court noted that for Chapter X to apply, income must first arise under substantive provisions of the Act, which was not the case here. The Court also highlighted that the CBDT accepted the Vodafone decision. The Revenue's argument about potential future loss from selling shares at a lower price was deemed speculative and not relevant to the current assessment. The Court concluded that the issue was settled by the Vodafone case and rejected the Revenue's appeal.Issue 2 - Deletion of Interest Adjustment on Deemed Loan Transaction:This issue was a consequence of the first issue. As the Court did not interfere with the Tribunal's decision on the first question, the issue of interest chargeable on deemed loan transaction became academic. Since no amount paid for acquiring shares could be considered a loan to the subsidiary, this issue did not raise any substantial question of law and was not entertained.In conclusion, the Court dismissed the appeal, emphasizing that the issues raised did not give rise to substantial questions of law. No costs were awarded in the case.This detailed analysis covers the key legal arguments, precedents, and conclusions drawn by the Court in addressing the issues raised in the judgment.
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