2014 (11) TMI 881

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.... No.2Transfer Pricing Officer (TPO) under Section 92CA (3) of the Income Tax Act, 1961 (the Act). 2 Brief facts leading to this Petition are as under: (a) The Petitioner is a wholly owned subsidiary of a Mauritian entity namely Vodafone Teleservices (India) Holdings Ltd (the Holding Company); (b) On 16 July, 2009, the Petitioner allotted 4,58,372 equity shares of Rs. 10/each at premium of Rs. 7,100/per share (total price being Rs. 7,110/per share), aggregating to a total consideration of Rs. 325.90 crores to its holding company; (c) On 24 January 2010, the Petitioner allotted further 1,02,659 equity shares of Rs. 10/each at premium of Rs. 6,437/per share (total price being Rs. 6,447/per share) aggregating to total consideration of Rs. 6....

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....ow cause notice to the Petitioner to show cause why the transfer price as fixed at Rs. 7,110/and Rs. 6,447/per share in respect of equity shares issued in Assessment Year 200910 should not be adjusted taking into account the ALP at Rs. 60,445/per share; and (h) The Petitioner filed its preliminary reply dated 22 January 2014 objecting to the jurisdiction of the department to initiate any proceeding under Chapter X of the Act. In the circumstances, the Petitioner requested the TPO to decide the preliminary issue of jurisdiction viz: whether Chapter X of the Act is at all applicable in respect of issue of shares by the Petitioner to its non-resident holding company. 3 The present Petition was filed on 27 January, 2014, challenging the show ....

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....January 2013, taking a view that the Petitioner ought to have valued each equity share at Rs. 53,775/resulting in shortfall to the extent of Rs. 45,256/per share, aggregating to Rs. 1,308.91 crores. TPO further held that this difference between the ALP and the issue price (including premium) was required to be treated as deemed loan given by the Petitioner to its holding company and deemed interest on such deemed loan at Rs. 88.35 Crores was also treated as interest income. The issue of jurisdiction was decided as a preliminary issue by the Dispute Resolution Panel (DRP) by its order dated 11 February 2014 in favour of the RespondentRevenue. 5 After the hearing learned Counsel for the Petitioner and the learned Solicitor General of India, ....

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....account of issue of shares by an Indian entity to a nonresident entity in Sections 4,5,15,22,28,45 and 56 of the Act. This is as it arises out of Capital Accounts transaction and, therefore, is not income; (iv) Chapter X of the Act does not contain any charging provision but is a machinery provision to arrive at ALP of a transaction between Associated Enterprises; and (v) Chapter X of the Act does not change the character of the receipts but only permits requantification of income uninfluenced by the relationship between the Associated Enterprises. 9 In view of the aforesaid Judgment dated 10 October 2014 passed in Writ Petition No.871 of 2014 which was filed by this very Petitioner, we allow the Writ Petition. Accordingly, we quash and ....