TaxTMI 
TaxTMI 
2015 (4) TMI 89
X X X X Extracts X X X X
X X X X Extracts X X X X
....29,18,492/- as the opportunity cost of the deficient funds received by the assessee for non-payment of share premium by the A.E. determined by Transfer Pricing Officer (TPO). 4. On the facts and circumstances of the case, the Hon'ble DRP has erred both on facts and in law in rejecting the contention of the assessee that the transaction by which the AE has subscribed to equity capital of the assessee company is not an international transaction as defined under Section 928 of the Act. 5. On the facts and circumstances of the case, the Hon'ble DRP has erred in rejecting the contention of the assessee that the capital financing being different from capital contribution it does not have any impact on profile or on assets, as such the same is not an 'international transaction. 6. On The facts and circumstances of the case, the Hon'ble DRP has erred both on facts and in law in rejecting the contention of the assessee that transfer pricing provisions cannot override changing provision of Section 4 of the Act to bring to tax fictional/assumed or hypothetical income, where no income otherwise results. 7. On The facts and circumstances of the case, the Hon'ble DRP has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and circumstances of the case, Hon'ble DRP has erred in rejecting the contention of the assessee that the basis of applying comparative PE multiplier method of listed company by the learned TPO is wrong and untenable in the eye of law. 16. On The facts and circumstances of the case, Hon'ble DRP has erred in rejecting the contention of the assessee that the learned TPO having failed to carry out the examination of the percentage of the holding of the promoter, the market volatility, etc. the value of the shares determined by him is wrong and untenable in the eye of law. 17. On The facts and circumstances of the case, the weights applied for determining the value of the share for different years by the learned TPO is arbitrary and without any basis. 18. On The facts and circumstances of the case, Hon'ble DRP has erred in rejecting the contention of the assessee that TPO has erred in computing the value of the share assuming the fresh allotments as transfer of shares ignoring the fact that by fresh allotment the existing shareholder continues to hold share and as such there is no extinguishment of the entire value but a dilution in the value of the share. 19. On The fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Associated Enterprises was referred to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price. 3.1 Order of the TPO dated 30.01.2013 was received on 31.01.2013 in which adverse inference was drawn as to transaction with associated enterprises. 3.2 In her order the TPO s determined the opportunity cost of the deficient funds received by the assessee for nonpayment of share premium by the AE, which is forgone by the assessee amounting to Rs. 6,29,18,492/-. Therefore, as per the order of TPOs (order under section 92CA(3) dated 30.01.2013), a sum of Rs. 6,29,18,492/- was added to the income of the assessee in the draft assessment order passed u/s 144C of the Act and, a copy of the same was issued to the assessee company on 18.03.2013 to file an objection before the DRP, if any. The assessee filed its objection before DRP on 17.04.2013. The DR after discussing the issues in length passed an order u/s 144C(5) of the Act vide order No. DRP-III/DeI/2013-14/66 dated 27.1.2013 which was received in the office of AddI.CIT, Range-9 on 07.01.2014. The same is placed on record. The DRP vide above order has declined to interfere in the transfer pricing adjustment made....
X X X X Extracts X X X X
X X X X Extracts X X X X
....International Transaction. The transaction on capital account or on account of restructuring would become taxable to the extent it impacts income i. e. under reporting of interest or over reporting of interest paid or claiming of depreciation etc. It is that income which is to be adjusted to the ALP price. It is not a tax on the capital receipts. This aspect appears to have been completely lost sight of in the impugned order. Page 44 para 36 Be that as it may, Section 92(2) of the Act deals with a situation where two or more AE's enter into an arrangement whereby they are to receive any benefit, service or facility then the allocation, apportionment or contribution towards the cost or expenditure is to be determined in respect of each AE having regard to ALP. Thus, to illustrate, the cost of research carried on by an AE for the benefit of three AE's, then the cost will be distributed i.e. allocated, apportioned or contributed depending upon the ALP of such benefit to be received by the assessed AE. It would have no application in the cases like the present one, where there is no occasion to allocate, apportion or contribute any cost and/or expenses between the Petitioner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rues or arises or when it is deemed to accrue or arise and not only when it was received. It is submitted that even though the Petitioner did not receive the ALP value/ consideration for the issue of its shares to its holding company, the difference between the ALP and the contract price is an income, as it arises even if not received and the same must be subjected to tax. There can be no dispute with the proposition that income under the Act is taxable when it accrues or arises or is received or when it is deemed to accrue, arise or received. The charge-ability to tax is when right to receive an income becomes vested in the assessee. However, the issue under consideration is different viz: whether the amount said to accrue, arise or receive is at all income. The issue of shares to the holding company is a capital account transaction, therefore, has nothing to do with income. We, thus do not find substance in the above submission. Page 51 para 45-46 Chapter X of the Act is a machinery provision to arrive at the ALP of a transaction between AEs. The substantive charging provisions are found in Sections 4, 5, 15 (Salaries), 22 (Income from house property), 28 (Profits and gains of ....