TaxTMI 
TaxTMI 
2015 (5) TMI 502
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....d on 30.09.2009 which was subsequently revised on 31st March, 2011 declaring loss of Rs. 36.70 crores. Though the original return was processed under section 143(1) of the Act on 21.03.2011, the case having been selected for scrutiny, notice under section 143(2) was issued and thereafter notice under section 142(1) was issued alongwith a questionnaire. 4. During the course assessment proceedings it was noticed that the assessee declared international transactions amounting to Rs. 555 crores, in Form No. 3CEB. Since the value of international transactions exceeded Rs. 15 crores, the case was referred to TPO, Mumbai to compute 'Arm's length' price in relation to its international transactions. The TPO, in turn, granted sufficient opportunity to the assessee and considered the issue in detail. Vide order dated 30.01.2013, passed under section 92CA(3) of the I.T. Act, he worked out the total transfer pricing adjustment of Rs. 4149 crores in relation to various international transactions of the assessee with its associated enterprises (hereinafter referred to as AE). Thereafter the AO prepared a draft order to enable the assessee to file its objections, if any. Based upon the objecti....
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.... India Services Pvt. Ltd. issued 289224 equity shares of the face value of Rs. 10 each on a premium of Rs. 8,509/- per share to its holding company and thus received a total consideration of Rs. 246.38 crores whereas according to the AO/TPO the fair market value of the equity shares was much higher. Assessee determined the fair market value in accordance with the methodology prescribed by the Government of India under the Capital Issues (Control) Act, 1947 whereas according to the AO/TPO the value of each equity share ought to have been determined at Rs. 53,775/- per share and on that basis the shortfall in premium was determined at Rs. 45,256/- per share and determined the income that was to be received at Rs. 1308.91 crores. Further the sum was treated as deemed loan given by the assessee to its holding company and periodical interest was sought to be charged. The Hon'ble Bombay High Court considered the issue at great length and observed that tax is charged on the resident only in respect of profits earned and not in respect of profits which he would have normally made but not made because of a business association with a non-resident. It was further observed that tax can be....
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....ounds of appeal which need not be elaborated since the main issue stands squarely covered by the aforecited judgements. 8. The learned D.R. admitted that the issue stands squarely covered by the aforecited decisions. He, however, relied upon the reasons given in the order passed by DRP/TPO/AO. 9. It is not in dispute that the facts and circumstances are identical to the facts of the aforecited decisions. Having regard to the circumstances of the case and in the light of the binding decisions of the Hon'ble Bombay High Court we hold that the AO erred in making the impugned addition referable to the price of shares and of the interest on deemed loan to the holding company. We direct the AO accordingly. 10. Vide ground (Q) the assessee contends that the DRP erred in enhancing the value of transfer pricing adjustment without issuing any notice of enhancement as contemplated under section 144C of the Act. At the time of hearing the learned counsel for the assessee submitted that this issue becomes academic in the event of deciding the main issue arising out of grounds (A) to (N) in favour of the assessee. The learned D.R. also admitted that the issue is of academic importan....
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....dia Ltd. 225 ITR 798 since the expenditure is of revenue nature. The DRP, however, chose to follow the decision of the Hon'ble Apex Court (supra) in holding that it is a capital expenditure since it results in an enduring benefit to the assessee. 14. Aggrieved, assessee is in appeal before the Tribunal. The learned counsel for the assessee adverted out attention to Annexure-13 (page 114 on wards of the file) to submit that while conducting site survey the assessee has to look into various sites and finally only few sites are identified to erect towers. The expenditure incurred herein is connected to the sites not selected for erection of towers and thus it cannot be said that the assessee has derived any enduring benefit in the process of site selection. The expenditure is related to business of providing passive telecom infrastructure services and hence the same has to be treated as revenue in nature. He adverted our attention to the decision of the Hon'ble Bombay High Court in the case of Richardson Hindustan Ltd. vs. CIT 169 ITR 516 wherein the court observed that an expenditure incurred in connection with capital asset on lease, for a long/fixed period, is more akin ....