TaxTMI 
TaxTMI 
2015 (3) TMI 1359
X X X X Extracts X X X X
X X X X Extracts X X X X
....against the order passed by the Deputy Commissioner of Incometax, Range 3( 2), Mumbai [hereinafter referred to as the 'learned AO'] under section 143(3) read with section 144C(13) of the Incometax Act, 1961 (hereinafter referred to as the 'Act'), in pursuance of the directions issued by the Hon'ble Dispute Resolution PanelI, (hereinafter referred to as the 'Hon'ble DRP') on the following grounds, each of which are without prejudice to one another: 1. On the facts and circumstances of the case, the learned AO, after considering the directions issued by the Hon'ble DRP, has erred in applying the provisions of the charging section of chapter X i.e. section 92(1) of the Act to the issue of equity share capital by the Appellant to its holding company and accordingly, -considered the issue of equity shares as an 'international transaction' within the meaning of section 92B(1) of the Act; -computed the arm's length price of the equity shares issued by the Appellant at Rs. 26.90. -treated the difference between the arm's length price of shares and actual issue price as a deemed loan provided by the Appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7. Having considered the facts and circumstances of the case as well as rival submissions. At the outset, we note that this issue regarding computation of fair market value of shares issued by the Indian subsidiary to its holding company and shortfall in premium was treated by the TPO as income as well as loan advance given to the holding company and consequent addition has been considered by the Hon'ble Jurisdictional High Court in the case of Vodafone India Services Pvt. Ltd (Supra). The relevant observation and finding of the Hon'ble High Court are in para 45 to 49 as under:- "45. 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 business), 45 (Capital gain) and 56 (Income from other Sources). Even Income arising from International Transaction between A.E. must satisfy the test of Income under the Act and must find its home in one of the above heads i.e. charging provisions. This the revenue has not been able to show. 46. It was next submitted that the machinery Section of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd that in the present facts issue of shares at a premium by the Petitioner to its non resident holding company does not give rise to any income from an admitted International Transaction. Thus, no occasion to apply Chapter X of the Act can arise in such a case." 8. We further note that in the case of M/s Shell India Markets Pvt. Ltd. (supra), the Hon'ble Jurisdictional High Court has again decided the identical issue by following the Judgment in case of Vodafone India Services Pvt. Ltd. (supra). Accordingly, following the Judgment of Hon'ble Jurisdictional High Court in the case of Vodafone India Services Pvt. Ltd. (supra), we delete the addition made by the authorities below on account of shortfall in premium for issuance of equity shares by the assessee to its holding company has been treated as deemed loan. 9. Ground no. 3 is regarding credit of TDS amounting to Rs. 2,21,837/- 10. We have heard the Ld. AR as well as Ld. DR and considered the relevant material on record. The Ld. AR of the assessee has submitted that the AO has not given the credit of TDS of Rs. 2,21,837/- despite a rectification petition u/s 154 filed by the assessee. Thus the Ld. AR has submitted that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the directions given by the learned TPO when the learned TPO had nowhere in his order issued under section 92CA(3) of the Act directed the learned AO to make any transfer pricing adjustment in respect of the alleged benefit provided by the Appellant to its parent company in terms of the alleged loan being the difference between the arm's length price of the equity shares determined by the learned TPO and the issue price of the equity shares amounting to Rs. 2,907,476,000, 4. Without prejudice to Ground No. 1 to Ground No. 3 above, on one hand where the difference between the issue price of the equity shares and arm's length price of equity shares determined by the learned TPO has already been treated as a loan from the Appellant to its parent company, notional interest has been imputed on the same and a transfer and thereby, erred in holding that transfer pricing adjustment should have been made in the Draft Order and Final Order for the difference between the issue price of the equity shares and the arm's length price of the equity shares determined by the learned TPO, amounting to Rs. 2,907,476,000 and based on this, the learned CIT erred in initia....