2019 (10) TMI 1608

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the A.Y 2014- 15 on 28.11.2014 electronically u/s 139(1) of the I.T Act declaring a loss of Rs. 4,46,72,742/-. The return of the assessee was selected for scrutiny under CASS to examine various issues. The AO also observed that the assessee has paid interest to AEs on CCDs. He, therefore, treated it as an international transaction and made a reference to the TPO for determining the ALP u/s 92CA of the Act. The TPO, vide orders dated 29.9.2017, held the CCDs to be a loan and further proposed to levy the interest at LIBOR plus 200 basis points. Accordingly, he determined the excess interest paid at Rs. 15,21,21,649/- and proposed the adjustment. In accordance with the TPOs order, a draft assessment order was passed, against which, ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....h nature of the interest paid on the FCCDs issued to its AE 5. The learned AO/ learned TPO/ Hon'ble DRP erred in considering ad hoc interest rate of LIBOR + 200 basis points for computing the interest paid by the Appellant on FCCDs issued to its AE. 6. The learned AO/ learned TPO/ Hon'ble DRP erred in computing the arm's length rate of interest on INR denominated FCCDs by considering the rate of interest prevailing in the lender country's instead of the rate that is prevailing in the borrower's country. 7. The learned AO has erred in law and on fact in levying interest under section 234 B of the Act amounting to INR 87,56,856/-. The appellant craves leave to add, alter, rescind and mod....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re the CCDs are compulsorily convertible debentures. We also find that the Tribunal has followed the decision of the Coordinate Benches and the Hon'ble High Court of Delhi in the case of CIT vs. Cotton Naturals (I) Ltd in ITA No. 233/2014 to grant relief to the assessee. As in the assessee's own case, the Tribunal has followed the said decision to grant relief to the assessee, and since the DRP has also relied upon its own order for the A.Y 2013-14, we are of the opinion that the issue is covered in favour of the assessee by the decision of the Coordinate Bench of this Tribunal. Further, we also find that the DRP in the last paragraph of its order has observed that the Department has filed an appeal against the order of the ITAT be....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ation Limited and Sahara Housing Investment Corporation Limited & Ors. Vs. Securities and Exchange Board of India & Anr. in Civil Appeal No. 9813 of 2011 dt. 31-08-2012 (supra) while assigning the jurisdiction to SEBI as an 'equity instrument'. Further, the policy of Govt. of India and also RBI effective from 01- 04-2010 also indicate that issuance of CCD is part of FDI being quasi-equity in nature and considering the same as a loan would be completely against regulations laid by DIPB, RBI and FEMA. It is to be reiterated that issuance of CCDs was denominated in Indian Rupees and not foreign currency. Therefore, TPO has erred in considering LIBOR as benchmark rate which is in complete contradiction to the principles on the issu....