TaxTMI 
TaxTMI 
2026 (9) TMI 1957
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....18-19, date of order 30/09/2025. The impugned order emanated by pursuing the order of the Ld. CIT (DRP-1), Mumbai-1 [for brevity, the "Ld. DRP"] order passed u/s 144C(5) of the Act date of order 11/09/2025 2. The brief facts of the case are that the assessee is engaged in the business of construction and development of real estate projects. For A.Y. 2018-19, the assessee had issued 13,87,85,714 Compulsorily Convertible Debentures ("CCDs") of Rs. 10/- each to its Associated Enterprise ("AE"), Russard Holdings Ltd. ("RHL"), under the Debenture Subscription Agreement ("DSA") dated 16.04.2008, carrying interest @ 15% per annum. Under the same DSA, 62,14,286 CCDs of Rs. 10/- each were also subscribed by HDFC Venture Trustee Company Limited on....
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....er dated 28.03.2023. The Ld. AR contended that there is no material change in the underlying transaction during the year under consideration. The CCDs held by the AE as well as the unrelated HDFC investor arose from the same DSA dated 16.04.2008. The relevant contractual conditions, interest rate of 15%, tenure and other material features were identical. Thus, the transaction with HDFC constituted a direct internal comparable and could not have been disregarded merely because the volume of CCDs subscribed by the AE was higher. 5. The Ld. AR further submitted that in A.Y. 2017-18, the Coordinate Bench examined this very internal comparable and held that internal comparables ordinarily deserve preference over external comparables becaus....
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....equently been decided by the Ld. CIT(A) with a direction to the Ld. AO to allow the set-off after due verification. 9. The Ld. DR relied upon the orders of the revenue authorities and supported the approach adopted by the Ld. TPO and the Ld. DRP. It was contended that the CCDs carry an inherent and compulsory conversion feature and ultimately result in equity ownership; therefore, the Ld. TPO was justified in examining their true character and determining the ALP accordingly. 10. The Ld. DR further submitted that the transfer-pricing analysis has to be undertaken independently for each assessment year and the order for A.Y. 2017-18 cannot automatically govern the assessment for the year under consideration. It was accordingly contende....
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....of contractual terms. It further held that the external comparables selected by the Ld. TPO were functionally dissimilar. Most importantly, the Coordinate Bench concluded as under: "024. Thus, we allow ground number 1 of the appeal of the assessee and direct the learned AO/TPO to delete the arm's-length price adjustment on account of interest paid to AE on compulsorily convertible debentures considering the interest rate actually paid at the rate of 15% at arm's-length." 14. The underlying DSA and the material terms of the CCDs remain the same for the year under consideration. Nothing has been brought before us to establish any material change in the relevant contractual terms so as to distinguish the decision of the Coo....
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....s 94B strictly in accordance with law after considering the correct amount of interest pertaining to the AE. The assessee is directed to furnish all necessary details and supporting documents before the Ld. AO. Subject to the aforesaid verification and direction, Ground No. 4 is allowed. Ground No. 5 - Set-off of Brought-forward Business Loss 17. The assessee seeks set-off of brought-forward business loss amounting to Rs. 1,65,82,611/-. The material placed before us indicates that the corresponding claim in the proceedings arising from the original assessment has been allowed by the Ld. CIT(A), subject to verification by the Ld. AO. Considering the factual verification required, Ground No. 5 is set aside to the file of the Ld. AO w....