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2015 (4) TMI 89 - AT - Income TaxTransfer pricing adjustment - whether the issue of equity shares by the assessee to its non resident Associated Enterprise, would attract the provisions of Chapter X of the Act? - Held that:- As decided in case of Vodafone India Services P.Ltd. vs. UOI [2014 (10) TMI 278 - BOMBAY HIGH COURT] the jurisdiction to apply Chapter X of the Act would occasion only when income arises out of International Transaction and such income is chargeable to tax under the Act. The entire exercise of determining the ALP is only to arrive at the real income earned i.e. the correct price of the transaction, shorn of the price arrived at between the parties on account of their relationship viz. AEs. In this case, the revenue seems to be confusing the measure to a charge and calling the measure a notional income. We find that there is absence of any charge in the Act to subject issue of shares at a premium to tax. 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 – there is no occasion to apply Chapter X of the Act Thus we set aside the assessment order to the extent it seeks to bring to tax the ALP of the share issued by the petitioner to its non resident AE's and also deemed interest which is sought to be brought to tax on the ground of non receipt of the consideration equivalent to the ALP by the petitioner on issue of equity Shares - Decided in favour of assessee.
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