Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (6) TMI 492 - AT - Income TaxTransfer pricing adjustment - addition on account of interest on the deemed loan, determined as a result of the issue of shares at value lower than their fair value estimated by the Transfer Pricing Officer (TPO) - whether the transaction of issue of share capital leads to generation of any income chargeable to tax in the hands of a company issuing shares, warranting the substitution of such income with income determined on the basis of its ALP? Held that:- Since the transaction of purchase of asset is on capital account, there can be no addition of ₹ 200 (Rs.300 minus ₹ 100), being the difference between the ALP and transacted value. However this international transaction of purchase of asset on capital account having impact on the income of the assessee by means of transaction of claim of depreciation is to be adjusted to the ALP price. Consequently, the TPO will be within his jurisdiction to determine the ALP of the transaction of claim of depreciation by reducing it to ₹ 10 on the basis of the ALP of the international transaction on capital account, for which no addition of ₹ 200 is maintainable. Similar is the position as regards the under reporting of interest on an international transaction on a capital account. The Hon’ble High Court in Shell India Markets Pvt. Ltd. Vs. ACIT [2014 (11) TMI 897 - BOMBAY HIGH COURT] following the judgment in Vodafone India Services Pvt. Ltd. (2014 (10) TMI 278 - BOMBAY HIGH COURT) held that there can be no addition by applying the provision under Chapter-X on account of less share premium received and also the consequential interest on the resultant deemed loan. The learned DR has not drawn our attention towards any contrary judgment not mandating the determination of ALP of interest on deemed loan consequent upon issue of shares by an Indian company to its non-resident AE at lower price than its fair market value. Respectfully following the precedent, we hold that the addition of ₹ 6.63 crore on account of interest on the deemed loan due to under-receipt of share premium, upheld by the learned CIT(A), cannot be sustained. Accordingly, the addition is deleted - Decided in favour of assessee.
|