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2015 (3) TMI 1133 - ITAT MUMBAI

2015 (3) TMI 1133 - ITAT MUMBAI - TMI - Transfer Pricing adjustment on account of difference in the issue price of equity shares to the holding company and ALP computed by the TPO treated as loan advanced to the AE - Held 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 consider .....

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t source. Accordingly, we direct AO to verify the claim of assessee and then pass the appropriate order. - ITA No. 7572/Mum/2012 - Dated:- 25-3-2015 - Vijay Pal Rao (Judicial Member) And D. Karunakara Rao (Accountant Member) For the Petitioner : Nishant Thakkar For the Respondent : S .D. Srivastava ORDER Vijay Pal Rao (Judicial Member) This appeal by the assessee is directed against the assessment order dated 30.11.2012 passed u/s 143(3) r.w.s 144C(13) of the Income Tax Act in pursuant to the di .....

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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 ₹ 51.74. - treated the difference between the arm's length price of shares and actual issue price as a deemed loan provided by the Appellant to its holding company; - failed to appreciate that transfer pricing does not permit secondary adjustments; - computed the notional interest on such deemed l .....

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fer Pricing adjustment on account of difference in the issue price of equity shares to the holding company and ALP computed by the TPO treated as loan advanced to the AE. The assessee issued 9 crore equity shares of face value of ₹ 10 at par to its holding Company, J.P. Morgan International Finance Limited. The TPO determined the arm s length price of the equity shares issued at ₹ 51.74 per share and treated the difference between the ALP and actual price as a deemed loan advanced by .....

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ional High Court in the case of Vodafone India Services Pvt. Ltd. Vs. Union of India and Ors. 368 ITR 01. He has further pointed out that the Hon ble Jurisdictional High court has against decided the identical issue in case of M/s Shell India Markets Pvt. Ltd. 369 ITR 516 as well as in number of other cases wherein the Judgment in case of Vodafone India Services Pvt. Ltd has been followed. 5. On the other hand, the Ld. DR has relied upon the orders of authorities blow. 6. Having considered the f .....

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g 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 o .....

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provisions and ordinarily the operation of the charging provisions cannot be affected by the construction of computation provisions." In the present case, there is no charging provision to tax capital account transaction in respect of issue of shares at a premium. Computation provisions cannot replace/ substitute the charging provisions. In fact, in B.C. Srinivasa Shetti (supra), there was charging provision but the computation provision failed and in such a case the Court held that the tra .....

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allegedly been earned by the holding company. None of the notices issued to the Petitioner on the draft order passed by AO on the impugned order passed by DRP even proposes to assess the Petitioner in its representative capacity. Hence, the Petitioner had no occasion to challenge the jurisdiction of the Revenue on the above aspect. Therefore, we see no reason to examine the issue. 48. Before parting, we may point out that in its written submissions, the revenue has raised an issue of alternative .....

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