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TMI Blog2019 (2) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... w, was the Tribunal correct in deleting the adjustment of Rs. 2,58,94,765/- on account of excess money paid to PMP Bakony (AE) for acquiring share? (B) Whether on the facts and circumstances of the case and in law was the Tribunal correct in upholding the deletion of the adjustment of Rs. 2,50,95,228/- being interest chargeable on deemed loan transaction with PMP Bakony (AE)? 3] The common facts leading to the aforesaid two questions are as under:- (a) On 14th October 2010, the respondent filed its return of income declaring income at Rs. 2.56 Crores. As the respondent had shown some international transactions, the Assessing Officer referred the same to the Transfer Pricing Officer (TPO) for determining the Arms length Price (ALP) of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exces money paid to acquire shares of its 100% subsidiary to the Tribunal. While the appellant - Revenue filed an appeal in respect of non-adjustment on account of interest payable on additional amounts paid to acquire shares as a loan to the Tribunal. (E) In appeal, the tribunal allowed respondent-assess's appeal on the issue of question No.1 raised herein holding that no income arises on account of purchase of shares as it was on capital account. This, it held was an issue covered by the decision of this Court in Vodafone Services Pvt. Ltd. Vs. Union of India reported in 268 ITR page 1 , in favour of the respondent. (F) So far as the appellant - revenue's appeal on the issue raised in question No.2 herein is concerned, the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the TPO and upheld by DRP; (ii) The decision of this Court in Vodafone (supra) is in applicable to the present facts, as it was concerned with inbound investment and was not in respect of out bound investment, as in this case; and (iii) In any case the investment made in shares if sold in subsequent years, may give rise to potential loss. This when the respondent sells the shares which have been purchased at a price much higher than its fair market value. Thus, this difference has to be brought to tax as sought to be done by the Revenue. Therefore, it is submitted that the appeal should be entertained and allowed. (d) There is no dispute before us that the transaction of purchase of shares by the respondent of its subsidiary company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between the actual investment of Rs. 2.67 Crores and fair market value of the shares (investment) at Rs. 8.13 lakhs i.e. 2.58 Crores to tax. This without being able to specify under which substantive provision would income arise.. In our view, therefore, the issue arising here stands concluded by the decision of this Court in Vodafone (supra). The distinction which is sought to be made by the revenue on the basis of this being an inbound investment and not an outbound investment as in the case of Vodafone (supra) is a distinction of no significance. On principle, if this court has held that Chapter X of the Act is machinery provision and can only be invoked to bring to tax any income arising from an international transaction, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares." (i) However, as this provision was made effective only with effect from 1st April 2013, and it is not even the case of revenue before the authorities or before us that the said provision would apply for the subject assessment year 2010-11. In the above view, there is no occasion to examine the above amendments in the context of this case. This would be done appropriately in a case arising post the amendment. (j) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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