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TMI Blog2014 (11) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... or Counsel on instructions undertakes that objections filed with the DRP in respect of the issues raised herein would be withdrawn by them. Undertaking accepted. Therefore, the challenge to the jurisdictional issue viz. the jurisdiction of the revenue to bring to tax amounts received on capital account namely issue of equity shares to its non resident Associated Enterprises under Chapter X of the Act is being challenged only before this Court. It is only after accepting the undertaking given by the petitioner that the merits of the issues raised in this petition are being considered. 3. Mr. Percy Pardiwala, learned Senior Counsel appearing for the petitioner at the very outset submitted that the issue raised in this petition viz. the jurisdiction of the revenue to tax under Chapter X of the Act capital account transactions not giving rise to income is no longer res integra in view of the decision of this Court in Vodafone India Services Pvt. Ltd. v. Union of India 368 ITR Page-1. (Vodafone-IV). 4. Mr. Dave, learned Counsel appearing for the respondent revenue, while accepting the fact that the issue raised in this petition is in principle covered by the decision in Vodafone IV, y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not an International Transaction. (d) The Assessing Officer in terms of Sections 92CA(1) of the Act referred the International Transactions disclosed by the petitioner in Form 3CEB to the TPO. This was for the purpose of computation of Arms Length Price (ALP) of the transaction reflected in Form 3CEB. (f) The TPO during the course of proceedings before it noticed the transaction of issue of shares by the petitioner to its AE's. Therefore, the TPO issued a show cause notice dated 24 January 2013 to the petitioner. The above notice called upon the petitioner to show cause as to why the ALP should not be determined at Rs. 622/- per share in respect of the issue of equity shares by it to its nonresident AE's at Rs. 10/- per share. (g) On 28 January 2013 the petitioner responded to the above show cause notice dated 24 January 20123. In its reply the petitioner inter alia pointed out that Chapter X of the Act would have no application as the transaction of issue of equity shares to non resident AE's would not give rise to any income. This for the reason that the transaction of issue of shares is on capital account not giving rise to any income. (h) On 30 January 2013, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision in Vodafone IV would cover the issue in principle. In fact, Mr. Dave learned Counsel for the Revenue does not dispute the fact that the issue with regard to chargeability to tax in respect of amounts not received on issue of shares to non resident AE's being on capital account stands covered so far as this Court is concerned. However, the revenue reserves its right to contest the decision of this Court in Vodafone (IV) and (V) before the Hon'ble Supreme Court. Nevertheless, according to Mr. Dave, learned Counsel appearing for the Revenue, the decision in Vodafone IV should not be applied in this case in view of the following distinguishing features:- (a) The petitioner has an alternative remedy of prosecuting its grievances with the DRP. It is submitted that, in fact, the petitioner has also filed an application before the DRP raising an identical grievance. In these circumstances, this petition ought not to be entertained . (b) The petitioner in its Form 3CEB had not disclosed its transaction of issue of shares to a non resident AE's even though it is an international transaction. This failure on the part of the petitioner to disclose the same in F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners therein had filed Form 3CEB in respect of issue of shares to its AE, they had submitted to the jurisdiction of Chapter X of the Act and cannot now contend that the proceeding to tax such shortfall on Capital account is without jurisdiction. In this case, an exactly opposite stand is being taken by the State. The State is expected to be consistent and not change its stand from case to case. Be that as it may, the petitioner herein had not disclosed the transaction in Form 3CEB as according to the petitioner it was not an international transaction for the reason that it did not give no rise to any income. The fact that the petitioner chose not to declare issue of shares to its non resident AE's in Form 3CEB as in its understanding it fell outside the scope of Chapter X of the Act now stands vindicated by the decision of this Court in Vodafone IV. If the petitioner did not file a particular transaction in Form 3CEB when so required to be filed, the consequences of the same as provided in the Act would follow. However, the mere not filing of Form 3CEB on the part of the petitioner would not give jurisdiction to the revenue to tax an amount which it does not have jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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