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TMI Blog2017 (1) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... o Transfer Pricing adjustments made by the Assessing Officer [AO]/Transfer Pricing Officer [TPO] on the Compulsorily Convertible Debentures (CCDs) issued in Indian currency. 2. During the year under consideration, the assessee has issued Rs. 4,62,00,000/- CCDs of Rs. 10/- each convertible into one equity share for every debenture held to Celcius Property BV of Rs. 10/-. Appellant had paid interest @ 12% on the CCDs amounting to Rs. 5,22,64,414/-. During the transfer pricing proceedings, the assessee benchmarked the weighted average rate of Prime Lending Rate (PLR) as per the State Bank of India (SBI), which was at 12.26%. Since the rate of interest paid by it is lesser than SBI PLR, Assessee has maintained that its rate of interest paid is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 without passing a draft assessment order under section 144C of the Act and the Learned Dispute Resolution Panel ('DRP') erred in upholding the said order. 2 On the facts and circumstances of the case and in law, the assessment order passed by the Ld.AO dated 19th March 2015 is contrary to law and is liable to be set aside. Without prejudice to ground no. 1 and 2, the Appellant raises the following grounds of appeal: 3 On facts and in the circumstances of the case and in contrary to law, the Learned transfer Pricing Officer ('TPO')/Ld. AO has erred in going beyond the scope to re-characterize the Compulsory Convertible Debentures ('CCD') as loan for benchmarking the international transaction of interest payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiation of penalty proceedings indicate that the order was a final order and, therefore the subsequent proceedings are bad in law. When it was pointed out that assessee withdrew the appeal before the CIT(A) and accepted the objections before the DRP, Ld. Counsel fairly admitted that assessee withdrew the appeal. However, Counsel relied upon the following case law in support of the stand that the AO was not justified in treating the draft assessment order as a final order and such a course of action is not a curable irregularity; therefore, the draft assessment order should be treated as bad in law: i. Vijay Television (P) Ltd., WP Nos. 1526 & 1527 of 2014 [369 ITR 113] (Madras); ii. Lionbridge Technologies Pvt. Ltd., ITA No. 1041/Mum/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Cotton Naturals India Pvt. Ltd., [276 CTR 445] and also the principles laid down by the Hon'ble High Court of Delhi in the case of EKL Appliances Ltd., [345 ITR 241]. It was also submitted that TPO has no power to re-characterise the transaction as laid down by the Co-ordinate Bench at Ahmadabad in the case of Sun Pharmaceuticals Ind. Ltd., in ITA No. 1589 & 1592/AHD/2011. It was further submitted that TPO also erred in benchmarking the transaction with reference to LIBOR plus when both TPO as well as DRP accepted that the loans were given in Indian Rupees. Accordingly, SBI's PLR rate should have been benchmarked rather than LIBOR plus. Ld. Counsel relied on the principles laid down by the Hon'ble Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation Limited & Ors. Vs. Securities and Exchange Board of India & Anr. in Civil Appeal No. 9813 of 2011 dt. 31-08-2012 (supra) while assigning the jurisdiction to SEBI as an 'equity instrument'. Further, the policy of Govt. of India and also RBI effective from 01- 04-2010 also indicate that issuance of CCD is part of FDI being quasi-equity in nature and considering the same as a loan would be completely against regulations laid by DIPB, RBI and FEMA. It is to be reiterated that issuance of CCDs was denominated in Indian Rupees and not foreign currency. Therefore, TPO has erred in considering LIBOR as benchmark rate which is in complete contradiction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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