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TMI Blog2017 (4) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit a sum of ₹ 60 crores within two weeks from the date of this order being pronounced in the open court, the assessee will pay further amount of ₹ 20 crores within four further weeks, i.e. six weeks from the date of this order, and yet another ₹ 20 crores in four more weeks, i.e. ten weeks from the date of this order; (b) the assessee will give a corporate guarantee, to the satisfaction of the Assessing Officer, within the two weeks from the date of this order, for the balance amount; and that (c) the assessee, as also the revenue, will fully cooperate in expeditious disposal of the appeal, and will not seek any adjournment on any grounds whatsoever, other than the grounds on which the bench is satisfied about the grounds being wholly unavoidable and bonafide. - SP NO. 73 OF 2017 & IT APPEAL NO. 565 (AHD.) OF 2017 - - - Dated:- 15-3-2017 - PRAMOD KUMAR, ACCOUNTANT MEMBER AND S.S. GODARA, JUDICIAL MEMBER For The Appellant : S.N. Soparkar, Fereshte D. Sethna, Sachit Jolly, Mrunal Parikh and Bandish S. Soparkar For The Respondent : K. Madhusudan and Jayant Jhaveri ORDER Pramod Kumar, Accountant Member - By way of this application, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place in 2005, all the operating companies in India were placed under the ownership of HEL, which, in turn, was owned by tier I companies in Mauritius. The other shareholders included Telecom Investments India Pvt Ltd (TII, in short), Indusind Telecom Network Pvt Ltd (later renamed Omega Telecom Holdings Pvt Ltd- Omega, in short) and Usha Martin Telematics Limited (UMTL, in short). In November 2005, when FDI ceiling in the telecom sector increased from 49% to 74% and it was also clarified that proportionate foreign investment held in Indian company was to be counted towards the ceiling of 74%, the HTIL group decided to buy out stakes owned by the Indian shareholders, and to overcome the foreign holding limit, entered into arrangements with Indian investors in the form of 'framework agreement' under which the financial support was provided by HTIL, the ultimate holding company of the group, and, in turn, certain entities, including the assessee company, were given an option to buy the shares at a fraction of the fair market value. It was in this backdrop that the assessee company entered into framework agreements, in March 2006, with Analjit Singh (AS, in short) and Asim Gh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e factor obtained by dividing FMV by ₹ 15 billion), which seemed a highly beneficial and valuable proposition- as is contended by the revenue, by paying ₹ 21.25 crore as termination fees to come out of this arrangement. The importance and value of this option, as seems to be the case of the revenue, can be appreciated from the fact that SMMS had 61.6% holding in Omega, which, in turn, has 5.11% holding in HEL, and the effective indirect holding in HEL thus worked out to 3.15%. As against this transaction of giving up option to buy 3.15% in Vodafone India for a consideration of ₹ 2 crores, the assessee was assigned cashless option for buying 0.1234% shares in HEL for a consideration of ₹ 62,24,27,849. It is this transaction of terminating the call option which has resulted in the impugned ALP adjustment. 5. The short case of the revenue seems to be that by terminating the framework agreement the assessee was put to deliberate and undue loss, while the VIH-BV has correspondingly gained- something for which the assessee should have been compensated adequately rather than being made to pay ₹ 21.25 crores as termination fees. It's the arm's lengt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations made by Their Lordships so as to demonstrate the parity in facts of this case vis- -vis the case before Their Lordships. It is pointed out that the Dispute Resolution Panel has taken note of the above judicial precedent but distinguished the said decision on wholly irrelevant and frivolous ground. Learned senior counsel also referred to, read out from, and relied on, the judgment of Hon'ble Supreme Court in the case of Vodafone International Holdings BV v. Union of India [(2012) 341 ITR 1 (SC)]. He submitted that the transaction of paying the fees for termination of call options is between two domestic entities, and, by no stretch of logic, such a transaction fits into the definition of international transaction under section 92B. It is also pointed out that out of the demand impugned before us, as much as ₹ 307 crore is on account of interest under section 234 C which is ex facie unsustainable in law. Without prejudice to all these submissions, learned senior counsel further submits that in any event, the arm's length price of the transaction is based on the comparable instance which took place in May 2007 i.e. acquiring 0.1234% of VEL holding for ₹ 62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are ₹ 837.84 crores, the assessee should be asked to pay at least ₹ 100 crores, plus the corporate guarantees for the remaining amount, before the grant of stay. 8. In rejoinder, learned senior counsel points out that, so far as the decision of Mumbai K bench is concerned, what the learned Departmental Representative has not informed us is that after the payment of ₹ 50 crore, in terms of Tribunal's order dated 18th March 2016, the actual hearing of appeal has not taken place due to dilatory approach being adopted by the revenue authorities. It is claimed that adjournments are sought by the revenue authorities on frivolous grounds. It is then pointed out that the assessee's petition under section 154 is pending before the DRP and no action has been taken on the same. It is then submitted that there is a direct judgment by Hon'ble jurisdictional High Court to support the proposition that when an issue is covered, in assessee's own case- as in the present case, by decision of Hon'ble High Court, related demands cannot be recovered by the revenue authorities. The plea of the revenue, according to the learned representatives for the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All aspects of the case need to be dealt with in detail only after hearing the rival contentions at length and after stand of the parties on the same. We make it clear that none of the observations made by us in this order will have any influence on the hearing of appeal on merits, as these observations are based on limited arguments before us and are, therefore, tentative in nature. Coming to our view so far as prima facie merits of the appeal, about which we must be satisfied before granting a stay on related demands impugned before us, are concerned, suffice to say that, on the face of it, the appeal before us does not appear to be frivolous appeal, and based on our understanding, on the basis of this limited discussion, the assessee, therefore, has a prima facie arguable case. The assessed income in this case is more than seventy times the returned income, and the impugned additions are in respect of contentious points. In our considered view, and on a perusal of material on record and on consideration of rival contentions, the balance of convenience is in favour of partial stay on collection/ recovery of disputed demands. We, therefore, deem it fit and proper to grant a stay o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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