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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 ..... fone (2014 (10) TMI 278 - BOMBAY HIGH COURT). 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, then, it is necessary for the revenue to show that income as defined in the Act does arise from the international transaction. The distinction between inbound and outbound investment is a distinction which does not take the case of revenue any further, as the Legislature has made no such distinction while providing for determination of any income on adjustments to arrive at ALP arising from an international transaction. No provision of the Act has been shown to us, which would allow the Revenue to tax a potential in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Price (ALP) of such international transactions. The TPO by an order dated 20th September 2013, inter alia made following two adjustments :- (i) Adjustment on account of excess money paid to PMP Bakony (AE) for acquiring its share Rs.2,58,94,765/- (ii) Interest chargeable on loan transaction with PMP Bakony (AE) Rs.2,50,95,228/- The above order dated 20th September 2013 of the TPO led to a draft assessment order dated 14th February 2014 by Assessing Officer. (B) Being aggrieved by the draft assessment order dated 14th February 2014, the respondent filed its objections to the draft assessment order with the Dispute Resolution Panel (DRP). B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent. (F) So far as the appellant revenue's appeal on the issue raised in question No.2 herein is concerned, the impugned order held that the same does not survive. This in view of the question No.1 being allowed in favour of respondent assessee. Thus, dismissed the appellant revenue's appeal. 3] We shall now deal with individual question raised for our consideration. 4] Regarding Question No.A, (a) The issue raised in this question is with regard to respondent investing an amount of ₹ 2.67 Crores to acquire shares of its AE (subsidiary company), which had a fair market value of ₹ 8.19 lakhs. It is this excess payment of ₹ 2.58 Crores, when compared to fair market value of the shares which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 i.e. A.E. at a price much higher than its fair market value would be international transaction as defined in Section 92(B) of the Act. The only issue before us as considered by the impugned order of the Tribunal is whether Chapter X of the Act would at all be applicable in case of any investment made on capital account. This on the premise that the transaction of purchase of equity share capital would not give rise to any income. We note that similar issue was before this Court in Vodafone (supra) and this court inter alia observed that Chapter X of the Act is machinery p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficance. 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, then, it is necessary for the revenue to show that income as defined in the Act does arise from the international transaction. The distinction between inbound and outbound investment is a distinction which does not take the case of revenue any further, as the Legislature has made no such distinction while providing for determination of any income on adjustments to arrive at ALP arising from an international transaction. (g) The further submission on behalf of the revenue that in future the respondent may sell these shares at a loss as they have purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject 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) In the above view, the view taken by the Tribunal being concluded by the decision of this Court in Vodafone (supra) the question as proposed does not give rise to any substantial question. Thus not entertained. 5] Regarding Question No.B :- (a) The issue arising herein is a consequence of Question No.A herein. However, as we have not interfered with the decision of the Tribunal with regard to question No.A, this question becomes academic in the present facts. This, as no amount paid to acquire equity shares of the A.E. can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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