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TMI Blog2024 (1) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... different grounds of appeal for Assessment Year 2012-13 are identical to the facts in appeals for Assessment Year 2010-11 and 2011-12. The ld.Counsel for the assessee placed on record copy of the Tribunal order in assessee's own case in ITA No. 1903/Mum/2015 for Assessment Year 2010-11 decided on 23/05/2023 and copy of Tribunal order in ITA No. 1992/Mum/2016 for Assessment Year 2011-12 decided on 28/06/2023. 3. Per contra, Shri Anoop Hiwase representing the Department strongly supported the findings of the Assessing Officer and Dispute Resolution Panel (DRP) in the impugned assessment year. However, he fairly stated that the issues raised in the present appeal by the assessee have been considered by the Tribunal in assessee's own case in the preceding Assessment Year. 4. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also considered the decisions on which the assessee has placed reliance to contend that the issues raised in appeal have been decided by the Tribunal in preceding Assessment Years. Our findings on the grounds of appeal are as under: Ground No. 1 is general, hence, require no separate adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Assessment Year 2018-19 decided on 30/06/2023. 7. We have heard the submissions made by rival sides. The assessee has furnished a chart giving average realization period from AEs. The same is as under: Particulars Int Amount (in Rs. ) Rate used Average realisation Ascent Pharma Pty Ltd. 179 3.21% -24 Ascent Pharmahealth Asia Pte Lt 8,211 2.71 -22 Co Pharma Limited 19,48,888 2.90% 58 Drug House of Australia (Asia) Pte Limited 1,203 2.71% -26 Farma Plus AS -86 Strides Inc 2,86,747 2.7% 311 Strides Vital Nigeria Limited 46,143 3.91% -9 Total 22,91,372 29 Except from one AE i.e. Stride Inc. where there is substantial delay of 311 days in respect of transactions on single day i.e. 29/06/2011, realization of the receivable is within the period. Apart from above, there is nominal delay of 58 days in recovery from Co Pharma Ltd., another AE of the assessee. A perusal of the details from Non-AE at page 85 to 125 shows that there is a delay of 398 days and 219 days in respect of the transactions with Non-AEs on different dates. Thus, it is evident from documents on record that in some of the transactions with AEs and Non-AE, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Years. The issue travelled to the Tribunal in all the Assessment Years. The Tribunal has been taking consistent view and deleted the adjustment of interest on share application money. The ld.Counsel for the assessee asserted that the facts in the impugned assessment year are identical and the investment has been made in share application of same AEs as was made in the preceding Assessment Years. 10. The ld. Departmental Representative vehemently defended the assessment order and e directions of the DRP. However, he fairly stated that the issue is similar to the one raised in the impugned assessment year has been considered by the Tribunal in the case of assessee in the past. 11. Both sides heard. We find that the issue relating to charging of interest on share application money by recharacterizing it as loan was subject matter of appeal in the past and subsequent Assessment Years. In immediate preceding Assessment Year the Co-ordinate Bench in turn following the order in assessee's appeal in ITA No. 1903/Mum/2015 for Assessment Year 2010-11 decided on 23/05/2023 deleted the addition. For the sake of completeness the findings from Tribunal Order for Assessment Year 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with case laws cited by the Id. AR for the assesses. At the outset, it needs mention that it has been held by the Hon'ble Bombay High Court in the case of DIT v/s Besix Kier Dabhoi -(2012) 210 Taxman 151 (Bombay) that the Revenue has no power to re-characterize a transaction entered into by the Assessee. Therefore admittedly, the AO or the TPO are not empowered to convert and re-characterize a transaction of share application into a loan transaction. This aspect of the matter and this judgment has been overlooked by the DRP in its order for earlier year. As such, it could not be followed. Secondly, the remittance of the said share application money was approved and supervised by the RBI and the purpose of remittance as approved was investment in share capital. As such, there is no dispute to the fact that the amounts paid were on account of investment in share capital of the associates or subsidiaries. We further note that even otherwise the transaction of issue of shares is a capital account transaction and not a revenue account transaction and therefore could not be said to result in any income per se. We further notice that the co-ordinate benches of the Tribunal have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue on the merits stands covered by the decision of Vodafone IV it would serve no useful purpose by directing the petitioner to prosecute its objections before the Dispute Resolution Panel and the Dispute Resolution Panel disposing of the same in accordance with Vodafone IV. Thus, in the present facts the distinction sought to be made on the ground of alternative remedy is not such as to warrant not entertaining the petition. 10. The second distinguishing feature from that of Vodafone IV, as canvassed by the Revenue, is that Form 3CEB in respect of the transaction of issue of shares to its associated enterprises, is not disclosed as an international transaction. This the petitioner was obliged to do as the transaction is an international transaction. ' This was in fact done by the petitioners in Vodafone IV. This stand by the Revenue is a little curious as in Vodafone IV the Revenue contended that as the petitioners therein had filed Form 3CEB in respect of issue of shares to its associated enterprise, they had submitted to the jurisdiction of Chapter X of the Ac! and cannot now contend that the proceeding to tax such shortfall on capital account is without jurisdiction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration before this court in Vodafone IV. Therefore, following the aforesaid decision we set aside the order dated January 30, 2013, of the Transfer Pricing Officer to the extent it holds that the arm's length price of issue of equity shares is Rs. 183.44 per share as against Rs. 10 per share as declared by the petitioner and consequent deemed interest brought to tax on the amount not received when benchmarked to the arm's length price. Accordingly, we set aside the draft assessment order dated March 30, 2013, to the extent it seeks to bring to tax the arm's length price of the share issued by the petitioner to its non-resident associated enterprises and also deemed interest which is sought to be brought to tax on the ground of non- receipt of the consideration equivalent to the arm's length price by the petitioner on issue of equity shares. It is further clarified that the petitioner's objection before the Dispute . Resolution Panel filed on April 25, 2013, on all issues save and except the issue covered by this order would be considered by the Dispute Resolution Panel on its own merits." 19. The Hon'ble Bombay High Court further in the case of Equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Bombay High Court, reverse the direction of DRP and direct the AO to delete the addition on account f notional interest of Rs. 2,44,20,173/-. 15. Similar view is also taken in other judgments relied on by the Ld. AR. Since, no contrary judgments have been brought to our notice, relying on the above stated judgments, we direct the AO to delete the impugned adjustment made by the TPO as affirmed by the DRP towards notional interest on share application money for belated allotment of equity shares." 9.2.6 We also notice that similar view has been held by the Tribunal in assessee‟s own case for A.Ys 2008-09 & 2015-16. Considering the facts being identical for the year under consideration also, respectfully following the above decision, we hold that no interest shall be imputed on the share application money. It is ordered accordingly." 11. The Ld. D.R. for the Revenue has not brought on record any fact or law to controvert the argument addressed by the Ld. A.R. for the assessee that the issue is not entirely covered in assessee's favour in A.Y. 2008-09 and 2015-16. 12. In view of the matter we are of the considered view that the addition made by the Ld. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 7: Disallowance u/s. 14A of the Act : 16. The ld.Counsel for the assessee submitted that during the period relevant to assessment year under appeal, the assessee has not received any exempt income, nevertheless the assessee has made suo- motu disallowance of Rs. 24,25,840/-. The ld.Counsel for the assessee submitted that this fact was brought to the notice of Assessing Officer during the assessment proceedings. The submissions of the assessee are at pages 187 and 188 of the Paper Book. The Assessing Officer disregarding the submissions of the assessee made further disallowance of Rs. 4,08,27,039/- u/s. 14A of the Act r.w. Rule 8D. 16.1 It is no more res-integra that no disallowance u/s. 14A of the Act is warranted where the assessee has not earned any exempt income during the relevant period.[ Re. PCIT vs. State Bank of Patiala, 99 taxmann.com 286(SC) & PCIT vs. Ballarpur Industries Ltd. in Income Tax Appeal No. 51 of 2016 decided by Hon'ble Bombay High Court on 13/10/2016]. In light of undisputed facts and the settled legal position, ground No. 7 of appeal is allowed. Ground No. 8 : Adjustment made to book profits u/s. 115JB of the Act with respect to disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Dispute Resolution Panel have erred in confirming the disallowance made u/s. 14A suo-moto by the Appellant while computing its total income. 1:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, no disallowance u/s. 14A is called for including the amount disallowed by it suo-moto while computing its total income and hence the action of the Assessing Officer and the Dispute Resolution Panel in this regard is incorrect, erroneous and not in accordance with the law. 1:3 The Appellant submits that the Assessing Officer be directed to delete even the amount of Rs. 24,25,840/- disallowed u/s. 14A suo-moto while computing its total income and to compute its total income and tax thereon accordingly". 24. The ld.Counsel for the assessee submitted that for adjudication of additional ground no fresh documents are required to be placed on record. The additional ground is legal in nature, hence, may be admitted. 25. On the other hand, the ld. Departmental Representative opposed the admission of additional ground of appeal at the belated stage. 26. We have heard the rival contentions. In additional ground of appeal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Orix Auto Infrastructure Services Ltd. (supra) by returning following findings: "3.2. We find that assessee had made suomoto disallowance under Rule 8D(2)(iii) of Rs. 33,62,493/- and had indeed pleaded before the lower authorities that the same should be reduced while determining taxable income as there was no exempt income derived by the assessee. We find that this request was rejected by the lower authorities. 3.2.1. We find that assessee is entitled to make a claim before the ld. AO or before the ld. CIT(A) even though it had made certain erroneous disallowance in the return of income. Reliance in this regard is placed on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt Ltd., reported in 349 ITR 336 (Bom). Respectfully following the said decision of the Hon'ble Jurisdictional High Court, we hold that the lower authorities ought to have entertained the claim of the assessee. We also find that the ld. CIT(A) in para 4.14 had categorically agreed to the legal proposition that no disallowance u/s.14A of the Act could be made when there is no exempt income. Having said so, he ought to have entertained the plea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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