9911796707
TMI Blog2024 (10) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the transfer pricing addition which is based upon incorrect understanding that there was inordinate delay in allotment of shares cannot be sustained. Accordingly, the transfer pricing addition is deleted. Ground No. 1 raised by the Appellant is allowed. DRP not considering the rectification order passed by AO u/s. 154 regarding the intimation u/s 143(1)(a) and adding the income as per intimation u/s. 143(1)(a) - It is admitted position that the Assessing Officer had passed rectification order under Section 154 of the Act on 06/06/2023 revising/rectifying total income to INR 22,01,32,774/. Accordingly the Assessing Officer is directed to re-compute the income and tax liability of the Appellant after taking into consideration the aforesaid rectification order dated 16/06/2024. In terms of the aforesaid, Ground No. 2 and 3 raised by the Appellant are allowed for statistical purpose. - Shri Narendra Kumar Billaiya, Accountant Member And Shri Rahul Chaudhary, Judicial Member For the Appellant/Assessee : Shri Firoze B. Andhyarujina Sr. Advocate, Shri Sandeep Sheth For the Department : Shri Uodal Raj Singh ORDER PER RAHUL CHAUDHARY, JUDICIAL MEMBER: 1. This present appeal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al at or before the date of hearing. 3. The relevant the Appellant is a company engaged in the business of manufacturing and marketing of micronutrients, fertilizers and food Additives. The Appellant-company is part of Aries Agro Group that was set up in 1969. For the Assessment Year 2020-2021, the Appellant filed return of income on 18/01/2021. The aforesaid return was processed and intimation order, dated 30/12/2021, was issued under Section 143(1) of the Act computing the taxable income of the Appellant at INR 90,77,64,640/- as against the return of income of INR 21,96,41,290/-. Subsequently, the case of the Appellant was selected for scrutiny. During the assessment proceeding, the Assessing Officer noted that the Appellant had entered into International Transaction which is Associated Enterprises [AE] during the relevant previous year and therefore, a reference was made to the Transfer Pricing Officer [TPO] for the computation of Arm s Length Price [ALP] in relation to the aforesaid international transactions. Vide order, dated 30/11/2022, passed under Section 92CA(3) of the Act, TPO proposed transfer pricing adjustments of INR 1,03,26,939/-. According to the TPO, the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment orders passed no addition on account of transfer pricing adjustments on interest on Share Capital has been made. It was clarified by the Learned Senior Counsel that for the Assessment Year 2023-2024 the issue of making Transfer Pricing adjustments in respect of interest on share application money did not arise since the shares were fully allotted on 23.08.2022. Learned Senior Counsel submitted that the Appellant had applied to the Sharjah Airport International Free Zone (for short SAIF Zone ) for the increase of authorised share capital and allotment of shares to the Appellant. However, the requisite approval was not received and this was the sole reason for delay in the allotment of share to the Appellant. Therefore, the delay in allotment of shares cannot be attributed to the Appellant. It was further submitted that identical stand taken by the Revenue has been considered and rejected by the Tribunal in the Appellants own case in the proceeding assessment years. 6. Per contra Learned Departmental Representative submitted that the DRP had noted in paragraph 6.3 of the Directions, dated 25/09/2023, that the Appellant had failed to submit any evidence to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application money which were to be utilized for setting up a manufacturing plant in SAIF Zone at Sharjah. It is the consistent stand of the Appellant since the Assessment Year 2012-2013 that as per the said rules investment in any company set-up in SAIF Zone required approval of the SAIF Zone Authority. Since the aforesaid approval was not received, the AE was not able to allot shares. The shares were finally allotted on 23/08/2022. For the Assessment Years 2012-13, 2013-14 and 2014-15 Transfer Pricing adjustments in respect of interest on share application money was made by the Assessing Officer by treating the transaction as a loan transaction. However, the aforesaid transfer pricing addition was deleted by the Tribunal holding that no income had accrued from the aforesaid transaction of remittance of share application money by the Appellant to its AE and therefore, the same could not be subjected to the transfer pricing provisions contained in the Act in view of the judgment of the Hon ble Bombay High Court in the case of Shell India Markets Pvt. Ltd. Vs. Asst. CIT - 369 ITR 516 (Bom), Vodafone India Services Pvt. Ltd. Vs. Add. CIT 368 ITR 001 (Bom), and Equinox Business Parks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Authority. We note that the Appellant has explained that AE was not able to allot shares since requisite approval was not received from SAIF Zone Authority for the same. The circumstantial evidences support the contention of the Appellant and therefore, the preponderance of probabilities lies in favour of the Appellant. The Revenue has not brought anything on record to dispute the contention of the Appellant that shares could have been allotted without seeking approval from the SAIF Zone Authority. No inquiry/verification has been conducted seeking any information in this regard from the AE or form the SAIF Zone Authority. The fact that the money has been utilized for setting up the manufacturing facility has not been doubted. In our view, the transaction cannot be regarded as bogus since the shares have been allotted by the AE to the Appellant on 23/08/2023. For the Assessment Year 2012-2013, 2013-2014 and 2014-2015, the Tribunal had accepted the contention of the Appellant that the Appellant had remitted share application money to its AE. Further, it also not disputed that by the Revenue that for the Assessment Years 2017-2018 and 2018-2019, no such transfer pricing addition w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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