ACIT Vs Mytrah Vayu (Gujarat) Private Limited (ITAT Ahmedabad)
The Revenue appealed against the order of the CIT(A)-10, Hyderabad dated 20.01.2025 for Assessment Year 2014-15. The first ground of appeal concerned deletion of an addition of Rs. 50 crores made under section 56(2)(vii)(b) of the Act. The assessee had received share application money of Rs. 62.50 crores during the year, in exchange for shares issued in the subsequent year at a premium of Rs. 40 per share. The Assessing Officer (AO) held that the assessee failed to justify the premium and made a protective addition under section 56(2)(vii)(b), stating that the substantive addition should be made in the year of share issuance.
The CIT(A) deleted the protective addition on the basis that the substantive addition made in the succeeding year had already been deleted by the ITAT on merits. Before the Tribunal, the Departmental Representative was unable to justify sustaining the protective addition in view of the deletion of the substantive addition. The Tribunal held that there was no merit in the Revenue’s ground and dismissed it.
Grounds 2 to 5 of the Revenue’s appeal concerned deletion of an adjustment made in respect of a Specified Domestic Transaction (SDT) relating to reimbursement of expenses by the assessee to its associate enterprise (AE), amounting to Rs. 2.83 crores. The AO/TPO treated the reimbursement as an SDT and determined its arm’s length price (ALP) at nil on the grounds that the assessee derived no benefit, the allocation key used was not based on actual usage, and the assessee failed the need-benefit test.
