Case Law Details
M/s. TCG Life sciences Pvt. Ltd. Vs. DCIT (ITAT Kolkata)
Assessee raised an objection that since the subscription/purchase of shares being on capital account and therefore does not give raise to any “income” and hence the provisions of Sec. 92 of the Act would not be applicable. The DRP did not agree with the submissions of the Assessee and it held that such transaction was also an international transaction and ALP of such transaction has to be computed in accordance with the provisions of Sec.92 of the Act. In AY 2011-12, the DRP upheld the quantum of addition and the rate of interest determined by the TPO. In AY 2012- 13, the DRP gave partial relief to the Assessee by directing the TPO to adopt a lessor interest rate on the international transaction of deemed loan by the Assessee to its AE by directing the TPO to adopt rate of interest at LIBOR rate plus 350 bps.
At the time of hearing of the appeal, it was brought to our notice by the learned counsel for the Assessee that identical issue as is sought to be raised in the present appeals for AY 2011-12 and 2012-13 had been considered and decided by the Tribunal in Assessee’s case in AY 2010-11. It was submitted that the facts and circumstances and the basis of addition made in AY 2010-11 and AY 2011-12 and 2012-13 are one and the same. A copy of the order of the Tribunal in ITA No.1053/Kol/2017 and ITA No.966/Kol/2017 for AY 2010-11 dated 9.2017 was also filed before us. The learned DR however, while agreeing with the submission of the learned AR that identical issue was decided by the Tribunal in Assessee’ s own case, however reiterated submissions as were made in the case of the Assessee in AY 2010-11. He also made further submissions with regard to deemed loan transaction in a case where purchase of shares is at a higher price than NAV and relied on the decision of the ITAT Hyderabad Bench in the case of North gate Technologies Ltd. Vs. DCIT TS 164 ITAT 2013 (Hyd.)-TP.
We do not find any merit in the submission of the learned DR because the decision rendered by the Tribunal in Assessee’s own case in AY 2010-11 will squarely apply to the present AY also. The decision of the Hyderabad Bench in the case of North gate Technologies (supra) is again a decision rendered prior to the decision of the Hon’ble Bombay High Court in the case of Vodafone (infra) which the Tribunal has considered and followed while deciding the case of the Assessee for AY 2010-11. When the transaction of purchase of shares are held to be outside the purview of the provisions of Sec.92 of the Act, we fail to understand as to how the excess price paid for acquiring shares can be treated as a deemed loan and an international transaction. We therefore find no merits in the argument advanced by the learned DR.
Full Text of the ITAT Order is as follows:-
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