- (1.) This appeal under section 260A of the Income Tax Act (Act for short) challenges the order dated 13th January 2016 passed by the Income Tax Appellate Tribunal (Tribunal for short). The appeal relates to the assessment year 2010-2011.
(2.) The Revenue has urged following two questions of law for our consideration - (A) Whether on the facts and circumstances of the case and in law, was the Tribunal correct in deleting the adjustment of Rs.2,58,94,765/- on account of excess money paid to PMP Bakony (AE) for acquiring share? (B) Whether on the facts and circumstances of the case and in law was the Tribunal correct in upholding the deletion of the adjustment of Rs.2,50,95,228/- being interest chargeable on deemed loan transaction with PMP Bakony (AE)?
(3.) The common facts leading to the aforesaid two questions are as under:- (a) On 14th October 2010, the respondent filed its return of income declaring income at Rs.2.56 Crores. As the respondent had shown some international transactions, the Assessing Officer referred the same to the Transfer Pricing Officer (TPO) for determining the Arms length 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). By its directions dated 26th September 2015, the DRP disposed of the respondent's objections by inter alia holding as under:- (i) The excess payment made for acquiring shares of its 100% subsidiary (AE) is taxable as held by the A.O. Thus rejected the objections of respondent assessee; and (ii) the interest chargeable on the additional capital investment made to purchase shares of the 100 % subsidiary was directed to be deleted. This on the ground that this adjustment done by the TPO is a secondary transfer pricing adjustment. (C) Consequent upon the above directions, the Assessing Officer passed final assessment order dated 27th November 2014 under section 143(3) read with section 144C(13) of the Act. (D) Being aggrieved with the assessment order dated 27 th November 2014, the respondent filed an appeal in respect of adjustments made on account of exces money paid to acquire shares of its 100% subsidiary to the Tribunal. While the appellant - Revenue filed an appeal in respect of non-adjustment on account of interest payable on additional amounts paid to acquire shares as a loan to the Tribunal. (E) In appeal, the tribunal allowed respondent- assess's appeal on the issue of question No.1 raised herein holding that no income arises on account of purchase of shares as it was on capital account. This, it held was an issue covered by the decision of this Court in Vodafone Services Pvt. Ltd. Vs. Union of India reported in 268 ITR page 1 , in favour of the 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.;