IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1454 OF 2014 M/s S.G.Asia Holdings (India) Pvt. Ltd. ...Petitioner vs Deputy Commissioner of Income Tax, Transfer Pricing-II(7) Mumbai & Ors. ...Respondents ..... Mr Percy Pardiwala, Senior Counsel, Mr Sunil Moti Lala, Mr Gautam Gaikwad, S.Thacker i/b Mr Paras Sumtichandra Savla for Petitioner Mr Tejveer Singh for Respondents ..... CORAM : M.S.SANKLECHA & S.C. GUPTE, JJ. NOVEMBER 19, 2014 At request of learned Counsel, Petition is taken up for final disposal at stage of admission. 2 At very outset, Mr Pardiwalla, learned Senior Counsel for om Petitioner, on instructions states that Petitioner undertakes that objection filed by Petitioner to draft assessment order dated 31 January 2014 before Dispute Resolution Panel ( for short DRP ) would be withdrawn by Petitioner to extent it relates to issues raised in present Petition. B undertaking is accepted. It is only thereafter that we proceed to consider merits of this Petition. 3 This Petition challenges following orders:- a) order dated 30 January 2014 passed under Section 92CA(3) of Income Tax Act, 1961 (for short Act ) by Transfer Pricing Officer (for short TPO ); and Pg 1 of 3 ::: Uploaded on - 27/11/2014 b) Draft Assessment Order dated 31 January 2014 passed by rt Assessing Officer; ou 4 challenge to above impugned orders is that to extent, impugned orders have held that difference between ALP at which equity shares had to be issued and prices at which equity shares have C actually been issued, gives rise to income chargeable to tax under Act. Mr Pardiwala states that this Court in Vodafone India Services Pvt. Ltd. Vs. Union of India, 368 ITR 1 (Vodafone-IV), concludes issue in favour of h Petitioner. Mr Pardiwala further refers to decision of this Court in Writ Petition No.589 of 2014 in Vodafone India Services Pvt. Ltd Vs. Union of India ig (Vodafone V) rendered on 13 October 2014 wherein findings in Vodafone IV have been inter alia summarized as under:- H (I) sine-qua-non to apply Chapter X of Act would be arising of Income under Act out of International Transaction. This income should be chargeable under Act, before y Chapter X can be applied; ba (II) definition of income does not include within its scope capital receipts arising out of capital account transaction unless so specified in Section 2(24) of Act as income; om (III) There is no charge in Act to tax amounts received and/or arising on account of issue of shares by Indian entity to non-resident entity in Sections 4,5,15,22,28,45 and 56 of Act. This is as it arises out of Capital Accounts transaction and, B therefore, is not income; (IV) Chapter X of Act does not contain any charging provision but is machinery provision to arrive at ALP of transaction between Associated Enterprises; and (V) Chapter X of Act does not change character of receipts but only permits re-quantification of income uninfluenced by relationship between Associated Enterprises. Pg 2 of 3 ::: Uploaded on - 27/11/2014 ::: Downloaded on - 03/05/2016 19:07:00 ::: 901.wp.1454.2014.doc rt 5 Mr Tejveer Singh, learned Counsel for Respondent very fairly states that issue arising in present Petition stands concluded in favour of ou Petitioner by virtue of Vodafone IV. 6 In view of above accepted position, we set aside order dated C 30 January 2014 of TPO to extent it seeks to bring to tax shortfall in consideration received on issue of shares when compared to ALP at which shares ought to have been issued and consequent deemed interest on h alleged shortfall, is quashed and set aside. As consequence, Draft Assessment Order dated 31 January 2014 is also set aside to extent ig order of TPO dated 30 January 2014 is set aside. It is further clarified that all other issues raised by Petitioner before DRP against draft Assessment H Order dated 31 January 2014 would be considered by DRP on its merits. 7 Accordingly, Petition is allowed in above terms. There shall be no order as to costs. ( S.C.GUPTE J. ) ( M.S.SANKLECHA J. ) om B Pg 3 of 3 M/s S.G.Asia Holdings (India) Pvt. Ltd. v. Deputy Commissioner of Income-tax, Transfer Pricing-II(7) Mumbai & Or