Partly allowed

Shell India Markets Pvt. Ltd. v. Union of India and Ors.

Bombay HC18 Nov 2014WP/2479/2014

Case brief

AI extract

What is this about?

The High Court disposed of a writ petition challenging the taxability of share issue shortfall under Chapter X of the Income Tax Act. Agreeing with parties that the issue was resolved in Vodafone IV and a related writ petition, the court set aside the TPO and Assessing Officer's orders.

What did the court decide?

Set aside the order of the Transfer Pricing Officer dated 29 January 2014 and the Draft Assessment Order dated 30 May 2014 to the extent sought to tax shortfall on share issues.

Shell India Markets Pvt. Ltd. Vs Union of India and Ors. — Income Tax | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO.2479 OF 2014

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Shell India Markets Pvt. Ltd.

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....Petitioner.

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vs.

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Union of India and ors.

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...Respondents.

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Mr. Persy Pardiwala, Senior Counsel i/by M.P.Savla & Co. for the Petitioner.

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Mr. Tejveer Singh for the Respondents.

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CORAM : M. S. SANKLECHA AND S.C. GUPTE, JJ. DATE : 18 NOVEMBER, 2014

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PC:

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At the instance of the Counsel, the petition is being disposed of at the stage of admission.

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The Challenge in this petition is to the jurisdiction of the Revenue to bring to tax under Chapter X of the Income Tax Act 1961 (“the Act”) the shortfall of the amounts receivable on issue of equity shares to Associated Enterprise (A.E.) when benchmarked against the Arms Length Price (ALP) at which the equity shares ought to have been issued. This alleged difference on capital account is characterized as income.

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WP-2479

This petition challenges the order dated 29 January 2014 of the Transfer Pricing Officer(TPO) as well as Draft Assessment order dated 30 May 2014 passed by the Assessing Officer for A.Y. 2010-11. The petitioners has filed objections to the Draft Assessment Order with the Dispute Resolution Panel (DRP). Mr. Pardiwala, Counsel for the petitioner, on instructions, undertakes to withdraw its objections filed before the DRP with regard to the issues in this petition. Undertaking accepted. We proceed to hear the petition on the basis of above undertaking.

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It is agreed between the Counsel that so far as this Court is concerned the issue is no longer res integra as it has been resolved by this Court in Vodafone Services Private Limited vs. Union of India 368 ITR Page 1 (Vodafone IV) in favour of the petitioner.

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It is agreed between the Counsel that the facts and parties to the challenge in this petition for A.Y.2010-11 are identical to the challenge made in W.P. No.1205/2013 in respect of A.Y. 2009-10. We have by order disposed of today W.P.No.1205/2013 in favour of the petitioner. It is an agreed position between the parties that for identical reasons mentioned in the order passed in W.P.No.1205 of 2013, this petition could also be disposed of in favour of the petitioner.

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We find that the issues raised in this petition are completely covered by our order passed today in Writ Petition No.1205/2013. One additional feature of the present petition is that the deemed interest which is sought to be brought to tax in A.Y.2009-10 is also sought to be brought to tax in the A.Y. 2010-11 as being payable for this Assessment Year, besides seeking to bring to tax the deemed interest in respect of short fall in premium on shares issued in A.Y. 2010-11.

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However, it is clarified that the petitioner's objection before the DRP filed on 25 April 2013 on all other issues save the issue raised in this petition would be considered by the DRP on its own merits.

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Accordingly, we set aside the order dated 29 January 2004 of the Transfer Pricing Officer (TPO) and the Draft Assessment Order dated 30 May 2004 to the extent it seeks to tax the short fall of the amounts received on issue of shares to AE for A.Y.2010-11 along with interest on the amounts short received and the interest relating to amounts short received on issue of shares to AE for the earlier A.Y. 2009-10 for the reasons given in our order passed today in the accompanying Writ Petition NO.1205/2013 filed by the petitioner for the earlier Assessment Year 2009-10. The other issues, which are a subject matter of objections before the DRP, will be decided by the

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DRP on its own merits.

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Petition is disposed of in the above terms. No order as to

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costs.

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(S.C. GUPTE, J.) (M.S. SANKLECHA, J.)

Shell India Markets Pvt. Ltd. v. Union of India and Ors.

Case brief

What is this about?

What did the court decide?

Shell India Markets Pvt. Ltd. v. Union of India and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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