STRIDES SHASUN LTD, NAVI MUMBAI V. DCIT CIR 15(3)(2), MUMBAI

ITA 1992/MUM/2016

AI Insights

M/s. Strides Shasun Ltd. appealed against the order of the Deputy Commissioner of Income Tax, which included adjustments and disallowances related to transfer pricing and corporate tax issues for the assessment year 2011-12. The primary contention was the treatment of share application money as a loan, which attracted interest imputation, and the disallowance of FCCB issue expenses. The Tribunal examined precedents and the specific circumstances of the case, including the absence of exempt income and the nature of the transactions, leading to a decision that favored the assessee on several grounds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301264 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: J
• Next Hearing Date: 26-06-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 28-03-2016
• Other Referred Cases: DIT v/s Besix Kier Dabhoi, Shell India Markets Pvt Ltd. vs. ACIT, Vodafone IV, Equinox Business Parks (P.) Ltd. vs. Union of India, Agro Ltd. v/s DCIT, Orix Auto Infrastructure Services Ltd. vs. ACIT, Prithvi Brokers and Shareholders Pvt. Ltd. vs. CIT, Gujarat Gas Company Ltd. vs. JCIT, Milton Laminates Ltd. vs CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MOVING APPLICATION DATED ..; VIRTUE OF GROUND NOS.
• Keywords: Transfer pricing; Rectification of order; International transaction; Earning of tax free income; Initiation of penalty proceedings; Capital expenditure; TDS; Rule 8D; Set aside; Capital Gains
• Section: 271(1)(c); 154; 92B; 234B; 14A; 115JB; 37(1); 274; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “J”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.1992/M/2016 Assessment Year: 2011-12 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited), 201, Devavrata, Sector 17, Vashi, Navi Mumbai – 400 703 PAN: AADCS8104P Vs. The Deputy Commissioner of Income Tax, Circle 15(3)(2), No.451, 4 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : Shri Ninad Patade, A.R. Revenue by : Shri Manoj Kumar, CIT D.R. Date of Hearing : 27 . 06 . 2023 Date of Pronouncement : 28 . 06 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 14.12.2015 passed by the Assessing Officer (AO) in consonance with the orders passed by the ld. DRP/TPO under section 143 (3)(ii) read with section 144C(1) of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2011-12 on the grounds inter alia that :- “Transfer Pricing grounds ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 2 1:0 Re: Transfer pricing adjustment under section 92CA of the Income- tax Act, 1961 [the Act"]: 1:1 The Assessing Officer, Transfer Pricing Officer and Dispute Resolution Panel grossly erred in making adjustment u/s. 92CA of the Act aggregating to Rs. 17,36,13,067/- with respect to imputing interest on share application money pending allotment. 2:0 Re: Imputing additional interest on the share application money paid the subsidiaries by the Appellant - Rs. 17,36,13,067/-: 2:1 The Assessing Officer / Transfer Pricing Officer / Dispute Resolution Panel have erred in imputing additional interest on the share application money paid to the subsidiaries by the Appellant. 2:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the Assessing Officer/Transfer Pricing Officer/ Dispute Resolution Panel erred in re- characterizing share application money as loan given to group companies and thereby imputing interest on hypothetical income at an ad-hoc average rate of 8% which is unwanted, unjustified, misconceived, erroneous, incorrect and illegal. 2:3 Without prejudice to aforesaid, the Assessing Officer / Transfer Pricing Officer/ Dispute Resolution Panel ought to have computed interest based on the LIBOR rate prevalent during the year. 2:4 The Appellant submits that Assessing Officer / Transfer Pricing Officer be directed to delete the aforesaid adjustment of imputing additional interest on the share application money paid to the subsidiaries and to re-compute its total income and tax thereon accordingly. Corporate-tax grounds 3:0 Re: Disallowance of premium payable on redemption of Foreign Currency Convertible Bonds ('FCCBS') (with respect to FCCBs of 100 million USD): 3:1 The Assessing Officer and the Dispute Resolution Panel have erred in disallowing the premium payable on redemption of FCCBS. 3:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the Appellant submits that FCCB premium claimed by it is revenue in nature and the Assessing Officer and the Dispute Resolution Panel I ought to have held as such. ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 3 3:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance of the FCCB premium and to re-compute its total income and tax thereon accordingly. 4:0 Re: Allowability of the premium on FCCBs in the year of redemption (with respect to FCCBs of 40 million USD): 4:1 The Assessing Officer and the Dispute Resolution Panel have erred in not granting a deduction of premium paid on FCCBs at the time of redemption. 4:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the premium paid by it on FCCBs should be allowed as a deduction in the year of actual payment i.c. the year under consideration and the Assessing Officer and the Dispute Resolution Panel ought to have held as such. 4:3 The Appellant submits that the Assessing Officer be directed to grant deduction of premium paid on FCCBs during the year on redemption and to re-compute its total income and tax thereon accordingly. 5:0 Re.: Disallowance of FCCB issue expenses: 5:1 The Assessing Officer and the Dispute Resolution Panel erred in disallowing FCCB issue expenses being 1/5th of the issue expenses on FCCB. 5:2 The Appellant submits that the Assessing Officer be directed to allow the FCCB issue expenses and to re-compute its total income and tax thereon accordingly. 6:0 Re: Disallowance u/s. 14A of the Act: 6:1 The Assessing Officer and the Dispute Resolution Panel have erred in disallowing expenditure in relation to earning exempt income by invoking Rule 8D read with section 14A of the Act. 6:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject no disallowance u/s. 14A is called for and the Assessing Officer and the Dispute Resolution Panel ought to have held as such. 6:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance u/s. 14A of the Act and to re-compute its tax liability accordingly. 7:0 Re.: Disallowance u/s. 14A while computing 'book profits' u/s. 11538 of the Income-tax Act, 1961: 7: 1 The Assessing Officer and the Dispute Resolution Panel have erred in increasing the 'book profits' for the purpose of section 1153B of the Income-tax Act, 1961 (the Act") by an amount of Rs. 3,62,07,231/- being the disallowance u/s. 14A of the Act read with Rule 8D of the ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 4 Income-tax Rules, 1962.. 7:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, no disallowance u/s. 14A of the Act is called for and the Assessing Officer and the Dispute Resolution Panel ought to have held as such. 7:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance made u/s. 14A made to the 'book profits' and to re-compute its total income and tax thereon accordingly. 8:0 Re: Credit for foreign taxes paid: 8:1 The Assessing Officer erred in not granting full credit of foreign taxes amounting Rs. 4,76,36,414/- as claimed in the return of the income. 8:2 The Appellant submits that the Assessing Officer be directed to grant full credit for the foreign taxes paid by it and to re-compute its tax liability accordingly. 9:0 Re: Credit for tax deducted at source ["TDS"] granted short: 9:1 The Assessing Officer has erred in not granting full credit of TDS as claimed by it the return of income. 9:2 The Appellant submits that considering the facts and circumstances of its case it is entitled to full credit of TDS as claimed by it and the stand taken by the Assessing Officer in this respect is misconceived, incorrect, erroneous and illegal. 9:3 The Appellant submits that the Assessing Officer be directed to grant full credit for TDS and to re-compute its tax liability accordingly 10:0 Re: Levy of interest u/s, 234B of the Act: 10:1 The Assessing Officer erred in levying excessive interest u/s. 2348 of the Act. 10:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the Assessing Officer has levied interest u/s. 234C in excess. 10:3 The Appellant submits that the Assessing Officer be directed to levy interest u/s. 234B in accordance with law and to re-compute its tax liability accordingly. 11:0 Re. Levy of interest u/s. 234C of the Act: 11:1 The Assessing Officer has erred in levying interest u/s. 234C of the Act. 11:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, interest u/s. 234C of the Act ought to be levied on the returned income and the ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 5 stand taken by the Assessing Officer in this respect is misconceived, Incorrect, erroneous and illegal. 11:3 The Appellant submits that the Assessing Officer be directed to delete the levy of Interest u/s. 234C of the Act and to re-compute its tax liability accordingly. 12:0 Re: Initiation of penalty proceedings u/s. 271(1)(c) of the Income- tax Act, 1961: 12:1 The Assessing Officer has erred in initiating penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Income-tax Act, 1961. 13:0 Re: Rectification of mistakes apparent on record; 13:1 The Assessing Officer has made certain mistakes apparent on record particularly with regard to the computation of total income and tax thereon. 13:2 The Appellant submits that the Assessing Officer be directed to rectify the aforesaid mistakes and correctly compute its total income and tax thereon. 14:0 Re.: General 14:1The Appellant craves leave to add, alter, amend, and/or substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.” 2. The assessee by moving application dated 14.12.2022 and 19.06.2023 sought to raise additional grounds, on the ground that these are the legal grounds and necessary for complete adjudication of the issues at hand, which are as under: “III. Additional grounds of appeal raised vide letter dated 14.12.2022: 1:0 Re: Not setting off brought forward long term capital loss of earlier years against the income from long term capital gains of the captioned year: 1:1 The Assessing Officer has erred in not allowing a set-off of the brought forward long term capital loss of earlier years against the income from long term capital gains of the captioned year. 1:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, brought forward long term capital loss can be set off against the income from ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 6 long term capital gains and the action of the Assessing Officer in this regard is incorrect, erroneous and not in accordance with the law. 1:3 The Appellant submits that the Assessing Officer be directed to set- off brought forward long term capital loss of earlier years against the income from long term capital gains of the captioned year and to re- compute its total income and tax thereon accordingly. The Appellant craves leave to add, alter, amend, substitute and / or modify in any manner whatsoever all or any of the foregoing additional ground of appeal at or before the hearing of the appeal.” IV. Additional grounds of appeal raised vide letter dated 19.06.2023 : 1:0 Re: Disallowance of Rs. 58,53,114/- made u/s. 14A suo-moto while computing the total income: 1:1 The Assessing Officer and the Dispute Resolution Panel have erred in confirming the disallowance made u/s. 14A suo-moto by the Appellant while computing its total income. 1:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, no disallowance u/s. 14A is called for including the amount disallowed by it suo-moto while computing its total income and hence the action of the Assessing Officer and the Dispute Resolution Panel in this regard is incorrect, erroneous and not in accordance with the law. 1:3 The Appellant submits that the Assessing Officer be directed to delete even the amount of Rs. 58,53,114/- disallowed u/s. 14A suo-moto while computing its total income and to compute its total income and tax thereon accordingly. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing additional grounds of appeal at or before the hearing of the appeal.” 3. Keeping in view the settled principle of law that the additional grounds, which are legal one, can be raised by the parties to the litigation at any stage of the proceedings the same are allowed to be entertained without entering into the merits of the same. 4. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is into the ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 7 business of manufacturing and marketing of pharmaceutical products. During the year under consideration Transfer Pricing Officer (TPO) noticed that the assessee had invested an amount of Rs.498.85 crores and Rs.641.96 crores in its overseas Associated Enterprises (AEs) as share application money in M/s. Strides Acrolab International, UK(SAIL) and M/s. Starsmore Ltd. respectively but the shares were not allotted and the amount was shown as share application money pending allotment. The Ld. TPO thereby treated the said transaction as loan transaction and charged interest @8% per annum on transaction and thereby proposed the TP adjustment of Rs.17,36,13,067/-. The AO during assessment proceedings noticed that the assessee company has shown investment of Rs.178,87,07,760/- and Rs.257,23,59,394/- as on 31.03.2010 and 31.03.2011 respectively and suo-moto disallowed an amount or Rs.58,53,114/- only. The AO by invoking the provisions contained under section 14A read with rule 8D further disallowed an amount of Rs.3,03,54,117/-. The AO also made similar disallowance by adding the same to the book profit as per clause (f) of section 115JB of the Act. 5. The assessee carried the matter before the Ld. DRP by way of filing objections who has dismissed the objections filed by the assessee. Feeling aggrieved with the impugned order passed by the Ld. DRP the assessee has come up before the Tribunal by way of filing present appeal. 6. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 8 of the facts and circumstances of the case and law applicable thereto. Ground No.1 7. Ground No.1 is general in nature which does not require any specific discussion. Ground No.2: 8. Undisputedly during the year under consideration the assessee invested its funds to the tune of Rs.498.85 crores and Rs.641.96 crores first in its overseas AEs namely M/s. Strides Acrolab International, UK(SAIL) and M/s. Starsmore Ltd. respectively but shares were not allotted in the year under consideration rather shown as share application money pending allotment. It is also not in dispute that the Ld. TPO has treated these transactions as loan transactions and charged interest @ 8% and thereby proposed the TP adjustment of Rs.17,36,13,067/- towards interest amount on share application money invested by the assessee in its AEs. It is also not in dispute that the Ld. DRP upheld the proposed adjustment made by the Ld. TPO by following its own order passed in A.Y 2009-10 & 2010-11 on the identical issues and facts in assessee’s own case. The assessee’s objections filed before the Ld. DRP challenging the impugned addition on account of TP adjustment who has upheld the proposed adjustment made by the Ld. TPO and thereafter AO made the addition on the basis of proposed adjustment made by the Ld. TPO. 9. In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee contended that this issue has already been ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 9 decided in favour of the assessee by the Tribunal vide order dated 23.05.2023 in ITA No.1903/M/2015 in A.Y. 2010-11, in ITA No.124/M/2013 vide order dated 02.09.2022 in A.Y.2008-09, in ITA No.7370/M/2018 vide order dated 07.02.2022 in A.Y. 2014-15 & in ITA No.7992/M/2019 vide order dated 06.04.2022 in A.Y. 2015-16 in assessee’s own cases available at page 1 to 248 of the case law paper book. 10. We have perused the order passed by co-ordinate Bench of the Tribunal in assessee’s own case for A.Y. 2010-11, wherein the identical issue as to making investment by the assessee in its overseas AEs but share had not been allotted during the year under consideration, which has been decided in favour of the assessee by returning following findings: “9.2.5 We heard the parties and perused the materials on record. We notice that the co-ordinate bench bench of the Tibunal in assessee‟s own case for A.Y. 2014- 15 has considered a similar issue and held that– 14. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below along with case laws cited by the Id. AR for the assesses. At the outset, it needs mention that it has been held by the Hon'ble Bombay High Court in the case of DIT v/s Besix Kier Dabhoi -(2012) 210 Taxman 151 (Bombay) that the Revenue has no power to re-characterize a transaction entered into by the Assessee. Therefore admittedly, the AO or the TPO are not empowered to convert and re-characterize a transaction of share application into a loan transaction. This aspect of the matter and this judgment has been overlooked by the DRP in its order for earlier year. As such, it could not be followed. Secondly, the remittance of the said share application money was approved and supervised by the RBI and the purpose of remittance as approved was investment in share capital. As such, there is no dispute to the fact that the amounts paid were on account of investment in share capital of the associates or subsidiaries. We further note that even otherwise the transaction of issue of shares is a capital account transaction and not a revenue account transaction and therefore could not be said to result in any income per se. We further notice that the ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 10 co-ordinate benches of the Tribunal have also taken a view that no imputation of interest could be made on a transaction of share application money paid to subsidiaries. The coordinate bench of Mumbai Tribunal in the case Agro Ltd. v/s DCIT - ITA No. 1452 / Mum / 17 (supra) has held as follows: 18. We have heard the rival submissions of both the parties 3nd perused the material on record. The undisputed facts are that the assesses has advanced money as share application money to Golden Harvest a foreign AE to set up a plant in free trade zone in Shafjah. It is also undisputed that the AE could not convert the share application money into share capita/ by issuing shares to the assassee as the permission from the free trade zone authorities with whom the AE was registered was pending and this was the only sole reason for not issuing the shares in favour of the assessee. Now the issue before us is whether the share application money could be treated as loan and could be subjected to the transfer pricing provisions. After perusing the facts on record and going through the decision relied on by the Ld.AR, we find that no income has accrued from the share application money to the assessee and therefore such transactions could not be subjected to transfer pricing provisions. The Hon’ble Jurisdictional Bombay High Court in the case of Shell India Markets Pvt Ltd. vs. ACIT and others has also held that the provisions of chapter 10 of the Act would apply only when income arises from the international transactions. The relevant portion of the said order is reproduced as under:- "9. We shall now consider the above submissions on behalf of the Revenue. So far as the availability of alternative remedy is concerned, the petitioner has at the beginning of today's hearing itself undertaken to withdraw its objection on the issue of jurisdiction before the Dispute Resolution Panel. This was accepted by us before considering the issue on the merits. Moreover, this petition was filed on April 24, 2013, challenging the impugned orders dated January 30, 2013, of the Transfer Pricing Officer and the draft assessment order dated March 28, 2014, of the Assessing Officer, on the issue of jurisdiction. This issue has been decided in Vodafone IV and would be binding on all authorities within the State till the apex court takes a different view on it. Therefore, in view of the fact that the Revenue does not dispute that the issue on the merits stands covered by the decision ofVodafone IV it would serve no useful purpose by directing the petitioner to prosecute its objections before the Dispute Resolution Panel and the Dispute Resolution Panel disposing of the same in accordance with Vodafone IV. Thus, in the present facts the distinction sought to be made on the ground of alternative remedy is not such as to warrant not entertaining the petition. ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 11 10. The second distinguishing feature from that of Vodafone IV, as canvassed by the Revenue, is that Form 3CEB in respect of the transaction of issue of shares to its associated enterprises, is not disclosed as an international transaction. This the petitioner was obliged to do as the transaction is an international transaction. ' This was in fact done by the petitioners in Vodafone IV. This stand by the Revenue is a little curious as in Vodafone IV the Revenue contended that as the petitioners therein had filed Form 3CEB in respect of issue of shares to its associated enterprise, they had submitted to the jurisdiction of Chapter X of the Ac! and cannot now contend that the proceeding to tax such shortfall on capital account is without jurisdiction, in this case, an exactly opposite stand is being taken by the State. The State is expected to be consistent and not change its stand from case to case. Be that as it may, the petitioner herein had not disclosed the transaction in Form 3CEB as, according to the petitioner, it was not an international transaction for the reason that it did not give no rise to any income. The fact that the petitioner chose not to declare issue of shares to its non-resident associated enterprises in Form 3CEB as in its understanding it fell outside the scope of Chapter X of the Act now stands vindicated by the decision of this court in Vodafone IV. If the petitioner did not file a particular transaction in Form SCEBwhen so required to be filed, the consequences of the same as provided in the Act would follow. However, the mere not filing of Form 3CEB on the part of the petitioner would not give jurisdiction to the Revenue to tax an amount which it does not have jurisdiction to tax. Therefore, we do not find any substance in this objection also. 11. The last objection taken by the Revenue was that in view of the variation in the shareholding pattern amongst different shareholders of the petitioner during the year clearly brought the issue of shares within clause (e) of the Explanation to section 92B of the Act. In terms of the above provision an international transaction would include a transaction of restructuring entered into by an enterprise with an associated enterprise. Mr. Pardiwala, learned counsel appearing for the petitioner, points out that there has been no restructuring of the organization but there has been a mere change in the shareholding of different shareholders of the petitioner. However, in the present facts we need not examine this for the reason that even if it is assumed that it is an international transaction, the jurisdictional requirement for Chapter X of the Act to be applicable is that income must arise. In this case, admittedly following Vodafone IV no income has arisen. Thus, ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 12 the jurisdictional requirement for application of Chapter X of the Act is not satisfied. 12. As held in Vodafone IV, the jurisdiction to apply Chapter X of the Act would occasion only when income arises out of international transaction and such income is chargeable to tax under the Act. The issues raised in the present petition are identical to the issues which arose for consideration before this court in Vodafone IV. Therefore, following the aforesaid decision we set aside the order dated January 30, 2013, of the Transfer Pricing Officer to the extent it holds that the arm's length price of issue of equity shares is Rs. 183.44 per share as against Rs. 10 per share as declared by the petitioner and consequent deemed interest brought to tax on the amount not received when benchmarked to the arm's length price. Accordingly, we set aside the draft assessment order dated March 30, 2013, to the extent it seeks to bring to tax the arm's length price of the share issued by the petitioner to its non- resident associated enterprises and also deemed interest which is sought to be brought to tax on the ground of non- receipt of the consideration equivalent to the arm's length price by the petitioner on issue of equity shares. It is further clarified that the petitioner's objection before the Dispute . Resolution Panel filed on April 25, 2013, on all issues save and except the issue covered by this order would be considered by the Dispute Resolution Panel on its own merits." 19. The Hon'ble Bombay High Court further in the case of Equinox Business Parks (P.) Ltd. vs. Union of India has held as under: "This has been accepted by the Revenue and is evident from the order of DRP dated 30 October 2014 in Petitioner's case for A.Y. 2010-11. In the A. Y.2010-11 also the Petitioner had issued CCDs and equityshares and the basis was identical to the present Petition. The Revenue sought to tax the Petitioner in terms of Chapter X of the Act. However, the Petitioner objected to the Draft Assessment order before DRP. On 30 October 2014. DRP issued directions under Section 144C(5) of the Act to the Assessing Officer for the A.Y. 2010-11 and on identical facts qua equity shares and CCDs holding as under: "3.4 We find that the issue under consideration of applying Transfer Pricing Provisions on 'issue of shares' has been decided in favour of the assesses by the Hon'ble Bombay High Court in the case of M/s Vodafone India Services Private Limited in Writ Petition number 871 of 2014 dated 10th October 2014. The honorable High Court has held that the amounts received on issue of shares is a capital account transaction not separately brought within the definition of ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 13 'income' as per the provisions of section 2(24) as well as sections 4 & 5 of the Act. Therefore, such capital account transaction not falling within a statutory exception cannot be brought to tax. Even income arising from international Transaction between AE must satisfy the test of income under the Act and must find its home in one of the above heads i.e. charging provisions. There is no charging section in chapter X of the act. Only if there is income which is chargeable to tax under the normal provisions of the act, then alone Chapter X of the act could be invoked. Further, since there is no income arising from the transaction of issue of shares, the provisions of chapter X would not apply. The Hon'ble Bombay High Court in the said case has quashed and set aside as Being without jurisdiction, null and void, f^g reference made by the TPO, and the order of the TPO making a transfer pricing adjustment on issue of shares. Respectfully following the decision of the jurisdictional Bombay High Court,, the adjustment proposed by the' TPO on account of issue of shares is deleted. Accordingly, ground of objection number 16 of the assessee is allowed.” 20. We, therefore, respectfully following the ratio laid down by the Hon'ble Bombay High Court, reverse the direction of DRP and direct the AO to delete the addition on account f notional interest of Rs.2,44,20,173/-. 15. Similar view is also taken in other judgments relied on by the Ld. AR. Since, no contrary judgments have been brought to our notice, relying on the above stated judgments, we direct the AO to delete the impugned adjustment made by the TPO as affirmed by the DRP towards notional interest on share application money for belated allotment of equity shares. ‖ 9.2.6 We also notice that similar view has been held by the Tribunal in assessee‟s own case for A.Ys 2008-09 & 2015-16. Considering the facts being identical for the year under consideration also, respectfully following the above decision, we hold that no interest shall be imputed on the share application money. It is ordered accordingly.” 11. The Ld. D.R. for the Revenue has not brought on record any fact or law to controvert the argument addressed by the Ld. A.R. for the assessee that the issue is not entirely covered in assessee’s favour in A.Y. 2008-09 and 2015-16. 12. In view of the matter we are of the considered view that the addition made by the Ld. TPO/DRP/AO on account of notional ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 14 interest is not sustainable hence AO is directed to delete the same. Accordingly, ground No.2 is allowed Ground Nos.3 & 4 13. Ground Nos.3 & 4 are dismissed having not been pressed by the Ld. A.R. for the assessee. Ground No.5 14. Assessee’s claim of 1/5 th issue expenses of foreign currency convertible bonds (FCCB) to the tune of Rs.1,50,83,420/- under section 35D of the Act have been disallowed by the AO on the ground that there is no provision under section 35D for amortization of the said issue expenses on FCCB over a period and since expenses are not incurred during the year under consideration no deduction in respect of the issue expenses can be allowed. The Ld. DRP upheld the disallowance made by the AO by following earlier year order for A.Y. 2009-10 & 2010-11. 15. The Ld. A.R. for the assessee contended that this issue has already been decided in favour of the assessee in its own case vide order dated 02.09.2022 and order dated 23.05.2023 for A.Y. 2009- 10 & 2010-11 respectively. This fact has not been controverted by the Ld. D.R. for the Revenue. 16. We have perused the order dated 02.09.2022 which is on the identical facts and grounds. Operative part of the order is extracted for ready perusal as under: “052. The issue arising in ground no. 10 and 11, raised in assessee‟s appeal is with regard to disallowance of FCCB premium and expenses.The brief facts of the case pertaining to this issue as emanating from the record are that the AO and DRP has considered that the sum of Rs. 12,80,23,824/-being 1/5th of total redemption ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 15 premium and 1/5th of the FCCB issue expenses amounting to 98,97,774/- as deduction has been claimed by assessee u/s 37(1) of the Act. According to AO, the premium of redemption is neither due nor incurred during the year and it is just a provision for liability arising in future. Accordingly, the AO disallowed the claim of deduction and the assessee carried the matter to DRP, who also confirmed by holding that the FCCB premium of redemption is just a provision for liability arising in future and therefore agreed that the AO i.e. premium of redemption cannot be allowed as deduction because the expenditure is neither fructified or ascertained. Further, as for the issue expenses it partakes the nature of capital expenditure. Aggrieved by the Order, the assessee is in appeal before the Tribunal. 053. We have heard the rival contentions and gone through the facts and circumstances of the case. The learned Counsel for the assessee explained the facts that the assessee company has issued FCCB (listed in Singapore Stock Exchange) to the extent of US$ 40 million. These bonds carry an interest rate of 0.5% p.a. and are redeemable on April 19, 2010 at 136.78 percent of the principal amount. Further, these bonds are convertible into shares by bond holders on or after May 18, 2005 and only at the option of bond holders. The total issue expense relating to the issue of FCCB is USD $ 10,77,926 claimed in equal instalments over a period of 5 years. Further, we find that these bonds may be redeemed only in full at any time on or after 18th April 2008 but before 19th April 2010 with a redemption premium of 6.8% p.a. As on 31 December 2005 the additional amount (including exchange fluctuation) which is payable on redemption was provided for under Debenture Redemption Reserve with a corresponding adjustment to Securities Premium Account . Further, none of the bonds were offered for conversion as on 31st March 2007. Further, the FCCB issue expenses have been allowed as a deduction in the Company's own case for the AY 2006-07. Based on GAAP principles and the relevant Accounting Standards , the premium needs to be accrued; consequently the liability has been accrued in the books in the year of receipt of FCCB funds. Premium on redemption amounting to USO 16 Million has been accrued in the financials for the year ending 31 December 2005 based on the office circular. The liability is crystallized in the year of issue; however, it is discharged in the year of redemption.During the course of hearing, the learned A.R. submitted that identical issue was decided in favour of the assessee by the Co– ordinate Bench of the Tribunal in assessee ‟s own case for the preceding assessment year. 054. The learned D.R. vehemently relied on the orders passed by the lower authorities. 055. We have considered the rival submissions and perused the material available on record. We find that the Co–ordinate Bench of the Tribunal in assessee ‟s own case in Strides Pharma Science Ltd. v/s DCIT, in ITA No.8540/Mum/2010 for the assessment year 2006-07, ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 16 vide order dated 31.03.2017 and in ITA no. 8614/Mum./2011, for the assessment year 2007–08, vide order dated 08.06.2018, had deleted the said disallowances.” 17. Following the order passed by the co-ordinate Bench of the Tribunal in assessee’s own case for A.Y. 2008-09, we are of the considered view that the assessee is entitled for claim of issue expenses of FCCB. Hence, disallowance made by the AO/DRP/TPO is ordered to be deleted. So ground No.5 is determined in favour of the assessee. Ground Nos.6 & 7 and additional ground No.1 raised vide application dated 19.06.2023 18. The AO by invoking the provisions contained under section 14A read with rule 8D made a disallowance of Rs.3,03,54,117/- (Rs.3,62,07,231/- – Rs.58,53,114/- suo-moto disallowance) and the same disallowance is added to the book profit as per clause (f) of section 115JB of the Act by declining the contentions raised by the assessee that no expenses have been incurred in relation to the exempt income during the year under consideration. The Ld. DRP upheld the disallowance made by the AO. 19. The Ld. A.R. for the assessee by raising additional ground challenged the impugned order passed by the AO/DRP that when the assessee has not received any exempt income during the year under consideration no disallowance under section 14A required to be made and further contended that even suo-moto disallowance of Rs.58,53,114/- made under section 14A while computing the total income is required to be deleted and relied upon the order passed by the co-ordinate Bench of the Tribunal in case of Orix Auto Infrastructure Services Ltd. (ITA No.5408/M/2019) & Sajjan India ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 17 Ltd. vs. ACIT (2018) 18 taxmann.com 21 (Mumbai). The Ld. A.R. for the assessee further contended that even in assessee’s own case identical issue has been decided for A.Y. 2008-09 & 2010-11 vide orders dated 02.09.2022 & 23.05.2023. 20. Undisputedly during the year under consideration the assessee has not earned any exempt income from its investment. By now it is settled principle of law that when there is no exempt income no disallowance under section 14A is required to be made. The co-ordinate Bench of the Tribunal in case of Orix Auto Infrastructure Services Ltd. (supra) decided the identical issue where the assessee has not earned any exempt income but made suo-moto disallowance, come to the conclusion that no disallowance is required to be made in this case. Though the assessee has not earned any exempt income but made suo-moto disallowance of Rs.58,53,114/- as a precautionary measure and requested that the same should be reduced while determining the taxable income as there was no exempt income derived by the assessee. The co-ordinate Bench of the Tribunal after following the decision rendered by Hon’ble Bombay High Court in case of CIT vs. Prithvi Brokers and Shareholders Pvt. Ltd. 349 ITR 336 (Bom.) held that “no disallowance under section 14A of the Act could be made when there is no exempt income.” Operative part of the findings returned by the co-ordinate Bench of the Tribunal in case of Orix Auto Infrastructure Services Ltd. (supra) by returning following findings: “3.2. We find that assessee had made suomoto disallowance under Rule 8D(2)(iii) of Rs.33,62,493/- and had indeed pleaded before the lower authorities that the same should be reduced while determining taxable income as there was no exempt income derived by the assessee. We find that this request was rejected by the lower authorities. ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 18 3.2.1. We find that assessee is entitled to make a claim before the ld. AO or before the ld. CIT(A) even though it had made certain erroneous disallowance in the return of income. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt Ltd., reported in 349 ITR 336 (Bom). Respectfully following the said decision of the Hon’ble Jurisdictional High Court, we hold that the lower authorities ought to have entertained the claim of the assessee. We also find that the ld. CIT(A) in para 4.14 had categorically agreed to the legal proposition that no disallowance u/s.14A of the Act could be made when there is no exempt income. Having said so, he ought to have entertained the plea of the assessee and directed the ld. AO to reduce even the suomoto disallowance of Rs.33,62,493/- made by the assessee. To this extent, we are inclined to modify the order of the ld. CIT(A) and direct the ld. AO to delete Rs.33,62,493/- being the suomoto disallowance made by the assessee. 3.3. We are conscious of the fact that this deletion of suomoto disallowance would result in assessed income going below the returned income. In this regard, we find that the Hon’ble Gujarat High Court in the case of Gujarat Gas Company Ltd., vs. JCIT reported in 245 ITR 84 and also in later decision in the case of Milton Laminates Ltd., vs CIT reported in 37 Taxmann.com 249 had categorically held that the assessed income could go below the returned income if assessee had disclosed certain income which is not supposed to be disclosed as per law. Respectfully following the said decision, we direct the ld. AO to delete the voluntary disallowance of Rs.33,62,493/- made by the assessee u/s.14A of the Act even if ultimately the assessed income goes below the returned income.” 21. So following the decision rendered by co-ordinate Bench of the Tribunal which is based upon the decision rendered by the Hon’ble jurisdictional Bombay High Court in case of CIT vs. Prithvi Brokers and Shareholders Pvt. Ltd. (supra) and decision rendered by Hon’ble Gujarat High Court in case of Gujarat Gas Company Ltd., vs. JCIT reported in 245 ITR 84, AO is directed to delete the addition made by him as well as suo-moto disallowance of Rs.58,53,114/- made by the assessee and reduce the same while determining the taxable income as no exempt income has been derived by the assessee during the year under consideration. Similarly when there could be no disallowance under section 14A ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 19 no adjustment could be made to the book profit computed in terms of section 115JB of the Act with respect to disallowance under section 14A. Consequently ground Nos.6 & 7 and additional ground No.1 are allowed. Ground Nos.8 &9 22. The Ld. A.R. for the assessee brought on record the fact that the relief sought for by the assessee by virtue of ground Nos.8 & 9 has already been granted by the AO by passing order dated 13.07.2021 & 18.07.2022. In view of the matter ground Nos.8 & 9 are dismissed having been become infructuous. Ground No.10 23. Ground No.10 is consequential in nature, hence needs no finding. Ground No.11 24. No interest under section 234C is liable to be levied when there is no shortfall in the payment of tax by the assessee. The Ld. A.R. for the assessee contended that there is no shortfall in the payment of tax by the assessee, hence no tax can be levied under section 234C. So ground No.11 is allowed and the AO is directed to verify this fact and directed to delete the same. So ground No.11 raised by the assessee is allowed. Ground No.12 25. Ground No.12 is premature hence ordered to be dismissed. ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 20 Ground No.13 26. This ground has also become infructuous as the assessee has already got the relief vide order dated 13.07.2021 & 18.07.2022 passed by the AO under section 154 of the Act, hence ground No.13 is dismissed. Additional Ground No.1 raised vide application dated 14.12.2022 27. The Ld. A.R. for the assessee contended that the AO may be directed to set off brought forward Long Term Capital Loss (LTCL) of earlier years against the income from LTCG of the captioned years. The Ld. A.R. for the assessee has brought on record details of losses to be carried forward to future years available at page 35 of the paper book. The AO is directed to examine the same and to allow the same as per law. So additional ground is allowed for statistical purposes. 28. Resultantly, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 28.06.2023. Sd/- Sd/- (MS. PADMAVATHY S) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 28.06.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench ITA No.1992/M/2016 M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) 21 //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.