DCIT 5(1), MUMBAI V. EQUINX BUSINESS PARKS P.LTD, MUMBAI

ITA 288/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93241 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Valuation report

Judgement Text

K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, A M .. , . . , ./ I.T.A. NO. 288 /MUM/2015 ( / ASSESSMENT YEAR : 2010-11 D.C.I.T. 5 ( 1 ) , ROOM NO. 568, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S EQUINOX BUSINESS PARKS PVT. LTD., ESSAR HOUSE, 11, K.K. MARG, MAHALAXMI, MUMBAI 400 034. ./ PAN : AACCC9633L ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) A PPELLANT BY SHRI N.K. CHAND R E SPONDENT BY : SHRI VIJAY MEHTA $ % & ' ( ) / DATE OF HEARING : 13-07-2015 *+,- ' ( ) / DATE OF PRONOUNCEMENT : 22-7-2015 [ . / O R D E R PER A.D. JAIN, J.M . : .. , THIS IS DEPARTMENTS APPEAL FOR A.Y. 2010-11, CHALL ENGING THE ACTION OF THE LD. DISPUTE RESOLUTION PANEL -1, MUMBAI IN ISSU ING DIRECTIONS U/S 144C(5) OF THE INCOME TAX ACT, 1961 TO DELETE THE A DJUSTMENT MADE BY THE TPO ON ACCOUNT OF VALUATION OF ISSUE OF SHARES AMOU NTING TO RS. 296,91,54,540/-. 3. THE ISSUE UNDER CONSIDERATION IS THAT THE ASSESS EE ISSUED 9595 NUMBER OF COMPULSORY CONVERTIBLE DEBENTURES ('CCDS') OF RS .2,000 EACH, CONVERTIBLE INTO 4 EQUITY SHARES AT RS. 500/- PER SHARE. WHILE BENCHMARKING THE ISSUANCE ITA 288/M/15 2 OF THESE EQUITY SHARES, THE ASSESSEE RELIED UPON TH E VALUATION REPORT OF A CHARTERED ACCOUNTANT MADE, AS PER CCI GUIDELINES. T HE TPO REJECTED THIS VALUATION REPORT AND WORKED OUT THE VALUE PER SHARE AT RS. 1955.45 BY APPLYING THE DCF METHOD AND WORKED OUT THE ADJUSTME NT OF RS. 5,58,60,171/- TOWARDS SHORTFALL IN THE ISSUE PRICE OF THE SHARES. HE ALSO CONSIDERED THE SHORTFALL IN THE ISSUE PRICE OF SHAR ES OF THIS YEAR, AS WELL AS THE SHORTFALL IN ISSUE PRICE OF SHARES OF AY 2009-10 AS DEEMED LOAN AND CHARGED INTEREST OF RS. 296,91,54,540/- ON IT. 4. THE LD. DRP I FOUND THE ABOVE ISSUE TO BE COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF M/S VODAFONE INDIA SERVICES PRIVATE LIMITED, I N WRIT PETITION NO. 871 OF 2014 DATED 10 TH OCTOBER, 2014 AND ACCORDINGLY, THE GROUND OF OBJEC TION RAISED BY THE ASSESSE WAS ALLOWED. THIS DECISION HA S BEEN ACCEPTED BY THE REVENUE. HOWEVER, IN A.Y. 2010-11 ALSO, THE ASSESSE E HAD ISSUED CCDS AND EQUITY SHARES AND THE BASIS WAS IDENTICAL TO THE PR ESENT ISSUE. THE REVENUE SOUGHT TO TAX THE ASSESSEE IN TERMS OF CHAPTER X OF THE ACT. HOWEVER, THE HONBLE JURISDICTIONAL HIGH COURT, VIDE WRIT PETITI ON NO. 1273 OF 2014, SET ASIDE THE ORDERS OF THE TPO AND ALLOWED THE PETITIO N BY HOLDING AS UNDER:- 10. ACCORDINGLY, WE SET ASIDE THE ORDERS OF TPO DATED 3 0 JANUARY 2013, THE DRAFT ASSESSMENT ORDER DATED 26 MARCH 2014 AND OF D RP 1 DECEMBER 2013 TO THE EXTENT THEY SEEK TO MAKE ADDITIONS ON ACCOUNT O F ISSUE OF EQUITY SHARES AND DEBENTURES TO ITS AE AND THE SHORTFALL IN RECEIPT T HEREOF BEING CONSIDERED AS DEEMED LOAN AND DEEMED INTEREST THEREON BEING SOUGH T TO BE BROUGHT TO TAX. 11. ACCORDINGLY, THE PETITION IS ALLOWED IN THE ABO VE TERMS. THERE SHALL BE NO ORDER AS TO COSTS. 5. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, THE ACTION OF THE LD. DR P-I IN DELETING THIS DISALLOWANCE IS ALSO UPHELD AND DISMISS THE APPEAL FILED BY THE REVENUE. ITA 288/M/15 3 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2015. . ' *+,- $ /0 1 2 22 ND + ' 3& SD/- SD/- (N.K. BILLAIYA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER / $ & MUMBAI ; 1 DATED 22-07-2015 [ %.../ R.K. R.K. R.K. R.K. , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $ E( () / THE DRP-I, , MUMBAI 4. $ E( / CIT/DIT CONCERNED, MUMBAI 5. H%I 3 '(JK , ) JK- , / $ & / DR, ITAT, MUMBAI G BENCH 6. 3 L M & / GUARD FILE. ! ( / BY ORDER, # H( '( //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , / $ & / ITAT, MUMBAI