SARENS HEAVY LIFT INDIA PRIVATE LIMITED,NEW DELHI V. ACIT CIRCLE-22(1), NEW DELHI

ITA 9719/DEL/2019

AI Insights

The case involves M/s Sarens Heavy Lift India P. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-34, New Delhi, confirming a penalty under section 271AA for not reporting the allotment of shares to its parent company, M/s Sarens NV, Belgium, in Form 3CEB. The shares were issued in lieu of capitalizing trade payables under a specific window allowed by the Reserve Bank of India. The primary contention was whether the transaction qualified as an 'international transaction' under section 92B of the Income Tax Act, 1961, which would necessitate reporting in Form 3CEB. The Tribunal concluded that since no adjustments were made regarding the international transactions by the Assessing Officer and the transaction did not meet the criteria of an international transaction as per the Act, the penalty was not applicable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314341 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANINDER KAUR; RAJESH KUMAR
• Assessee Lawyers: S SALIL KAPOOR; UTKARSH KUMAR; ADVOCATES
• Keywords: Set aside; Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 143(3); 92B; 92D

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “जी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी अवधेश क ुमार िमŵा, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER आअसं.9719/िदʟी/2019 (िन.व. 2015-16) ITA No.9719/DEL/2019 (A.Y.2015-16) M/s Sarens Heavy Lift India P. Ltd., F-90/25, Okhla Industrial Area, Phase-I, Delhi 110020 PAN: AAMCS-9036-P ...... अपीलाथᱮ/Appellant बनाम Vs. Assistant Commissioner of Income Tax, Circle-22(1), 308, 3rd Floor, Drum Shape Building, ..... ᮧितवादी/Respondent New Delhi 110002 अपीलाथŎ Ȫारा/ Appellant by : S/Shri Salil Kapoor, & Utkarsh Kumar, Advocates ŮितवादीȪारा/Respondent by : Ms. Maninder Kaur, Sr. DR & Shri Rajesh Kumar, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 07/02/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 07/05/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-34, New Delhi (hereinafter referred to as 'the CIT(A)') dated 24.10.2019, for AY 2015-16, confirming levy of penalty u/s. 271AA of the Income Tax Act, 1961 (hereinafter referred to as 'the Act’). 2. Shri Salil Kapoor, appearing on behalf of the assessee submits that during the period of relevant assessment year under appeal, the assessee had allotted 2 ITA No. 9719/Del/2019 (AY 2015-16) 140565039 equity shares of Rs.10 each to its parent company M/s. Sarens NV, Belgium. The shares were issued in lieu of capitalization of trade payables outstanding in its books of account for the year ended 31.03.2014, under a specific window allowed by the Reserve Bank of India. The said allotment of shares to parent company does not qualify as ‘international transaction’ defined u/s. 92B of the Act; hence, the same was not reported in Form 3CEB. The assessee filed its return of income for the impugned assessment year on 30.11.2015 declaring Nil income. The return of the assessee was accepted by the Assessing Officer (AO) in proceedings u/s. 143(3) of the Act accepting all international transactions. It is pertinent to mention here that no reference was made by the Assessing Officer to Transfer Pricing Officer (TPO) u/s. 92CA of the Act. Once, no addition/adjustment has been made on account international transaction, the penalty u/s. 271AA of the Act is not leviable. In any case, allotment of shares to parent company does not fall within the meaning of international transaction as defined under the Act, hence, penalty u/s. 271AA of the Act is unsustainable. 3. Per contra, Ms. Maninder Kaur representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that the assessee failed to report transaction of issue of shares to its associated enterprises in Form 3CEB. Thus, the assessee has failed to comply with the mandatory provisions of reporting of international transactions. 4. We have heard the submissions made by rival sides and have examined the orders of authorities below. The short issue in this appeal is levy of penalty u/s. 271AA of the Act for none reporting of allotment of shares by assessee to its parent company in Form 3CEB. It is an undisputed fact that the assessee during the period relevant to assessment year under appeal had allotted shares to its 3 ITA No. 9719/Del/2019 (AY 2015-16) parent company i.e. Sarens NV, Belgium. As per the provisions of section 92D of the Act every person who enters into an international transaction is required to maintain and document information in respect of any transactions as specified under Rule 10D of the Income Tax Rules 1962 (hereinafter referred to as ‘the Rules’). The assessee has placed on record Form 3CEB at pages 87 to 96 of the paper book. A perusal of the same reveals that the assessee has given a complete list of Associates Enterprises with whom the assessee entered into international transaction during the period relevant to AY 2015-16. The assessee has also given detailed descriptions of transactions entered into with its AE’s during the relevant period except for issuance of share capital against outstanding trade payables of the parent company. The assessee is a wholly owned subsidiary of Sarens NV, Belgium the shares have been issued by the assesse to its parent company at par. No addition/adjustment was made by the AO on account of any international transaction and the return of income was accepted by the AO. Hence, in our considered view it is not a fit case for levy of penalty u/s. 271AA of the Act, therefore, penalty levied u/s. 271AA of the Act is deleted. 5. In the result, impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Wednesday the 07th day of May, 2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 07/05/2025 4 ITA No. 9719/Del/2019 (AY 2015-16) NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "