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| The Tax Publishers2019 TaxPub(DT) 2361 (Bom-HC) : (2019) 416 ITR 0435 : (2019) 307 CTR 0739 : (2019) 262 TAXMAN 0104 INCOME TAX ACT, 1961
Section 92B read with sections 2(24)
Where shares purchased by assessee from its 100 per cent subsidiary AE at high premium were on capital account, the difference between investment and fair market value of such shares could not be brought to tax as the same would not give rise to any income to trigger the provisions of transfer pricing under Chapter X.
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Transfer Pricing - Arm's length price - Purchase of shares from AE on high premium -
Assessee-company filed its return of income showing some international transactions. TPO made addition to income of assessee on account of adjustment of excess money paid to its AE, which was its 100 per cent subsidiary in respect of acquiring its shares. On appeal, the Tribunal allowed the same holding that no income arose on account of purchase of shares as it was on capital account. Aggrieved by the same, Revenue preferred appeal. Held: Since shares purchased by assessee from its 100 per cent subsidiary AE at high premium were on capital account, the difference between investment and fair market value of such shares could not be brought to tax as the same would not give rise to any income to trigger the provisions of transfer pricing under Chapter X.
REFERRED : Vodafone India Services (P.) Ltd. v. Union of India (2014) 368 ITR 1 (Bom.) : 2014 TaxPub(DT) 3959 (Bom-HC)
FAVOUR : In assessee's favour
A.Y. : 2010-11
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