Monthly Archives: October 2014


DCIT v M/s. Baljit Securities Private Limited /I.T.A No.1183/Kol/2012 (Kol ITAT) dated 21.10.14 Background: The assessee is engaged in the business of trading in shares on self account, derivative transactions and share broking activity. During the course of assessment proceedings, the AO noted that the assessee has incurred it incurred net loss of Rs.2,16,75,441/- in purchase and sale of shares (delivery based loss of Rs.7,29,56,706 and non-delivery based profit of Rs.5,12,81,265). The assessee treated the entire activity of purchase and sale of shares which comprised of both delivery based and non-delivery based trading, as one, before application of the deeming provision contained in explanation to section 73 of the Act and accordingly, claimed set off of the loss incurred in delivery based trading with the profit derived from derivative trading. The AO applied explanation of Section 73 of the Act and denied the claim of set off of loss from dealing of shares with profit from F & O operations. The CIT(A) allowed the claim of the assessee by holding that share trading loss is to be allowed to be set off with the profits earned in derivative transactions. The Department filed an appeal before the ITAT against the CIT(A) order. 

Explanation to section 73 to be applied after setting off share trading loss against derivative ...


Vodafone India Services Pvt. Ltd vs. UOI (WRIT PETITION NO.871 OF 2014) (Bombay High Court) dated 10.10.2014 Background: The Petitioner, Vodafone India Services Pvt. Ltd., is a wholly owned subsidiary of a non-resident company, Vodafone Tele-Services (India) Holdings Limited. The Petitioner issued 2,89,224 equity shares of a face value of Rs.10/- each at the premium of Rs.8,519/- per share to its holding company.  The Fair Market Value for the issue of equity shares was determined by the Petitioner in accordance with the methodology prescribed under the Capital Issues (Control) Act 1947. The Petitioner filed Form 3CEB alongwith return of income wherein the transaction of issuance of equity shares was declared as an International Transaction and also the ALP of the shares so issued, was determined. However, a note was appended to its Form 3-CEB report by the Accountant making it clear that the transaction of issue of equity shares did not affect the income of the Petitioner and was being reported only as a matter of abundant caution. According to the AO and TPO, the Petitioner ought to have valued each equity share at Rs.53,775/- and on that basis shortfall in premium to the extent of Rs.45,256/- per share resulted into total shortfall of Rs.1308.91 crores. The short fall in the value of shares issued by the Petitioner to its holding company was also treated as a deemed loan by the Petitioner to its holding company. This deemed loan was sought to be charged with interest at 13.5% per annum amounting to Rs.88.35 crores.  Thus the total amount of Rs.1397,26,37,035/- was treated as transfer pricing adjustment for the FY 2008-09, relevant for the AY 2009-10.

TP adjustment cannot be made in relation to issue of shares at a premium lower ...