Petitioner bank filed the writ petition to quash the order dated 29-12-2016, passed by the Respondent to holds certain transactions entered. By the petitioner are “ Specified Domestic Transactions “ ( “SDTs”) as per S. 92BA(i) of the Act and the Arms Length Price ( “ALP”) of the said transactions are required to be determined by making a reference c to TPO under S.92CA(1) of the Act for determination of ALP. Order as well as reference are ex-facie without jurisdiction, illegal , unsustainable , contrary to the principle of natural justice , the Writ petition was admitted . Allowing the petition the Court held that, Revenues contention that a share holder has beneficial interest in the assets of the company is contrary to all cannons of company law .Law does not permit to hold that HDFC Ltd is the beneficial owner of 22.64% of the shares of the petitioner by clubbing the share holding of HDFC investments Ltd with the share holding of HDFC Ltd. Payment made by the petitioner to the global Pvt Ltd for rendering services would not fall with in the meaning of a SDT – Payment of interest to HDFB Trust which is a welfare trust for providing general welfare to the employees of the petitioner and not the petitioner – The Trust has been set up exclusively for the welfare of its employees and there is no question of petitioner being entitle to 20% of the profits of such Trust – transaction would not fall with in the meaning of S. 40A(2) (b) of the Act hence is not covered as SDT- Loan cannot be treated as expenditure -Indirect share holding is not covered under S.40A(2)(b) of the Act- – From Revenues contention that a share holder has beneficial interest in the assets of the company is contrary to all cannons of company law -Law does not permit to hold that HDFC Ltd is the beneficial owner of 22.64% of the shares of the petitioner by clubbing the share holding of HDFC investments Ltd with the share holding of HDFC Ltd- None of the three transactions that form the subject matter of the petition with in the meaning of S.92BA(1) of the Act , required to be disclosed by the petitioner by filing form 3CEC – Accordingly the petition was allowed. ( AY. 2014-15)( WP No. 462 of 2017, dt. 20.12.2018)
HDFC Bank Ltd. v. ACIT ( 2019) 410 ITR 247/ 306 CTR 189/173 DTR 217/ 261 Taxman 297(Bom)(HC),www.itatonline.org
S.92BA:Domestic transfer pricing- Arms Length price- Specified Domestic Transactions ( SDT)- Purchase of loan from HDFC Ltd -Loan could never be termed as an expenditure – Payment made by the petitioner to the global Pvt Ltd for rendering services would not fall with in the meaning of a SDT – Payment of interest to HDFB Trust which is a welfare trust for providing general welfare to the employees of the petitioner and not the petitioner – The Trust has been set up exclusively for the welfare of its employees and there is no question of petitioner being entitle to 20% of the profits of such Trust – transaction would not fall with in the meaning of S. 40A(2) (b) of the Act hence is not covered as SDT- Loan cannot be treated as expenditure -Indirect share holding is not covered under S.40A(2)(b) of the Act- – From Revenues contention that a share holder has beneficial interest in the assets of the company is contrary to all cannons of company law -Law does not permit to hold that HDFC Ltd is the beneficial owner of 22.64% of the shares of the petitioner by clubbing the share holding of HDFC investments Ltd with the share holding of HDFC Ltd- None of the three transactions that form the subject matter of the petition with in the meaning of S.92BA(1) of the Act , required to be disclosed by the petitioner by filing form 3CEC – Accordingly the petition was allowed. [ S.40A(2)(b),92CA(1), 271G ]