Dismissing the appeal of the revenue the Court held that, Purchase of equity shares at value in excess of FMV is capital transaction and does not give raise to any income Taxability under Transfer Pricing provisions of shares purchased at value in excess of FMV. As the transaction of purchase of equity shares is a capital transaction and does not give rise to any income, the transfer pricing provisions do not apply. Chapter X is a machinery provision. It can only be invoked to bring to tax any income arising from an international transaction. It is necessary for the revenue to show that income does arise from the international transaction. S. 2(24)(xvi) & 56(2)(viib) are prospective. (ITA No. 1685 of 2016, dt. 20.02.2019)( AY.2010-11)
PCIT v. PMP Auto Components Pvt. Ltd. ( 2019) 416 ITR 435/ 175 DTR 404 / 307 CTR 739 / 262 Taxman 104(Bom.)(HC), www.itatonline.org
S. 92C : Transfer pricing–Purhase of equity shares at value in excess of FMV is capital transation and does not give raise to any income Taxability under Transfer Pricing provisions of shares purchased at value in excess of FMV-As the transaction of purchase of equity shares is a capital transaction and does not give rise to any income, the transfer pricing provisions do not apply. Chapter X is a machinery provision- It can only be invoked to bring to tax any income arising from an international transaction. It is necessary for the revenue to show that income does arise from the international transaction. S. 2(24)(xvi) & 56(2)(viib) are prospective. [S.2(24)(xvi); 56(2)(viib), 92B]