Tribunal held that ;Foreign AE and parent company of the assessee is not only a party to the agreement but the terms of the agreement, in substance, are being decided by the foreign AE, therefore ,termination of option rights under an agreement can be treated as a “deemed international transaction” hence transfer provision is held to be applicable and addition was held to be justified.Right to nominate another group concern for transfer of its unexercised call option right is covered by definition of transfer in terms of Explanation 2 to S.2(47) accordingly liable to be taxed as capital gain ( ITA No. 565/Ahd/2017, dt. 23.01.2018)(AY. 2012-13)
Vodafone India Services Pvt. Ltd. v. DCIT( 2018) 169 ITD 345/ 168 DTR 257/ 192 TTJ 105 ( Ahd)(Trib) www.itatonline.org
S.92B: Transfer pricing – International transaction – Termination of option rights under an agreement can be treated as a “deemed international transaction”- Transfer pricing provision was held to be applicable and addition was held to be justified . Transfer of its unexercised call option right to nominate is held to be liable to capital gain tax . [ S. 2(47),92C ,92F]