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46. Before Ld CIT(A), the assessee contended that the application made for subscribing preference shares cannot be treated as interest free loan and hence no T.P adjustment could have been made. In this regard, the assessee placed reliance on the decision rendered by Delhi ITAT in the case of Bharti Airtel Limited vs. ACIT (ITA No.5816/Del/2012 reported in TS-76-ITAT-2014), wherein also identical T.P adjustment had been made. It was held in the above said case that character of payment, i.e., subscription amount cannot be changed as interest free loan, merely due to delay in allotment of shares, as there is no such deeming fiction under Income tax Act. It was further held that it is not open to the TPO to recharacterise the transaction under Income tax Act, unless it is found to be sham or bogus. It was further held that, even under judge-made law, recharacterisation is possibly only if transactions are found to be substantially at variance with the stated form. In the absence of any such finding and also in the absence of anything on record to show that an unrelated applicant for preference shares would be entitled for interest for the period till the date of allotment of shares, the ITAT deleted the addition. The above said ruling was followed by Mumbai bench of ITAT in the case of Parle biscuits P Ltd (ITA No.9010/Mum/2010 reported in TS-127-ITAT-2014). The assessee also placed reliance on the decision rendered by Hon'ble jurisdictional High Court in the case of DIT (Intl. Taxation) vs. Besix Kier Dhabhol SA (210 Taxman 151), wherein it was held that re-characterisation of share application money as loan is not permitted under the provisions of Income tax Act. It was also submitted that the General Anti Avoidance provisions inserted in Chapter X-A of the Act by Finance Act 2013, shall apply prospectively from AY 2016-17 onwards only. Accordingly it was contended that the T.P adjustment made on share application money is not sustainable.

M /s . R e l i a n c e In d us tr i e s l i m i te d

47. The Ld CIT(A), by following the decision rendered by Hon'ble Bombay High Court in the case of Besix Kier Dhabhol SA (supra) and also following decisions rendered by Tribunal held that the re-characterisation of Share Application money as interest free advance is not permissible:-

(a) Parle biscuits P Ltd of Mumbai ITAT (supra)

(b) Bharti Airtel Limited of Delhi ITAT (supra)