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details of the bank in which the proceeds of FCCBs were parked in the foreign countries and from where these were transferred to Indian Bank, were also furnished. Along with the said reply, the assessee submitted copies of Offer Memorandum of the FCCBs issued, Global Certificate along with the Registrar's confirmation of entries of the Bondholder in Register, Foreign Inward Remittance Certificate and the details of FCCBs as per the Offer documents and Global Certificates.

5.3. Both the sides are in agreement that the facts and circumstances of the three FCCB issues are similar. For the sake of convenience and on representative basis, the parties chose to take up the FCCB issue of US$ 500 million with DB HK as Lead Manager for making their respective submissions. The assessee entered into a Subscription Agreement with DB HK on 21.3.2006, as per which DB HK agreed to subscribe to the FCCB issue of US$ 500 million. As per Clause-1 of the Agreement, the assessee agreed to issue the Bonds and the Lead Manger agreed to subscribe and pay for or to procure subscribers to subscribe and pay for the Bonds on the closing date at the issue price of hundred per cent of the aggregate principal amount of the Bonds less the commission and concession referred to in Clause-5. As per Clause 1.2, the Issuer assessee undertook to prepare and deliver to the Lead Manager an Offering Circular not later than four business days prior to the closing date. The assessee issued Offering document dt. 05.05.2006 to DB HK, clarifying that M/s.Reliance Communications Limited.

5.6. It is palpable from the above narration of facts that the assessee was concerned with and did actually receive US$ 497.500 million from and on behalf of DB HK, which was duly recorded in its M/s.Reliance Communications Limited.

name. It is not understandable, in the facts and circumstances of the extant case, that how the assessee could have entered the names and addresses of the actual subscribers in its books of account, when the subscriber, as far as the assessee is concerned, was DB HK. The Global Certificate was issued by the assessee in the name of DB HK. It was for DB HK to subscribe to the entire FCCB or find customers for a part or total of such issue. The decision on inviting other customers from outside India to subscribe to the FCCB and to what extent was the sole responsibility of DB HK, without any instructions or involvement of the assessee in India. In so far as the assessee is concerned, it was only supposed to get the amount against FCCB from DB HK, which it, in fact, received. The fact that Global Certificate was issued in the name of nominee of DB HK amply proves that it was the obligation of DB HK to pay towards FCCB issue of US$ 500 million. The ld. CIT has not referred to any material which indicates that the assessee had details of the `actual subscribers' at the time of issuance of FCCB or it was obliged to keep such details. No material has been brought to our notice even by the ld. DR to show that at that stage the assessee had any direct contact with the actual subscribers to the FCCB, different from DB HK. It can be observed from the details of the shares issued, on conversion of FCCB at a much later stage, that DB HK itself opted to subscribe for a certain part of the FCCB and issued a portion thereof to other customers who also happen to be international financial institutions only. At the stage of issuance of Bonds, there was privity of contract M/s.Reliance Communications Limited.

6.2. A perusal of the impugned order indicates the conclusion drawn by the learned CIT on this aspect is contained in para 4.3.5. He opined that the assessee did not discharge its onus of fulfilling the requisite conditions of section 68 of the Act in respect to the actual subscribers to the FCCB issue, as it only furnished the identity of the Lead Managers who are distinct from the subscribers to the issue. He noticed that : "The names and addresses and creditworthiness etc. of the actual subscribers to the FCCB issues have not been furnished / established by the assessee either during the course of assessment proceedings or even now, during the course of proceedings u/s 263". Thereafter, he recorded that various judicial decisions relied upon by the assessee were of no help as the assessee did not furnish details about the names and addresses, PANs etc. and creditworthiness of the persons from whom the FCCB funds were introduced in the books of account of the assessee, which is a primary condition for the applicability of the said decisions to the assessee's case. He further noticed that : "In the absence of above, compliance to the procedure M/s.Reliance Communications Limited.

and rules of various regularity authorities in respect of FCCB cited by the assessee cannot be substituted for establishing the identity and creditworthiness etc. of subscribers to the FCCB.". A cursory look at the above findings recorded by the ld.CIT on this issue reveals that he was not satisfied with the assessment order because in his opinion, the necessary ingredients for the applicability of section 68, being identity, capacity and credit worthiness of the `actual subscribers' were required to be examined, which the AO failed to do. There is no reference whatsoever to the non-examination by the AO of the compliance or otherwise of the RBI guidelines in respect of FCCB issues. Now the question arises as to whether the ld. DR can be held to be within her power to press for approving the impugned order from an angle different from that taken note of by the ld. CIT.