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IN THE INCOME TAX APPELLATE TRIBUNAL "F"

BENCH, MUMBAI BEFORE SHRI S. RIFAOR RAHMAN, AM & SHRI RAVISH SOOD, JM आयकरअपीलसं./ I.T.A. No. 1073/Mum/2019 (निर्धारणवर्ा / Assessment Year: 2015-16) Vodafone M-Pesa Ltd. DCIT Circle 8(3)(2), Peninsula Corporate बिधम/ Room no. 615, 6th floor Park, Ganpatrao Kadam Vs. Aayakar Bhavan, M. K. Marg, Lower Parel, Road, Mumbai-400 020 Mumbai-400 013 स्थायीले खासं ./जीआइआरसं ./ PAN No. AAECV8934F (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) & आयकरअपीलसं./ I.T.A. No. 2032/Mum/2019 (निर्धारणवर्ा / Assessment Year: 2015-16) DCIT Circle 8(3)(2), Room Vodafone M-Pesa Ltd.

I.T.A. No. 10731Mum/2018 & 2032/Mum/2019 Vodafone M-Pesa Ltd.

The following sources of information have been utilized in conducting the valuation analysis.

Company specific information - The following Company specific information, as provided by the Management, verbally or in written form have been inter-alia used in the valuation

- UnAOdited carved out profit and loss statement for FY14 and period 1 April 2014 to 6 November 2014 for the m-pesa business segment while it was carried out under MSCL.

examined and relied upon by EYMBPSL while issuance of valuation report [please refer statement of Limiting conditions and specific clAOses as reproduced above]. Copy of such MRL is attached as Annexure 2 for your reference.

• At this stage, we also wish to also emphasis that VMPL is a wholly owned subsidiary of Vodafone India Limited ('VIL7. VMPL has been AOthorized by the Reserve Bank of India to operate payment system for issuance and operation of prepaid instruments in India under the Payments and Settlement Systems Act, 2007. VMPL offers mobile-based payment instruments like mobile wallets, linked cards, etc. to customers for enabling payments through mobile phones in a convenient and secure manner. VMPL has built a Mobile Wallet, which is a virtual wallet residing on a customer's mobile phone containing virtual money under the brand name of M-Pesa. By using M-Pesa, the customers can make c-commerce or mobile commerce transactions ie, buy products/ avail services at defined outlets registered with VMPL, deposit and withdraw cash, transfer money to mobile phone or bank account, etc., thereby, reducing the need to carry cash. Thus, the operating revenues of VMPL principally comprise of wallet revenues on account of transactions carried out by M-Pesa subscribers (ie.

28. Now what we are required to examine whether under these facts and circumstances Assessing Officer after invoking the deeming I.T.A. No. 10731Mum/2018 & 2032/Mum/2019 Vodafone M-Pesa Ltd.

provision of Section 56(2)(vii) could have determined the fair market value of the premium on shares issued at Nil after rejecting the valuation report given by the Chartered Accountant on one of the prescribed methods under the rules adopted by the Valuer. Before us, learned counsel, Mr. Dinodia, first of all had harped upon the spirit and intention of the Legislature in introducing such a deeming provision and submitted that such a provision cannot be invoked on a normal business transaction of issuance of shares unless it has been demonstrated by the Revenue authorities that the entire motive for such issuance of shares on higher premium was for the tax abuse with the objective of tax evasion by laundering its own unaccounted money. His main contention was that, being a deeming fiction, it has to be strictly interpreted and there is no mandate to the Assessing Officer to arbitrarily reject the valuation done by the assessee on his own surmises and whims. We are in tandem with such a reasoning of the Id. Counsel, because the deeming fiction not only has to be applied strictly but also have to be seen in the context in which such deeming provisions are triggered. It is a trite law well settled by the Constitutional Bench of Supreme Court, in the case of Dilip Kumar & Sons (supra) that in the matter of charging section of a I.T.A. No. 10731Mum/2018 & 2032/Mum/2019 Vodafone M-Pesa Ltd.