Dcit-Cc-4(3), Mumbai, Mumbai vs Era Realtors Private Limited, Mumbai on 30 May, 2025
6. On other aspect of the issue, the learned CIT (Appeals) noted that TPO has
determined the ALP of transaction of the receipt of amount on issuance of
CCD at Nill. TPO determined ALP at Nill for the reasons that assessee was not
able to justify the identity and creditworthiness of the investor companies
and genuineness of the transaction on the issue of CCD to Thirdscroll Holding
ted. As per section 92C(1)of the Income Tax Act. The TPO is required to
determine ALP of the transaction as per method prescribed therein. The TPO
has not followed any of the prescribed method, i.e. CUP, Transaction Net
Margin Method, Resale Price Method, Profit Split Method or any other method
prescribed in the Act/ Rules. The TPO has merely doubted the identity and
creditworthiness of the investor and genuineness of transaction. The learned
CIT(Appeal) by referring the decision in case of LintasIndia (P) Ltd (2019)
107 taxmann.com 426 (Mumbai Trib) and in John Deere India (P) Ltd Vs ITO
(2017) 82 taxmann.com 201 (Pune-Trib) wherein it was held that where
TPOhad not proposed adjustment as per the procedure laid down under the
transfer pricing provision, there was no merit in ad hoc disallowance of
royalty. The learned CIT(Appeal) further held that TPO was bound to follow
11
ITA No. 3096/Mum/2023 (AY 2013-14)
Era Realtors Private Limited
any of the method prescribed in section 92C(1) and Rule 10AB to determine
ALP of the transaction, therefore the TPO was not justified in determining the
ALP of the transaction on issue of CCD to Thirdscroll Holding Limited at Nill.
So far as other aspect of identity creditworthiness and genuineness of
transaction of issuance of CCD and equity share is concerned, the learned
CIT(Appeals) recorded that on identical issue in assesses own case for AY
2012-13, the assessing officer made similar addition of Rs. 137 crore in
respect of amount received on account of issuance of CCD from Thirdscroll
Holding Limited and equity shares to Azapel Holding Private Limited.
However, on appeal before learned CIT(Appeals), the additions were deleted
and no further appeal is filed by revenue before Tribunal. The ld CIT(Appeals)
also extracted relevant part of order of his predecessor. On the basis of such
observation, the learned CIT(Appeals) deleted the entire addition of Rs.
116.92 Crore. It was ultimately held that transaction of issuance of CCD was
a quasi-capital in nature, secondly TPO has not determined ALP by following
any of the method prescribed under section 92C(1) read with Rule 10AB to
determine ALP.