AIROLI ITP DEVELOPMENT PRIVATE LIMITED,MUMBAI vs. DY CIT CIRCLE 1(1)(1), MUMBAI CITY

ITA 6708/MUM/2024Status: DisposedITAT Mumbai10 September 2026AY 2021-229 pages
AI SummaryAllowed

What were the facts?

The assessee issued unsecured Compulsorily Convertible Debentures (CCDs) to an associated enterprise, incurring significant interest expenditure. The Transfer Pricing Officer (TPO) re-characterized these CCDs as equity, deeming the interest payment at arm's length to be Nil.

What did the Tribunal hold?

The Tribunal held that Compulsorily Convertible Debentures (CCDs) are debt instruments until their conversion into equity. The re-characterization of CCDs as equity by the TPO was beyond the scope of transfer pricing and lacked the procedural safeguards of GAAR provisions.

What were the issues?

Whether Compulsorily Convertible Debentures (CCDs) can be re-characterized as equity by the Transfer Pricing Officer for determining arm's length price, and if the GAAR provisions are applicable.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 144C(5),Section 234A,Section 234B,Section 270A,Section 95,Section 96,Section 98,Section 144BA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI ANIKESH BANERJEE & MS. RATNA DASGUPTA

For Respondent: Shri Ashish Kumar, CIT, Sr.DR

PER: SHRI ANIKESH BANERJEE, (JM): The instant appeal of the assessee filed against the order of the Assessment Unit, Income Tax Department [for brevity “Ld. AO”], order passed under Section 143(3) r.w.s. 144C (13) r.w.s. 144B of the Income Tax Act, 1961 (for brevity ‘the Act’), date of order 25.10.2024. The impugned order originated

ITA 6708/MUM/2024

by pursuing to the order of the Ld. Comm

The order continues below.

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