ERANTHUS DEVELOPERS PRIVATE LIMITED,MUMBAI vs. DCIT, CIRCLE 14(1)(2), MUMBAI

ITA 8997/MUM/2025Status: DisposedITAT Mumbai09 September 2026AY 2022-2311 pages
AI SummaryAllowed

What were the facts?

The assessee company incurred interest expenditure on unsecured Compulsorily Convertible Debentures (CCDs) issued to an associated enterprise. The Assessing Officer (AO) and Dispute Resolution Panel (DRP) treated these CCDs as equity and determined the arm's length price (ALP) of interest at Nil, making a significant adjustment.

What did the Tribunal hold?

The Tribunal held that fully and compulsorily convertible debentures are hybrid instruments that remain debt instruments until conversion into equity. The re-characterization of CCDs as equity for transfer pricing purposes by the revenue authorities was not sustained.

What were the issues?

Whether the revenue authorities were justified in re-characterizing CCDs as equity to determine the arm's length price of interest, and whether the assessment order was time-barred.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(3),Section 144B,Section 153,Section 92(2),Section 36(1)(iii),Section 37(1),Section 234D,Section 144BA,Section 98

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI ANIKESH BANERJEE & MS. RATNA DASGUPTA

For Respondent: Ms Ajay Uke- Sr. AR

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(3) r.w.s. 144B of the Income Tax Act, 1961 (for ITA 8997/MUM/2025

brevity ‘the Act’), for Assessment Year 2022-23, date of order 16.10.2025. The impugned order originated by pursuing the o

The order continues below.

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