16 Section 92E of the Act – Allotment of shares is an international transaction; Taxpayer is required to furnish Form 3CEB for reporting such transaction.

TS-319-ITAT-2017(Mum)-TP

BNT Global Pvt. Ltd. vs. ITO

A.Y.: 2011-12, Date of Order: 25^th April, 2017

Facts

Taxpayer was an Indian
company. During the course of assessment proceedings, AO observed that the
Taxpayer had received foreign inward remittance on account of share capital and
premium from one of its existing shareholder who was also a director of the
Taxpayer Company. Though no adjustments were made, AO held that the allotment
of shares was an international transaction and levied penalty of INR 1 lakh
u/s. 271BA the Act as the Taxpayer did not file Form 3CEB.

The Taxpayer contended that share allotment transaction is
not an international transaction and in absence of any other international
transaction entered into by the Taxpayer, it was not required to file form
3CEB. Taxpayer appealed before CIT(A), who upheld the levy of penalty.
Aggrieved by the order of CIT(A), the Taxpayer appealed before the Tribunal.

Held

–   It is mandatory for a person entering into
international transactions to furnish Form 3CEB setting forth the particulars
of international transactions.

–   Transaction of share investment, clearly
falls within the ambit of section 92E of the Act and hence it has to be
reported in Form 3CEB. 

–   In IL&FS Maritime Infrastructure Co. Ltd.
(ITA No. 4177/Mum/2002 dated 23.07.2013), co-ordinate bench of the Tribunal has
held that share investment transactions fall within the purview of section 92E
of the Act. Hence, Taxpayer is required to file form 3CEB for such transactions
before the due date. In case of default, penalty u/s. 271BA would be attracted.

–   Thus, Taxpayer’s contentions that it was not
required to file Form 3CEB, since the provisions of section 92E of the Act were
not applicable to allotment of shares does not hold good.

–   Taxpayer’s reliance on Vodafone India
Services Pvt. Ltd. vs. ACIT (2014) 368 ITR 1 (Bom) is not applicable to the
present case, since in the aforesaid case Form 3CEB was filed by the Taxpayer
and issue considered therein was validity of arm’s length price adjustment made
by Transfer Pricing Officer (TPO) to issue of equity shares at a premium.

–   Failure on the part of the Taxpayer to
furnish the audit report in Form 3CEB is a violation of the provisions of
section 92E of the Act. Accordingly, penalty under the Act was leviable u/s.
271BA.