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of <h1>Tribunal rules for assessee in transfer pricing & section 14A dispute, deletes additions</h1> <h3>Transasia Bio-Medicals Limited Versus ACIT, RaNGE-11 (3) (1), Mumbai</h3> Transasia Bio-Medicals Limited Versus ACIT, RaNGE-11 (3) (1), Mumbai - TMI Issues:1. Transfer pricing adjustment challenge2. Disallowance under section 14A r.w.r.8DTransfer Pricing Adjustment Challenge:The appeal by the assessee contested the addition made on transfer pricing adjustment for the assessment year 2011-12. The dispute centered around the interest rate applied by the Transfer Pricing Officer (TPO) on loans granted to an associate enterprise (AE). The TPO proposed a rate of 14%, while the Commissioner (Appeals) directed to determine the rate at LIBOR / EURIBOR (+) 3.83%. The assessee argued that the interest charged at 3% was at arm's length, supported by the prevailing LIBOR rates. The Tribunal noted that the TPO had accepted 3% interest in subsequent assessment years, leading to the conclusion that the interest charged was at arm's length, resulting in the deletion of the addition.Disallowance under Section 14A r.w.r.8D:The assessee challenged the disallowance made under section 14A r.w.r.8D for earning exempt income through dividends and long-term capital gains. The Assessing Officer computed disallowance under Rule 8D, leading to a total disallowance of Rs. 2,04,87,775. The Commissioner (Appeals) deleted part of the disallowance but sustained a portion. The Tribunal observed that the Assessing Officer did not record proper satisfaction before invoking Rule 8D, as required by section 14A(2) of the Act. Despite the detailed explanation provided by the assessee for the voluntary disallowance made, the Assessing Officer failed to justify why the claim was incorrect. Consequently, the Tribunal deleted the disallowance of Rs. 86,44,811, resulting in the allowance of the appeal.In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee on both the transfer pricing adjustment challenge and the disallowance under section 14A r.w.r.8D.
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