2023 (6) TMI 1388 - AT - Income Tax

Transfer pricing rules don't apply to share application money with no income accrual, FCCB expenses allowed under section 35D

M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) Versus The Deputy Commissioner of Income Tax, Circle 15 (3) (2), Mumbai.

M/s. Strides Shasun Ltd., (Formerly known as Strides Acrcolab Limited) Versus The Deputy Commissioner of Income Tax, Circle 15 (3) (2), Mumbai. - TMI Issues Involved:1. Transfer Pricing Adjustment u/s 92CA2. Imputing Additional Interest on Share Application Money3. Disallowance of Premium Payable on Redemption of FCCBs4. Allowability of Premium on FCCBs in the Year of Redemption5. Disallowance of FCCB Issue Expenses6. Disallowance u/s 14A7. Disallowance u/s 14A while Computing 'Book Profits' u/s 115JB8. Credit for Foreign Taxes Paid9. Credit for Tax Deducted at Source (TDS)10. Levy of Interest u/s 234B11. Levy of Interest u/s 234C12. Initiation of Penalty Proceedings u/s 271(1)(c)13. Rectification of Mistakes Apparent on Record14. General GroundsSummary:Ground No. 1:General in nature, no specific discussion required.Ground No. 2: Transfer Pricing Adjustment u/s 92CAThe Tribunal held that the issue of imputing interest on share application money pending allotment has already been decided in favor of the assessee in previous years (A.Y. 2008-09, 2010-11, 2014-15, 2015-16). The Tribunal directed the AO to delete the addition made on account of notional interest, as the transaction was not deemed to be a loan.Ground Nos. 3 & 4: Disallowance of Premium Payable on Redemption of FCCBsThese grounds were dismissed as they were not pressed by the assessee.Ground No. 5: Disallowance of FCCB Issue ExpensesThe Tribunal followed its previous orders for A.Y. 2008-09 and directed the AO to delete the disallowance of FCCB issue expenses, allowing the assessee's claim.Ground Nos. 6 & 7 and Additional Ground No. 1 (19.06.2023): Disallowance u/s 14AThe Tribunal found that no disallowance u/s 14A is required when there is no exempt income. The suo-moto disallowance made by the assessee was also directed to be deleted. The Tribunal also held that no adjustment could be made to the book profit u/s 115JB with respect to disallowance u/s 14A.Ground Nos. 8 & 9: Credit for Foreign Taxes Paid and TDSThe Tribunal noted that the relief sought by the assessee had already been granted by the AO in subsequent orders, rendering these grounds infructuous.Ground No. 10: Levy of Interest u/s 234BThis ground was deemed consequential and required no specific finding.Ground No. 11: Levy of Interest u/s 234CThe Tribunal directed the AO to verify the assessee's claim that there was no shortfall in tax payment and to delete the interest levied u/s 234C if verified.Ground No. 12: Initiation of Penalty Proceedings u/s 271(1)(c)This ground was dismissed as premature.Ground No. 13: Rectification of Mistakes Apparent on RecordThis ground was dismissed as infructuous since the assessee had already received relief through subsequent orders.Additional Ground No. 1 (14.12.2022): Set-off of Brought Forward Long Term Capital LossThe Tribunal directed the AO to examine and allow the set-off of brought forward long-term capital loss against the income from long-term capital gains as per law.Conclusion:The appeal filed by the assessee was partly allowed for statistical purposes. The Tribunal directed the AO to make necessary adjustments and deletions as per the findings on each issue.