Tribunal remands Revenue's appeal, dismisses assessee's Cross Objection, and condones filing delay.

The Tribunal allowed the Revenue's appeal, remanding the issue for further consideration. The assessee's Cross Objection was dismissed, and the delay in filing it was condoned.

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Issues:
1. Condonation of delay in filing the appeal by the Revenue.
2. Justification of interest rate on debentures and application of DTAA between India and Cyprus.
3. Admission of additional evidence by CIT (A) without following proper procedures.
4. Consideration of comparable cases for determining arms length rate of interest.
5. Taxation of interest income under DTAA without surcharge and education cess.

Condonation of Delay:
The Revenue filed an appeal with a delay of 1159 days, citing misplacement of files due to cadre restructuring as the reason. The assessee objected, highlighting incomplete details in the Revenue's application for condonation. The Revenue explained the delay due to workload and cross-movement of files. The Tribunal accepted the reasons given by the Revenue, condoning the delay and allowing the appeal.

Interest Rate on Debentures and DTAA:
The assessee invested in debentures of related parties with an interest rate of 15.75%. The AO proposed adding 4.55% to the income, considering 11.20% as a reasonable rate. The AO also applied the DTAA between India and Cyprus, recharacterizing interest as "income from other sources." The CIT (A) directed to compute interest at 15.75% as the "Arms Length" rate and tax it at 10% under the DTAA. The Tribunal remanded the issue to the AO/TPO for further consideration in accordance with the law.

Admission of Additional Evidence:
The CIT (A) accepted additional evidence from the assessee without calling for a remand report from the AO, violating Rule 46A of the I.T. Rules. The Tribunal found this acceptance without verification by the AO as improper and remanded the issue for denovo consideration.

Comparable Cases and Taxation under DTAA:
The Revenue raised multiple grounds of appeal, challenging the CIT (A)'s decision on the interest rate and taxation under the DTAA. The Tribunal found the CIT (A) erred in not following proper procedures and remanded the issue for further consideration by the AO/TPO.

Conclusion:
The Tribunal allowed the Revenue's appeal, remanding the issue for further consideration. The assessee's Cross Objection was dismissed, and the delay in filing it was condoned. The Tribunal pronounced the order on 12th June 2019.

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