Tribunal grants relief on disallowances for A.Y. 2008-09 & 2009-10, adjusts Book Profit under Section 115JB.

The Tribunal partly allowed the assessee's appeal for A.Y. 2008-09 and 2009-10, granting relief on various disallowances including under Section 36(1)(iii), Section 14A, Pooja Expenses, Club Expenses, Transfer Pricing Adjustment, and others. The Tribunal directed the Assessing Officer to delete certain disallowances and recompute interest under Sections 244A and 234D. Additionally, the Tribunal instructed the AO to adjust Book Profit under Section 115JB without considering disallowance under Section 14A. The revenue's appeal was dismissed as it became moot due to the assessee's successful appeal.

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Issues Involved:
1. Disallowance under Section 36(1)(iii)
2. Disallowance under Section 14A
3. Disallowance of Pooja Expenses
4. Disallowance of Club Expenses
5. Transfer Pricing Adjustment for Corporate Guarantee
6. Treatment of Receipt on Transfer of TDR
7. Unutilized Cenvat Credit
8. Interest under Section 244A
9. Interest under Section 234D
10. Addition to Book Profit under Section 115JB on Disallowance of Section 14A

Detailed Analysis:

1. Disallowance under Section 36(1)(iii):
The Tribunal noted that similar disallowances were made in previous years (A.Y. 2006-07 & 2007-08) and were deleted by the Tribunal. The assessee had sufficient interest-free funds, and the advances were given to subsidiaries out of these funds. Therefore, following the precedent, the disallowance under Section 36(1)(iii) was deleted.

2. Disallowance under Section 14A:
The assessee argued that investments were made from its own funds and not borrowed funds. The Tribunal agreed that no interest disallowance under Rule 8D(2)(ii) was warranted as the investments were from interest-free funds. However, the Tribunal upheld the disallowance of indirect expenses under Rule 8D(2)(iii) at 0.5% of the average value of investments, granting partial relief to the assessee.

3. Disallowance of Pooja Expenses:
The Tribunal found that similar disallowances in previous years were allowed. Following the same reasoning, the Tribunal directed the Assessing Officer to delete the disallowance of Pooja Expenses.

4. Disallowance of Club Expenses:
The Tribunal noted that similar disallowances in previous years were allowed based on the decision of the Hon’ble Bombay High Court in Otis Elevator Co. Ltd. Therefore, the Tribunal directed the deletion of the disallowance of Club Expenses.

5. Transfer Pricing Adjustment for Corporate Guarantee:
The Tribunal held that the provision of a corporate guarantee is considered an international transaction as per Explanation 1(c) to Section 92B. Following the Hon’ble Bombay High Court's decision in Everest Canto Cylinders Ltd., the Tribunal directed the Assessing Officer to charge a guarantee commission at 0.5% per annum for the period of the guarantee.

6. Treatment of Receipt on Transfer of TDR:
The Tribunal admitted the additional ground raised by the assessee regarding the non-taxability of capital gains from the transfer of TDR. The Tribunal restored the issue to the Assessing Officer to decide afresh, considering the assessee's claim and providing sufficient opportunity for the assessee to substantiate its claim.

7. Unutilized Cenvat Credit:
Following the Tribunal's decision in the assessee's own case for A.Y. 2007-08, the issue was restored to the Assessing Officer for examination afresh.

8. Interest under Section 244A:
The Tribunal restored the issue to the Assessing Officer to recompute the interest under Section 244A in accordance with the law, directing the assessee to provide necessary details.

9. Interest under Section 234D:
Similar to the interest under Section 244A, the Tribunal restored the issue to the Assessing Officer to recompute the interest under Section 234D, directing the assessee to provide necessary details.

10. Addition to Book Profit under Section 115JB on Disallowance of Section 14A:
The Tribunal followed its decision in the assessee’s own case for A.Y. 2007-08, wherein it was held that computation under clause (f) of Explanation 1 to Section 115JB(2) should be made without resorting to computation/disallowance under Section 14A. The Tribunal directed the Assessing Officer to follow this precedent and recompute the adjustment under Section 115JB accordingly.

Separate Judgments:
- The appeal of the assessee for A.Y. 2008-09 was partly allowed.
- The appeal of the assessee for A.Y. 2009-10 was partly allowed with similar directions as given for A.Y. 2008-09.
- The appeal of the revenue was dismissed as it became infructuous following the Tribunal's decision on the assessee's appeal.

Order Pronouncement:
The order was pronounced in the open court on 17/01/2020.

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