Appeals partially allowed, orders re-verification of tax issues.

The appeals were allowed in part, with various issues being restored to the Transfer Pricing Officer (TPO) and Assessing Officer (AO) for re-verification and fresh decision. The Tribunal emphasized compliance with its earlier directions and legal precedents, directing re-computation of notional interest on outstanding receivables from associated enterprises, MAT credit, TDS/TCS credits, interest under Sections 234B/234C and 244A, and disallowance of depreciation on office premises for book profit under Section 115JB. The Tribunal's order was issued on 08th January 2020.

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Issues Involved:

1. Charging of notional interest on outstanding receivables from AEs.
2. Incorrect computation of income tax payable and utilization and carry forward of MAT credit.
3. Non-grant of full TDS/TCS credit and non-consideration of TDS and advance tax payable by erstwhile subsidiary.
4. Incorrect computation of interest under Section 234B/234C.
5. Computation of interest under Section 244A.
6. Adjustment of book profit under Section 115JB by adding disallowance on account of depreciation on office premises.

Issue-wise Detailed Analysis:

1. Charging of Notional Interest on Outstanding Receivables from AEs:

The primary issue for both A.Y. 2012-13 and 2013-14 pertains to the charging of notional interest on the outstanding balance of receivables from AEs. The TPO had computed the adjustment on the interest that should have been charged to the AE on receivables remaining unpaid beyond 90 days, applying a LIBOR of 4.8%. The Tribunal referenced its earlier order for A.Y. 2009-10, where it had directed the AO to recompute the interest, considering the advances from AEs and limiting the interest computation to the financial year-end. The Tribunal also emphasized that the interest element might already be factored into the pricing of contracts with AEs and that the higher operating margin from AE transactions should be considered. The matter was restored back to the TPO/AO for fresh decision in line with these directions.

2. Incorrect Computation of Income Tax Payable and Utilization and Carry Forward of MAT Credit:

For A.Y. 2012-13, the assessee argued that the MAT credit was not correctly given by the AO. The Tribunal restored the matter to the TPO/AO for re-verification and correct computation of MAT credit.

3. Non-grant of Full TDS/TCS Credit and Non-consideration of TDS and Advance Tax Payable by Erstwhile Subsidiary:

The assessee claimed that the AO did not grant full TDS/TCS credit and did not consider the TDS and advance tax payable by its erstwhile subsidiary, which merged with the assessee from 01/04/2011. The Tribunal directed the AO to verify the factual position and grant the correct credit as per law.

4. Incorrect Computation of Interest under Section 234B/234C:

The assessee contended incorrect computation of interest under Section 234B/234C due to non-credits or short credits. The Tribunal directed the AO to verify the computation of interest under Section 234B and to charge interest under Section 234C based on the returned income, not the assessed income.

5. Computation of Interest under Section 244A:

For A.Y. 2013-14, the assessee argued that the AO had granted interest under Section 244A only for 37 months instead of 52 months. The Tribunal directed the AO to verify the correctness of the interest computation and grant the necessary refund as per law.

6. Adjustment of Book Profit under Section 115JB by Adding Disallowance on Account of Depreciation on Office Premises:

The AO had disallowed tax depreciation on the cost of office premises and added this disallowance to the book profits under Section 115JB. The Tribunal referenced the Supreme Court decision in Apollo Tyres Ltd. vs. CIT, which limits the AO's power to adjustments specified in the Explanation to Section 115J. The Tribunal found no justification for the AO's addition of depreciation while computing book profit and ruled in favor of the assessee.

Conclusion:

The appeals were allowed in part, with several matters restored to the TPO/AO for re-verification and fresh decision, ensuring compliance with the Tribunal's earlier directions and legal precedents. The Tribunal's order was pronounced on 08th January 2020.

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