Appeal admitted despite time bar, transfer pricing challenge dismissed, ALP reevaluation ordered. Education Cess deduction partially allowed.

The Departmental appeal was admitted despite being time-barred, as the delay was condoned. The Revenue's challenge against the deletion of transfer pricing addition for interest on debentures/CCDs was dismissed. The Tribunal upheld the CIT(A)'s decision, directing reevaluation of facts for ALP determination. The AO/TPO were instructed to recompute the ALP, rejecting departmental grounds. The assessee's claim for deduction of Education Cess and Secondary and Higher Secondary Cess was partially allowed, with the AO directed to determine the correct amount and provide a deduction after hearing.

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Issues:
1. Condonation of delay in Departmental appeal.
2. Deletion of transfer pricing addition towards interest on debentures/CCDs.
3. Allowance of Education Cess and Secondary and Higher Secondary Cess as a deduction.

Analysis:
1. The Departmental appeal was found to be time-barred by 63 days, but the delay was condoned as the ld. AR did not object to it. Thus, the appeal was admitted for hearing.

2. The main issue raised by the Revenue was against the deletion of transfer pricing addition concerning interest on debentures/CCDs. The case involved the recharacterization of transactions by the Transfer Pricing Officer (TPO) for the assessment year 2014-15. The TPO determined Nil Arm’s Length Price (ALP) for the transactions, resulting in a proposed transfer pricing adjustment. However, the ld. CIT(A) deleted the addition, directing the TPO to reevaluate certain facts regarding ALP determination. The Tribunal, considering a similar issue from the previous year, upheld the CIT(A)'s decision, emphasizing that the AO was not justified in re-characterizing the transactions. The Tribunal directed the AO/TPO to recompute the ALP of the transactions, dismissing the departmental grounds.

3. An additional ground raised by the assessee concerned the deduction of Education Cess and Secondary and Higher Secondary Cess while computing total income. The Tribunal admitted this ground as it raised a pure question of law. Referring to relevant judgments, the Tribunal directed the AO to determine the correct amount of education cess and allow a deduction after providing an opportunity of hearing to the assessee.

In conclusion, the appeal of the Revenue was dismissed, while that of the assessee was partly allowed, with directions given for further assessment and deductions.

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