2014 (1) TMI 872

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....n the business of strategic investment and consultancy services. The assessee is making investments in various sectors either by itself or through its wholly owned subsidiaries both in India and overseas. The assessee filed its return of income for the AY. 2007-08 on 31-10-2007 declaring its total income as Rs. 58,52,69,148/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Act was issued to the assessee on 08-08-2008. Since, some international transactions were made by the assessee during the relevant AY, reference u/s. 92CA(1) of the Act was made to the Transfer Pricing Officer (TPO). The assessee had advanced USD25 Million to its wholly owned subsidiary Avis Venture Ltd.,(AVL) Mauritius @ 6% p.a. vide agr....

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.... appropriate to treat interest @ 14% as the ALP of the transaction. 3. The Assessing Officer vide draft assessment order, made addition u/s. 14A r.w.r. 8D. The assessee had received dividend income from mutual funds to the tune of Rs. 47,46,25,883/- and claimed the entire amount as exempt. The assessee had claimed expenses towards payment of interest amounting to Rs. 28,00,34,434/- during the year. According to balance sheet as on 31-03-2007, the assessee had made investments to the tune of Rs. 15,28,07,35,000/-. The assessee had voluntarily made dis-allowance u/s. 14A to the extent of Rs. 9,12,24,848/-. The Assessing Officer made an additional dis-allowance of Rs. 8,22,92,012/-. Aggrieved against the findings of the TPO and draft ass....

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.... on behalf of the Revenue strongly supported the assessment order and prayed for the dismissal of the appeal of the assessee. 6. We have heard the representative of both the sides and had gone through the orders of the authorities below. The first issue arised by the assessee is with regard to interest rate. The TPO has held that based on the opportunity cost, interest @ 14% as the ALP of the transaction is appropriate. The view of the TPO has been upheld by the DRP. However, we find that this issue has already been adjudicated by the co-ordinating bench of the Tribunal in Siva Industies & Holding Ltd. (supra) wherein the Tribunal has held as under:      "11.... Once the transaction between the assessee and the Ass....