2017 (4) TMI 864

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....1,99,65/- in respect of provision for 'post retirement medical scheme' treating a contingent liability. (v) The ld. CIT(A) erred in confirming the disallowances of Rs. 5,24,659/- as prior period expenses. 2. Brief facts of the case are that the assessee-company is engaged in the business of export/import of Alumina/Aluminium, Ferro Alloys, Steel, Machine Tools etc., filed its return of income for relevant AY on 29.09.2008. The Assessing Officer (AO) while framing the assessment order noticed that assessee has entered into international transaction with its AE. Thus, reference u/s 92CA(3) was made to the Transfer Pricing Officer (TPO) for computation of Arms Length Price (ALP) in relation to international transaction with its AE. The ld. TPO after giving opportunity of hearing to the assessee submitted its report/order dated 20.01.2011 to the AO. The ld. TPO determined the ALP of international transaction relating to cost of guarantee for Rs. 2,16,986/-. On the basis of order passed u/s 92CA(3) of the Act by TPO, the AO added Rs. 2,16,986/- on account of corporate guarantee. The AO further disallowed a sum of Rs. 1,56,87,826/- u/s 14A, disallowed the depreciation on intangible ass....

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....essee was not accepted by TPO. The TPO concluded that providing of corporate guarantee is an international transaction. The assessee has not any kind of bench mark, the TPO concluded that assessee has not discharged his primary onus of bench marking for transaction and proceeded to determine the ALP. The TPO further concluded that during the relevant year, the bank rate was 6% and for the week ended on 28.09.2007 upto 05.10.2007, the rate was 6% while average PLR rate for this period was in between 12.75 to 13.25% and worked out the ALP on CUP Method of Rs. 2,16,986/-. The TPO suggested the upward adjustment of Rs. 2,16,984/-. On appeal before the ld. CIT(A), the adjustment was sustained holding that rate of 6% adopted by TPO is quite reasonable. 5. We have seen that recently the similar ground of appeal came up consideration before the co-ordinate bench of this Tribunal in Videocon Industries vs. DCIT in ITA No. 1310/Mum/2016 and the Tribunal vide order dated 24.02.2017 passed the following order: "10. However, we are not entering into semantics of this argument as to whether corporate guarantee is an 'International Transaction' or not, because before us, the Ld. counsel Mr. Son....

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....e recovered from AE should be 0.50% which would meet the arms length requirement. Thus, under the facts and circumstances of the case, we direct the TPO/Assessing Officer to take the corporate guarantee fee @ 0.50% and make the adjustment accordingly. Thus, the issue of corporate guarantee as raised vide ground nos. 1.1 to 1.5 is treated as partly allowed." Considering the decision of co-ordinate bench on similar issue, we direct the AO to exceed the corporate guarantee fees @ .5% and made the adjustment accordingly. Thus, Ground No.1 is partly allowed. 6. Ground No.2 relates to disallowance of depreciation of Rs. 11,90,285/- on intangible assets. The ld. AR of the assessee fairly conceded that this Ground of Appeal is covered against the assessee in assessee's own case for AY 2009-10 in ITA No. 1822/Mum/2013 dated 31.07.2015. The ld. DR for the Revenue confirmed the contention of ld. AR of the assessee. Considering the contention of ld. AR of the assessee, the Ground No.2 raised by assessee is dismissed. 7. Ground No.3 relates to the disallowance of Rs. 1,56,87,826/- u/s 14A r.w. Rule 8D(iii) of the Act. The ld. AR of the assessee argued that this ground of appeal is covered in....

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....lar issue came before the Tribunal in the case of the group concern M/s. Mahindra &Mahindra Ltd. for assessment year 2007-08 and vide order dated 8/6/2012 in ITA No.7999/Mum/2011, similar liability has been held to be an unascertained liability which was not allowable as a deduction under section 37(1) of the Act. Following the aforesaid precedent, we hereby affirm the stand of the Lower Authorities in deciding the issue against the assessee. Thus, on this aspect also assessee fails." 10. Considering the decision of co-ordinate bench in assessee's own case for AY 2009-10, wherein order of AY 2007-08 was followed. Thus, following the preceding year, this ground of appeal is dismissed. 11. Ground No.5 relates to disallowance of prior period expenses. The ld. AR of the assessee argued that prior period expenses were related with service tax covered u/s 43B and is allowable expenses in the year when payment was made. On the other hand, ld. DR for the Revenue relied upon the orders of authorities below. 12. We have considered the rival contention of the parties and gone through the order of authorities below. The AO during the assessment observed from the Tax Audit Report (TAR) that ....