TaxTMI 
TaxTMI 
2018 (4) TMI 557
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....s of the case and in law, the Commissioner of Income Tax (Appeals)-15 ("the CIT(A)-15") erred in upholding part disallowance of a sum of Rs. 24,58,395/- u/s. 14A of the Income Tax Act, 1961 ("the Act"). 2. He failed to appreciate and ought to have held that: - Investments had been made out of own funds and internal cash accruals and has not incurred any expenditure in relation to tax -free income - That own funds were sufficient to cover tax - free investments. - No other expenses were incurred in relation to earning the dividend income. 3. The Appellant prays that the aforesaid disallowance u/s 14A be deleted. Without Prejudice to Ground I Ground II 1. The appellant also prays that on the basis of reasonableness the disallowances u/s 14A to be restricted to the extent of 1 % of exempt income. 2. The above view has been accepted by Commissioner of Income Tax (Appeals)'s in appellant's own case in the past years. GROUND III: Disallowances of interest on share holders deposits amounting to Rs. 1,37,70,563/- as it not at arms length 1. On the facts and circumstances of t....
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.... aforesaid capital gain in the year under consideration and allow the set off of brought forward capital loss against the same. GROUND VI: Long term capital loss on sale of investment not considered 1. On the facts and circumstances of the case and in law, the CIT (A)-15 erred in not directing the AO, to allow the long term capital loss amounting to Rs. 1,90,49,831/- on sale of investments. 2. The Appellant prays that the AO be directed to allow the said long term capital loss and grant set off and/or carry forward thereof as per law. 2. The Revenue in its cross appeal has raised the following grounds of appeal: On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in directing that the expenses disallowed under section 14A amounting to Rs. 2,96,54,962/- be not added to the book profit u/s.115JB of the Act under Clause 'f' of Explanation 1 to that section, contrary to the expressed provision to add any e....
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....3 ITR 529) (Bombay High Court) and CIT Vs. Reliance Utility and Power Ltd. [313 ITR 340 (B)]. In other alternative submission, the Ld. AR of the assessee submits that the disallowance under section 14A should not be restricted to exempt income. The assessee earned exempt income of Rs. 28,000/- only. Therefore, the disallowance under section 14A should not exceed to exempt income. In support of its submission, the Ld. AR of the assessee relied upon the decision of Joint Investment P. Ltd. Vs. CIT [372 ITR 694 (Del.) and Daga Global Chemicals Pvt. Ltd. Vs. ACIT in ITA No. 5592/Mum/2012 (Mum. Trib.) The Ld. DR for the Revenue relied upon the order of authorities below. However, the Ld. DR not disputed the amount of exempt income of Rs. 28,380/- earned by assessee during the relevant Financial Year. The Ld. DR for the Revenue also conceded that Rule 8D is not applicable for the A.Y. under consideration. 5. We have considered the rival submission of the parties and gone through the orders of authorities below. We have noted that the assessee earned exempt income of Rs. 28,380/- in the form of dividend income. The Hon'ble Delhi High Court in case of Joint Investment Pvt. Ltd. (sup....
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....qually applicable to controlled and uncontrolled enterprises i.e. they are universally applicable and hence the very restrictions for permissions would be deemed to encompass the principle of neutrality and hence, the standard of arms length is inherent in the provision of law. Hence the company has a contractual and statutory obligation with the PTFSI for not charging any interest on the shareholder deposits and thereby it cannot take any recourse for charging interest till the year 2015 by which PTFSI is required to make payment to the company. There has been no inflow or outflow relating to the above deposit during the Previous Year 2011- 12 and hence it is outside the purview of transfer pricing provisions. We are of the view that the assessee cannot be asked to do something which is impermissible in law and expenditure incurred in compliance of law or the direction of the statutory authorities, the same is allowable. This view is supported by the case law relied on by the assessee of Hon'ble Bombay High court in the case of CIT v. Hukumchand Mills Ltd. [1993] 202 ITR 474 . Further, another aspect argued by the learned Counsel is that interest and principal amount itself is....
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....in accordance with law. Needless to say that the Assessing Officer shall grant necessary opportunity of hearing before passing the order. In the result, appeal of the assessee is allowed. ITA No. 557/Mum/2012 for AY 2007-08. 13. The Revenue has raised the sole ground of appeal which relates to addition on disallowance under section 14A r.w.Rule 8D to the computation of book profit under section 115JB of Rs. 2,96,54,962/-. At the outset of hearing, the Ld. AR of the assessee submits that the ground of appeal raised by Revenue is also covered in assessee's own case for A.Y. 2012-13 in ITA No. 1716/Mum/2017 and by the decision of Special Bench in ACIT Vs. Vireet Investment (P.) Ltd. [82 taxmann.com 415 (Del. SB). On the other hand, the Ld. DR for the Revenue fairly conceded that this ground of appeal is covered in favour of assessee. 14. We have considered the rival submission of the parties and gone through the order of authorities below. We have noted that identical ground of appeal was raised by assessee in appeal for A.Y. 2012-13. The Tribunal passed the following order: 57. The next issue in this appeal of assessee is against the order of DRP confirming the acti....
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.... the appeal is allowed. 19. Ground No. II & III relates to addition on account of Transfer Pricing Adjustment in relation to non-interest bearing shareholders deposits of Rs. 1,50,94,363/-. These ground of appeal are identical to the ground of appal for A.Y. 2007-08. We have already allowed the identical ground of appeal for A.Y. 2007-08. Thus, following the principle of consistency, these grounds of appeal are allowed with similar direction. 20. In the result, ground no. II & III are allowed. 21. Ground No. IV relates to addition on account of Transfer Pricing Adjustment towards interest on outstanding balances of the Associate Enterprises for Rs. 44,21,973/-. The Ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee in assessee's own case for A.Y. 2012-13. On going through the order of Tribunal for A.Y. 2012-13. The Ld. DR for the Revenue conceded that this ground of appeal is covered in favour of assessee. 22. We have considered the submission of both the parties and noted that similar ground of appeal was raised by assessee in appeal for A.Y. 2012-13. The co-ordinate bench of Tribunal passed the following order: 24. We f....
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....Gain and Business Income. The Ld. AR of the assessee submits that he is not pressing these grounds of appeal. Considering the submission of Ld. AR, Ground No. V & VI are dismissed as not pressed. 25. In the result, appeal of the assessee is partly allowed. ITA No. 6055/Mum/2014 for A.Y. 2008-09 by Revenue 26. Ground No. 1 relates to deleting the addition on account of Transfer Pricing Adjustment towards this involve in guarantee on loan and advances to Associate Enterprises for Rs. 60,48,000/-. At the outset of hearing, the Ld. AR of the assessee submits that this ground of appeal is also covered in favour of assessee in assessee's own case for A.Y. 2012-13. The Ld. AR of the assessee further submits that corporate guarantee given to third party in favour of Associate Enterprises is not an international transaction as envisaged under section 92 of the Act. In support of his submission, the Ld. AR of the assessee relied upon the decision of Bharti Airtel Ltd. v. Addl CIT (63 SOT 113( (Del.), Siro Clinpharm Private Ltd. v DCIT (ITA No. 2618 of 2014)(Mum.), Marico Ltd. v. ACIT (70 taxmann.com 214) (Mum.) & Videocon Industries Ltd. v. Addl. CIT (55 taxmann.com 263)(Mum.).On th....
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.... any bearing on profits, income, losses or assets of the enterprise and, therefore, it is outside the ambit of 'international transaction' to which ALP adjustment can be made. As we have decided the matter in favour of the assessee on this short issue, we see no need to address ourselves to other legal issues raised by the assessee and the judicial precedents cited before us. For the reasons set out above, and as we have held that the issuance of corporate guarantees in question did not constitute ' international transaction' within meanings thereof under section 92B, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned ALP adjustment of Rs. 33,10,161. The assessee gets the relief accordingly." 17. We further notice that the decision of Ahmedabad Tribunal in the case of Micro Ink Ltd. v. Addl. CIT [2016] 157 ITD 132/[2015] 63 taxmann.com 353 (Ahd. - Trib.), which has followed the decision of Bharti Airtel (supra) held that issuance of corporate guarantees was in the nature of shareholder's activity/quasi capital, thus, could not be included in the ambit of international transaction u/s. 92(1) of the Ac....
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.... Ltd. [2013] 145 ITD 582/34 taxmann.com 298 (Mum. - Trib.), wherein it was held as under: "For the guarantee given to the bank against the financial assistance given to its AEs, no commission was charged by the assessee-company on the ground that the said AEs were not benefited by the guarantee so given and it was the assessee who benefited as a result of commercial benefits secured for future. In support of this stand of the assessee, the assessee has contended that business strategy should be taken into consideration while making any TP adjustments in respect of such transactions and has relied on the OECD Transfer Pricing Guidelines issued in 2010. As stated in para 1.59 of the said guidelines, the business strategies should also be examined in determining comparability for transfer pricing purposes and certain illustrations of such business strategies are also given therein. As stated in para 1.60 of the said guidelines which has been relied upon by the assessee, business strategies also could include market penetration schemes and taxpayer seeking to penetrate a market or to increase its market share might temporarily charge a price for its product that is lower than ....