2019 (2) TMI 234

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.... counsel for the assessee submitted before us that one of the items of addition made which has given rise to the outstanding demand was a sum of Rs. 538.59 crores on account of determination of arm's length interest income on advances made to overseas subsidiary by the assessee. The advances to the subsidiaries were in foreign currency. The adjustment suggested by the TPO was by applying 14.18% rate of interest, whereas as per the law laid down by the Hon'ble Rajasthan High Court in the case of CIT v. Vaibhav Gems Ltd. [2017] 88 tgaxmann.com 12 and the decision of the jurisdictional Tribunal in the case of Sasken Technologies Ltd. in ITA No.550/Bang/2016, order dated 16.11.2018, only the LIBOR rate of interest has to be adopted for loans gi....

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....ven to the correct legal position, the outstanding demand would get reduced by Rs. 14.85 Crores. 5. It was further submitted that revenue authorities disallowed brand promotion expense of Rs. 44.33 crores holding it to be capital expenditure and allowed only depreciation, which resulted in levy of tax to the extent of Rs. 14.39 crores. The Hon'ble High Court of Karnataka in the case of Indo Nissin Foods Ltd. reported in 35 taxmann.com 637 has taken a view that brand promotion expenses are revenue in nature and cannot be treated as capital expenditure. If effect is given to this decision, the tax payable would be reduced by Rs. 14.39 Crores. 6. The ld. counsel for the assessee submitted that assessee has a prima facie case and balance of c....

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....ision of Rajasthan High Court in Vaibhav Gems Ltd. (supra) were after the earlier order of stay passed by the Tribunal. So also, he pointed out that the disallowance u/s. 14A to be restricted to exempt income earned was rendered by the Hon'ble High Court of Karnataka in the case of Pragathi Krishna Gramin Bank (supra) after the passing of the order of Tribunal in the Stay Petition filed for AY 2012-13. He therefore submitted that there were material changes in the facts and circumstances of the case and therefore dismissal of stay petition in the earlier assessment year will not be of any significance. 9. We have heard the rival submissions. Keeping in mind the existence of a prima facie case, other contentions regarding change of circumst....