TaxTMI 
TaxTMI 
2019 (2) TMI 1058
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....uarantee for loans taken by AEs 2. erred in making a notional adjustment on account of provision of corporate guarantee by the Appellant to its AEs. without appreciating the fact that such transactions do not qualify as international transactions within the meaning of Section 92B of the Act; 3. erred in making a notional adjustment of guarantee commission of Rs. 7,14,67,809 by determining the Arm's Length Price ('ALP') on the corporate guarantee provided by the Appellant to its subsidiaries, over and above the voluntary adjustment in respect of guarantee commission made in the return of income, aggregating to Rs. 4,71,28,451. 4. erred in not appreciating the fact that the guarantee commission of Rs. 7,14,67,809 does not accrue or deemed to accrue or received or deemed to receive to/by the Appellant from its AEs: 5. erred in not appreciating the fact that the guarantee given by the Appellant is for strategic purpose and in its capacity of a shareholder; 6. erred in not appreciating the fact that no benefit arose to the AEs from corporate guarantee given by the Appellant; 7. without prejudice to above, erred in making ....
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....m), wherein the jurisdictional High Court directed the AO to restrict the adjustment at 0.5%. The Tribunal observed as under: - "Considering the above stated facts, we direct the AO to restrict the adjustments to 0.5% as upheld by the Hon'ble High Court in the case of Everest Kanto Cylinders (supra). Accordingly, the relevant ground nos. 6 to 9 are partly allowed." 5. We find that this issue is squarely covered by Tribunals decision in assessee own case for immediately preceding years and hence, respectfully following the Tribunals view and the decision of Hon'ble Bombay High Court in the case of Everest Kanto Cylinder Limited (supra) we direct the AO to restrict the adjustment at 0.5% of the loan amount advanced by the bank to its AE. We direct the AO accordingly. This issue of assessee's appeal is partly allowed. 6. The next issue in this appeal of assessee is against the order of AO/TPO/ DRP is regarding making disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules 1962 (hereinafter the 'Rules'). For this assessee has raised the following ground: - "Disallowance un....
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....to disallowance for an amount of Rs. 43,96,340/- considering the overall investment amounting to Rs. 12,24,16,786/-. The AO was of the view that the disallowance under section 14A of the Act read with Rule 8D of the Rules be computed considering the growth oriented mutual funds in the average investment and accordingly, he disallowed a sum of Rs. 2,57,60,872/-, over and above the suo moto disallowance made by the assessee at Rs. 43,96,340/-. The assessee before us filed comparative chart of disallowance consider by assessee and the AO as under: - Sr. No. Investment Amount (Rs.) 31 March 2012 Amount (Rs) 31 March 2011 Amount 1. Ezeego One Travel and Tours Private Limited (Ezeego) 10,00,00,000 10,00,00,000 Considered by the Assessee in Suo moto disallowance- Average investments is Rs. 12.24 cr. 2. Business India Publications Limited (BIPL) 24,75,000 24,75,000 Additionally considered by the learned AO 3. Radius Global Travel Company 59,16,063 59,16,063 4. Tulip Stars Hotels Limited (Tulip) 1,40,25,000 1,40,25,000 5. Mutual Funds (Growth Option) 7,02,300 1,58,22,40,335 &nbs....
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....the assessee has made suo moto disallowance of Rs. 43,96,340/- by considering the overall investment of Rs. 12,24,16,063/-. The assessee claimed before us, that the assessee has not earned any dividend income from such investment of Rs. 12,24,16,063/-. The learned Counsel for the assessee before us relied on in the decision of Special Bench of Delhi ITAT in the case of ACIT vs. Vireet Investments (P.) Ltd. [2017] 58 ITR(T) 313 (Delhi - Trib.) (SB), wherein it is held as under: - "11.16 Therefore, in our considered opinion, no contrary view can be taken under these circumstances. We, accordingly, hold that only those investments are to be considered for computing average value of investment which yielded exempt income during the year." 12. When this facts were confronted to the learned CIT Departmental Representative, he stated that the issue can be remitted back to the file of the AO for verifying whether the investment of Rs. 12,24,16,063/- as claimed by assessee is giving exempt income or not. In view of the decision of Special Bench of ITAT Delhi in the case of Vireet Investments (P.) Ltd. (supra), we direct the AO to consider those investments only for computing the....
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....R statement is Rs. 187,79,01,066/-." It was explained that out of total 284 parties, the tour sales pertains to 145 parties as per the books of account were more than the sales reflected in AIR to the extent of Rs. 17,90,37,421/-. Further in case of 118 parties the tour sales amount as per AIR is exactly matching with that of the books of account of the assessee. The assessee explained it was sales of balance 21 parties appearing in the books of accounts were less than those appearing in AIR statement by an amount of Rs. 25,86,068/-. The DRP also rejected the objection of the assessee and agreed with the order of the Assessing Officer. It was contended before us that the AIR statement is generated on system basis, the details provided by various parties and according to them there could be instances of possible errors therein and such errors are in regard the name, PAN, TAN of the assessee and grossing up of TDS etc. But the assessee before us could not filed any reconciliation qua the difference of Rs. 25,86,068/- except making verbal submissions. At last, the assessee contended that the addition should be restricted to the profit margin of sales at the rate of 11.47% on un acc....
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.... the comparable. The assessee has also developed SAP software for its back office functions like accounting and Human Resource management and for this various direct and indirect expenses have been incurred by the assessee. The assessee claimed total expenses for development of portal and SAP software amounting to Rs. 31,88,06,569/- forming part of capital work in progress as per AS(Accounting Standard) followed by the assessee. The AO while framing assessment disallowed an expenses of Rs. 1,20,24,914/- mainly incurred by assessee on account of salary expense of staff/ employees and according to the AO these were not wholly and exclusively involved in the development and implementation of software and their involvement is less than 60% of the total activity. The assessee carried the matter to DRP and raised objections which were rejected by holding that the expenses incurred on travel booking engine and SAP software was to acquire new capital asset to be used in a new line of business of assessee allowing the customers to book tickets, tour packages etc. and accordingly the same cannot be allowed under section 37(1) of the Act. Aggrieved, assessee came in appeal before Tribunal ....
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....h submissions made by the assessee. These propositions put forth by of the assessee before AO are supported by the decision of the Hon'ble Bombay High Court in the case of Kothari Auto Parts Mfg. (P.) Ltd. (supra), and the decision of Hon'ble Gujarat High Court in the case of Alembic Glass Industries Ltd. (supra). Therefore, it has to be held that these expenditures incurred by the assessee are for the purpose of expansion of its business and those expenditure are in the nature of revenue (being mostly paid to employees). These are allowable in the year itself as per ratio of aforementioned decision of the Hon'ble Bombay High Court in the case of Kothari Auto Parts Mfg. (P.) Ltd. (supra) and Hon'ble High Court of Gujrat in the case of Alembic Glass Industries Ltd. (supra). These expenditures did not create any asset and also did not provide enduring benefit to the business of the assessee so as to say that the expenditure was capital in nature. Therefore, we hold that expenditure are allowable in the year under consideration irrespective of the fact that assessee has given dual status to such expenditure in its books of account vis-à-vis computation of income....