TaxTMI 
TaxTMI 
2019 (8) TMI 557
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....e ground, being ground no.4, is on the issue of disallowance made under section 14A r/w rule 8D. 4. It is necessary to observe, the Revenue has also challenged the decision of the learned Commissioner (Appeals) on the very same issue in its appeal in ITA no.4972/Mum./2016 and the corresponding ground being ground no.5 and 6. Therefore, for the sake of convenience, we propose to dispose of both the grounds together. 5. Brief facts are, in the course of assessment proceedings the Assessing Officer noticed that during the year under consideration, the assessee has earned exempt income by way of dividend from shares and mutual funds amounting to Rs. 3,627. Since, the disallowance of expenditure for earning of exemption made by the assessee was not in terms of rule 8D, the Assessing Officer called upon the assessee to explain why disallowance should not be computed by applying rule 8D. In response, it was submitted by the assessee that following the decision of the Tribunal in its own case it has disallowed 10% of the dividend income. Hence, no further disallowance should be made. The Assessing Officer, however, did not find merit in the submissions of the assessee and proceede....
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....e with the learned Authorised Representative that while making such adjustment the Assessing Officer cannot invoke the provisions of section 14A r/w rule 8D, however, it is equally true that the Assessing Officer can make adjustment to the book profit towards expenditure incurred for earning exempt income as per Explanation-1(f) of section 115JB of the Act. Therefore, in the facts of the present case, we direct the Assessing Officer to restrict the adjustment under Explanation-1(f) to section 115JB of the Act to the amount of exempt income earned by the assessee during the year. Ground no.4 of the assessee's appeal and grounds no. 5 and 6 of Revenue's appeal are accordingly disposed of. 11. In the result, assessee's appeal is partly allowed. ITA no.4972/Mum./2016 Revenue's Appeal - A.Y. 2011-12 12. In ground no.1, the Revenue has challenged the deletion of addition of Rs. 3,58,478, made by the Assessing Officer under section 41(1) of the Act. 13. Brief facts are, during the assessment proceedings, the Assessing Officer after verifying the details relating to sundry creditors furnished by the assessee, found that an amount of Rs. 3,58,478, pertaining to 46 creditors are ....
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....educed a part of expenditure allocated to the other units by reallocating them to Baddi and Solan Units. This resulted in disallowance of R & D expenses of Rs. 8,54,86,997. The assessee challenged the aforesaid disallowance before the first appellate authority. 17. The learned Commissioner (Appeals) taking note of the order passed by the first appellate authority in assessee's own case in assessment year 2010-11 and various other decisions, ultimately held that the Assessing Officer was not justified in apportioning R & D expenses incurred in other Units to Baddi and Solan Units. Thus, he allowed assessee's claim. 18. We have considered rival submissions and perused the material on record. The learned Authorised Representative fairly submitted befor us that the Tribunal while deciding identical issue in assessee's own case in assessment year 2010-11 has restored it to the Assessing Officer with certain directions. He submitted, similar direction may be issued in the impugned assessment year. 19. The learned Departmental Representative agreed with the aforesaid submission of the learned Authorised Representative. 20. Having considered the rival submissions, we find that ....
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.... as referred to by him, learned Commissioner (Appeals) held that interest expenditure cannot be apportioned on the basis of sales turnover. Accordingly, he deleted the disallowance made by the Assessing Officer. 25. The learned Departmental Representative relied upon the observations of the Assessing Officer. 26. The learned Authorised Representative submitted, identical issue has been decided in favour of the assessee in the assessment year 2010-11. 27. We have considered rival submissions and perused the material on record. As could be seen, the assessee has allocated interest expenditure on the basis of utilization of borrowed funds in different Units. Since no borrowed funds were utilized at Baddi Unit, which is in existence since the year 2006-07, the assessee had not allocated any interest expenditure to the Baddi Unit, while allocating interest expenditure to other two Units. It is apparent, before the Departmental Authorities the assessee has demonstrate that no borrowed funds were utilized at Baddi Unit. Whereas, without factually examining assessee's claim the Assessing Officer has arbitrary allocated a part of interest expenditure to the Baddi Unit on the basis ....
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....ncil (Professional Conduct, Etiquette and Ethics) Amendment Regulations 2009. Further, he observed, subsequently the Central Board of Direct Taxes (CBDT) has also issued a circular bearing no.5/2012, date 1st August 2012, prohibiting allowance of deduction in respect of expenditure incurred towards gift and freebies, to doctors and medical professionals in violation of Indian Medical Council Regulation. Thus, in the aforesaid premises, he disallowed assessee's claim of deduction. Being aggrieved with the aforesaid disallowance, assessee preferred appeal before the first appellate authority. 31. After considering the submissions of the assessee in the context of facts and material on record as well as the case laws cited before him, learned Commissioner (Appeals) held that the prohibition imposed in Medical Council of India guidelines applies to doctors and medical professionals and not to the pharmaceutical companies. Further, he held that CBDT Circular no.5, dated 1st August 2012, would be applicable only from assessment year 2013-14. Accordingly, he deleted the disallowance made by the Assessing Officer. 32. The learned Departmental Representative relied upon the observa....
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....aceuticals Ltd. (supra), the Tribunal has also expressed similar view. In view of the aforesaid, respectfully following the decisions of the Tribunal referred to above, we uphold the order of the learned Commissioner (Appeals) on the issue. Ground raised is dismissed. 35. In grounds no.5 and 6, the Revenue has challenged the direction of learned Commissioner (Appeals) in respect of disallowance made under section 14A r/w rule 8D while computing the income under the normal provision as well as under section 115JB of the Act. 36. While dealing with the corresponding ground being ground no.4, of assessee's appeal in ITA no.4923/Mum./2016 in the earlier part of this order, we have held that disallowance/addition relating to expenditure incurred for earning exempt income should be restricted to the amounts of exempt income earned by the assessee during the year while computing the income both under the normal provision of the Act as well as under section 115JB of the Act. In view of the aforesaid, these grounds of the Revenue have become redundant, hence, dismissed. 37. In grounds no.7 and 8, the Revenue has challenged the decision of learned Commissioner (Appeals) in accepting....
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....o arm's length price of comfort guarantee provided to the AE. 41. This issue is identical to the issue raised in grounds no.7 and 8. As observed earlier, while deciding identical issue in assessee's own case in assessment year 2010-11 cited supra, the Tribunal has held that guarantee commission of all types of guarantee should be fixed @ 0.53%. In fact, as could be seen from the facts on record, the assessee has not charged any guarantee commission for providing comfort guarantee. In view of the aforesaid, since the Transfer Pricing Officer has charged guarantee commission @ 0.5% on comfort guarantee, the decision of the Transfer Pricing Officer on the issue deserves to be upheld. Accordingly, the decision of the learned Commissioner (Appeals) on the issue is reversed. Grounds no.9 and 10 are allowed. 42. In the result, Revenue's appeal is partly allowed. ITA no.5694/Mum./2016 Revenue's appeal : A.Y. 2012-13 43. Ground no.1, is on the issue of addition made under section 41(1) of the Act. 44. This issue is identical to the issue raised in ground no.1 of ITA no.4972/Mum./2016. Facts being identical, following our decision therein, we dismiss the ground raised. 45. ....