TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1026
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....he ld. DRP/A.O./TPO has erred in not restricting the ALP of guarantee commission to 0.53% as held by the Hon'ble Tribunal in appellant's own case for A.Y. 2013-14. 3. On the facts and in the circumstances of the case and in law, the ld A.O. has erred in not allowing loss on sale of shares of M/s Jewel Gems USA Inc amounting to Rs. 50,72,57,000 despite the ld. DRP observing that issue is covered by the Hon'ble Jurisdictional High Court decision in favour of appellant in its own case for A.Y. 2012-13. The ld DRP ought to have given clear direction to A.O. to allow the said loss. 4. Without prejudice, on the facts and in the circumstances of the case and in law, the ld DRP/A.O. has erred in not allowing the loss on sale of shares of M/s Jewel Gems USA Inc as capital loss. 5. On the facts and in the circumstances of the case and in law, the ld DRP/A.O. has erred in disallowing Rs. 13,616/- U/s 14A r.w. Rule 8D of the Rules. 6. On the facts and in the circumstances of the case and in law, the ld DRP/A.O. has erred in taxing interest on income tax refund of Rs. 1,47,059/- despite the fact that the same has not been received by the appellant. 7. On the facts and in the circumsta....
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.... the A.Y. 2013-14. 6. Having considered the rival submissions as well as relevant material on record at the outset we note that this issue has been considered by this Tribunal for the A.Y. 2013-14 vide order dated 24/04/2018 in para 6 as under: "6. We have considered the rival submissions as well as the relevant material on record. There is no dispute that this Tribunal in assessee's own case for the assessment years 2009-10, 10-11 and 12-13 has considered and decided this issue. The Tribunal for the assessment year 2009-10 vide order dated 25.08.2014 in IT(TP)A No. 1/JP/2014 at page 28 has held as under :- " We have heard the rival contentions and perused the materials available on record. In our considered view the ITAT Bench, Hyderabad has clearly held that TP legislation does not stipulate the inclusion of such inter-group facility as international transaction which we have to respectfully follow. Even otherwise, such services constitute shareholders services. In view thereof, and by respectfully following ITAT Hyderabad Bench judgement in the case of Four Soft Ltd vs. DCIT (supra), we hold that the corporate guarantee given is not a international transaction and no adju....
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....e case of Glenmark Pharmaceuticals Vs ACIT (supra) we restrict the addition on account of T.P. adjustment in respect of corporate guarantee to the AE by applying the ALP at 0.53%. Before parting with this issue, we take note of the directions of the DRP on this issue in para 2.2. as under: "2.2 In view of the above, TPO action of adjustment on account to corporate guarantee is upheld. With regard to the ALP of 0.53% determined by the Hon'ble ITAT, the TPO shall ascertain if the matter is being agitated before the Hon'ble High Court or not. If no appeal is filed in the High Court, the direction of ITAT of rate of 0.53% shall be applied. Assessee's objection is accordingly disposed off." After considering the decision of this Tribunal, the DRP in principle accepted that the adjustment on account of corporate guarantee is to be restricted by applying ALP at 0.53%, however, the DRP has not passed directions in conformity of the decision of this Tribunal in assessee's own case. This is a clear case of judicial indiscipline on the part of the DRP who was performing quasi-judicial functions while passing the directions U/s 144C(5) of the Act. The DRP is supposed to decide the matters i....
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.... financial statements as well as the director's report for the F.Y. 2004-05 and submitted that the investment in USA was made for retail outlet business with the intention to inter into the retail outset business outside the India. Therefore, the purpose of setting up of the subsidiary in USA was only to expand the business of the assessee company and entering into retail outset business outside the India. Even otherwise this aspect has been duly considered by this Tribunal for the A.Y. 2012-13 as well as the Hon'ble High Court. The ld AR has further submitted that though for the A.Y. 2013-14, the Tribunal has considered the issue regarding the loss in respect of investment in equity shares of another subsidiary namely STS Creation Thai Ltd.. However, the said subsidiary was not a set up for expansion of retail business and the Tribunal after considering all these facts and pointing out a specific distinction of facts for the A.Y. 2012-13 and 2013-14 has decided the issue. Thus, the ld AR has submitted that even for the A.Y. 2013-14, the Tribunal has clearly analysed the facts to show that the purpose for setting the subsidiary M/s Jewel Gems USA Inc was for expanding the retail sa....
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....te business interest of the assessee. Thus, the investments made wee out of commercial expediency and for business interest. In our opinion, the written off such investment in 100% subsidiary which was not recoverable was an admissible business loss which is proximately relatable to assessee's business. Therefore, the said loss so incurred has been rightly claimed by the assessee company as deductible business loss. Accordingly, we decide the ground No. 2(2.1 & 2.2) of appeal in favour of the assessee." The Tribunal has given the finding that the USA subsidiaries were set up to expand its business and the expenditure was purely for business expansion of the assessee's product. Thus, the investment made were held to be out of commercial expediency and business interest and consequently the loss of such investment in the 100% subsidiary not recoverable was an allowable business loss. This decision of the Tribunal was challenged by the revenue before the Hon'ble High Court and the Hon'ble High Court vide decision dated 12/11/2017 dismissed the appeal of the revenue in DBIT No. 291/2017. The said decision of the Hon'ble Jurisdictional High Court was again challenged by the revenue in ....
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....by the ld CIT-DR. Accordingly, ground No. 3 of the assessee's appeal is allowed and ground No. 4 is consequently become infructuous. 11. Ground No. 5 of the appeal is regarding confirmation of disallowance of Rs. 13,616/- U/s 14A of the Act r.w. Rule 8D of the IT Rules, 1962. At the time of hearing, due to smallness of the amount, the ld AR of the assessee has stated at bar that the assessee does not want to press ground No. 5 of the appeal and the same may be dismissed as not pressed. The ld DR has raised no objection if ground No. 5 of the assessee's appeal is dismissed as not pressed. Accordingly, ground No. 5 of the assessee's appeal is dismissed being not pressed. 12. Ground No. 6 of the appeal is regarding addition on account of interest on income tax refund. We have heard the ld AR as well as the ld CIT-DR and considered the relevant material on record at the outset, we note that the assessee objected this addition before the DRP on the ground that no such interest was received by the assessee on the refund of income tax. The DRP, accordingly, directed he A.O. to verify and compute the interest though there is a typographical mistake in the order of the DRP in para No. 6.2....