TaxTMI 
TaxTMI 
2021 (9) TMI 595
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....rcumstances of the case, the learned CIT(A), erred in confirming additions of Rs. 2,75,41,987/- on basis of the order passed for AY 2013-14 without appreciating the facts of the case. 3. The assessee submits that 'Education Cess' and 'Secondary and Higher Education cess' amounting to Rs. 42,46,460/- may kindly be allowed as a deduction while computing the total income of the assessee company. 4. The appellant prays for admission of Additional grounds/Additional evidence, if any required to support its case. 5. The appellant craves to leave or add, amend or alter any of the grounds for appeal. In view of all these and others grounds which may be produced during the hearing of appeal the appeal may be allowed and justice rendered." 2. The brief facts in this case are that the assessee is a private limited company and engaged in the business activity of real estate projects. The assessee company is developing a township projects named as Future tower at Amanora, Pune. The assessee has filed its return of income for the year under consideration on 28.11.2016 declaring total income of Rs. 42,12,75,820/-. The case was selected for scrutiny an....
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....nd would have been taxed in India. Therefore, it was clear that the interest payments were made to the shareholder/ultimate shareholder only. 4. The TPO went on to refer to the OECD report of 1979, OECD Guidelines, 2010, provisions of section 2(22)(e) of the Act and various other case laws. In view of the above, the TPO took the Arm's Length Price of the payment of interest to AE at Rs. Nil and thus, made an unward adjustment of Rs. 3,92,81,275/- and the same was confirmed by the Assessing Officer in his order. 5. Thereafter, the assessee filed detailed written submissions before the Ld. CIT(Appeal) which is on record. The Ld. CIT(Appeal) after considering the assessee's submission has given his findings at Para 2.3 of this order which reads as follows: "2.3 I have carefully considered the facts of the case and submission filed by the appellant. As rightly mentioned by the appellant, the transfer pricing adjustment towards interest on compulsory convertible debenture (CCDs) is squarely covered by my decisions in the appellant's own case for AY 2014-15 & AY 2015-16. Further, the appellant has also brought to my attention Honourable ITAT, Pune's decisio....
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....s not justified in re-characterising the transaction of issue of debentures/CCDs as that of equity shares. As regards the ALP determination, we again follow the view taken by the Tribunal for the immediately preceding year and direct the AO/TPO to recompute the ALP of the transactions of payment of interest on debentures/CCDs........................... 7.1. We find that the Ld. CIT(Appeal) has passed his order based on the decision of the Pune Bench of the Tribunal for the assessment year 2013-14 in assessee's own case (supra.). Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(Appeal) and accordingly, the same is upheld. Thus, Ground No. 1 raised in appeal by the assessee is dismissed. 8. Ground No. 2 pertains to the issue of addition on reworking of WIP. During the assessment proceeding, the Assessing Officer observed that the Ld. CIT(Appeal), Pune had passed an order for the assessment year 2013-14 dated 21.03.2018 wherein the Ld. CIT(Appeal) had upheld the action of the Assessing Officer for upward international transaction adjustment of Rs. 16,88,23,507/-. However, the assessee made an alternate, without prejudice argument before the ....
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....l ALP. When the matter came up before the ld. CIT(A), the assessee contended that the interest cost of Rs. 14.20 crore was taken to work-in-progress and not claimed as deduction. Albeit the ld. CIT(A) approved the ALP determination, but also accepted the assessee's alternative argument. He directed the AO that whenever the assessee claims deduction against this work-in-progress, the interest component for the assessment year 2013-14, whose ALP was determined at NIL, should be added back to the total income. Following the same, the AO added Rs. 3.03 crore to the total income of the assessee for the year under consideration representing interest expenditure on debenture/CCDs booked for the assessment year 2013-14. The ld. CIT(A) approved the AO's action. 21. We have heard the rival contentions and perused the relevant material on record. It is seen that for the assessment year 2013-14 the Tribunal vide its order dated 18-12-2020 (ITA No. 772/PUN/2018) has overturned the view of the ld. CIT(A) and held that the re-characterization of transaction of issue of debentures/CCDs to issue of equity capital was not correct and accordingly directed the AO/TPO to re-work out th....
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....pted the fact that it is covered in favour of the assessee and same has been allowed in assessee's own case in ITA No. 618/PUN/2020 & ITA No. 44/PUN/2021 for the assessment year 2014-15 dated 17.08.2021. The Tribunal on this issue of 'Education cess' and 'Secondary and Higher Education Cess' held as follows: "6. The assessee has also raised an additional ground stating that Education Cess and Secondary and Higher Secondary Cess amounting to Rs. 26,66,359/- may be allowed as a deduction while computing the total income of the assessee company. 7. The Hon'ble Supreme Court in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that "the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relev....