AI Drafter 
TaxTMI 
TaxTMI 
2022 (10) TMI 255
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....sessee filed return of income for the Assessment Year 2010-11 on 07.10.2010 declaring total income of INR 117,47,85,218/- which was revised on 27.03.2012 declaring the same total income after claiming additional credit for tax deducted at source. The case of the Assessee was selected for scrutiny. During the assessment proceeding, the Assessing Officer noted that the Assessee had entered into International Transactions with its Associated Enterprises (AEs) and therefore, a reference under Section 92CA(3) of the Act was made to the Transfer Pricing Officer (TPO) for determination of Arms Length Price (ALP) of the International Transactions. The TPO, vide order dated 30.01.2014, passed under Section 92CA(3) of the Act proposed aggregate transfer pricing adjustments of INR 106,67,93,791/- which was incorporated by the Assessing Officer in the Draft Assessment Order dated 31.03.2014 passed under Section 143(3) read with Section 144C of the Act. The Assessing Officer also proposed (a) disallowance of INR 7,67,10,046/- under Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter referred to as "the Rules") in addition to suo-moto disallowance of INR 8,70,89,9....
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....to levy of excess interest under Section 234D of the Act. In addition to the above, vide letter, dated 06.06.2022, the Assessee has also raised the following additional grounds of appeal: "Additional Ground No. 1: On the facts and in the circumstances of the case and in law, the order dated 30 January 2014 passed by the Learned Transfer Pricing Officer (Ld. TPO) under section 92CA of the Act is beyond the time limit prescribed under section 92CA(3A) r.ws 153 of the Income-tax Act, 1961 (Act) thus making the transfer pricing order illegal, bad in law, null and void and liable to be quashed. Additional Ground No. 2 On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, the action of the Assessing Officer in passing the draft assessment order dated 31 March 2014 by invoking section 144C of the Act is without jurisdiction and thus all proceedings consequent to the draft assessment order are also illegal and bad in law and liable to be quashed. Additional Ground No. 3 On the facts and in....
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....recedents 31.03.2014 is to be excluded and therefore, the period of 60 days is to be computed by taking 30 days of March, 28 days of February and 2 days of January since TPO was under obligation to pass order under Section 92CA(3) of the Act at any time before 60 days prior to the date on which the period of limitation referred to in Section 153/153B for making the order of assessment/reassessment expires. Accordingly, the period of limitation prescribed under Section 92CA(3A) of the Act expired on 29.01.2014. Therefore, the order passed by the TPO is barred by limitation. 6. Per contra, the Ld. Departmental Representative vehemently contended that the order passed by the TPO is within limitation. He submitted that the order has been passed by the TPO on 30.01.2014 which is within the limitation prescribed under Section 92CA(3) of the Act, i.e. 60 days prior to the limitation expiry date of 31.03.2014. According to him, the period of 60 days is to be computed by taking 31 days of March, 28 days of February and 1 day of January. 7. We have heard the rival contention and perused the material on record including the judicial precedents cited during the course of hearing. We note....
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.... completed before 11.59.59 of 31.12.2019. The period of 21 months therefore, expires on 31.12.2019 that must stand excluded since Section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to Section 153 expires'. Excluding 31.12.2019, the period of 60 days would expire on 01.11.2019 and the transfer pricing orders thus ought to have been passed on 31.10.2019 or any date prior thereto. Incidentally, the Board, in the Central Action Plan also indicates the date by which the Transfer Pricing orders are to be passed as 31.10.2019. The impugned orders are thus, held to be barred by limitation." 15. Identical issue has been decided by the co-ordinate Bench of the Tribunal in case of ECL Finance Ltd. vs. ACIT in ITA No.899/M/2018 order dated 22.09.2021 and in case of Louis Dreyfus Commodities India Pvt. Ltd. vs. DCIT in ITA No.2381/Del/2014 order dated 11.03.2021 in favour of the assessee by following M/s. Pfizer Healthcare India Pvt. Ltd. (supra) case rendered by Hon'ble Madras High Court. 16. In view of what has been discussed above and following the order passed by the Hon'ble Madras High Court in case of M/s.....
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....s in addition to suo-moto disallowance of INR 8,70,89,954/- offered by the Assessee. 11. The Ld. Authorised Representative for the Assessee submitted that the suo moto disallowance of INR 8,70,89,954/- was offered by the Assessee and therefore, no further disallowance was warranted. Without prejudice to the aforesaid, he submitted that while computing the average value of investment for the purpose of computing disallowance as per Rule 8D(2)(iii) of the Rules the investments which did not yield any exempt income should be excluded as per the decision of the Special Bench of the Tribunal in the case of ACIT Vs Vireet investments Private Limited: 58 ITR(T) 313 (Delhi - Trib.) (SB). Per contra, the Learned Departmental Representative relied upon the Final Assessment Order as well as the directions issued by the DRP. 12. Having considered the rival submission, we find merit in the submission advanced on behalf of the Assessee that the benefit of decision of the Special Bench of the Tribunal in the case of Vireet investments Private Limited (supra) should be granted to the Assessee. Accordingly, we direct the Assessing Officer to verify the investment which yielded exempt income d....
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....eserves the right to contest the alternative plea in case the assessment for the Assessment Year 2009-10 is restored in appeal. 16. In view of the above factual position, Ground No. 8 raised by the Assessee is dismissed as infructuous. Ground No. 9 17. "9. On the facts and in the circumstances of the case and in law, the learned AO, under the directions issued by the Hon'ble DRP, erred in taxing foreign exchange gain amounting to Rs.4,09,00,000 which was not credited to the Profit and Loss account. It is prayed that the learned AO be directed not to tax the foreign exchange gain of Rs.4,09,00,000." 18. The Assessee offered to tax Foreign Exchange Gain of INR 4.09 Crores in the return of income for the Assessment Year 2010-11 even though the same was changed to Profit & Loss Account for the Assessment Year 2010-11. 19. The Learned Authorised Representative for Assessee submitted that since during the assessment proceedings of Assessment Year 2009-10, the deduction for said foreign exchange loss was disallowed by the Assessing Officer on account of such foreign exchange loss not being debited to Profit & Loss Account, the Assessee made a claim during the assessment....
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....-99 to 2002-03 had overturned the decision of the assessing officer by holding that exchange gains on revaluation of Shareholders Deposits were capital in nature and therefore, not taxable. The decision of the CIT(A) was confirmed by the Tribunal vide order, dated 23.11.2012. Learned Authorised Representative for Assessee further submitted that the Appeal filed by the Revenue against the aforesaid order of the Tribunal was not admitted by the Hon'ble Bombay High Court and therefore, the issue is settled. 25. In view of the above submission advanced by the Learned Authorised Representative for Assessee, Ground No. 10 raised by the Assessee is dismissed since, admittedly, the very basis on which the Assessee had set up this alternative/without prejudice claim does not survive. Further, in our view the two pleas set up by the Assessee are not alternative but mutually destructive. While preparing return of income the Assessee has treated the exchange loss on revaluation of Shareholders" Deposits as capital in nature, during the assessment proceedings the Assessee has claimed the same to be Revenue in nature while retaining the stand that the exchange gain on revaluation of Sharehold....
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....disposed off as not pressed as no arguments were advanced on the same during the course of hearing. ITA No. 2408/Mum/2015 (Department's Appeal) 33. The Revenue has raised 4 grounds of appeal which are taken up in seriatim hereinafter. Ground No. 1&2 34. "1. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in relying upon the decision of Hon'ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., vide writ petition No. 871 of 2014 not appreciating the facts of this case are different in as much as that the investment in the instant case is out-bound as compared to the inbound investment in the cited case as such would have an impact on the cost of acquisition of the shares. 2. On facts and circumstances of the case and in law the Hon'ble DRP erred in relying upon the decision of Hon'ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., vide writ petition No. 871 of 2014 not appreciating the facts that the investment made is more than ALP and is to be treated as deemed loan and as such the decision in the cited case is not applicable to the facts of the present case." 35. Ground No. 1 & 2 perta....
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.... was deleted. Referring to paragraph 10.1 of the order passed by the DRP on 29.12.2014 giving directions under Section 144C(5) of the Act, the Ld. Departmental Representative submitted that the Assessing Officer had disallowed interest of INR 42.38 Crores under Section 36(1)(iii) of the Act as interest bearing funds were used by the Assessee for making the investments instead of using the same for the purposes of business of the Assessee. Instead of making investments in Joint Ventures or subsidiaries, the Assessee could have made direct investment. The Assessee could have established branches outside India and in that case, profit of branches would have been taxable in India and deduction for the entire interest cost would have been allowed to the Assessee. 40. Responding to the above contentions, the Ld. Authorised Representative for the Assessee reiterated the submissions made before the DRP. He submitted that the investments made by the Assessee were on account of commercial expediency and for the purpose of business as per the main objects contained in the Memorandum of Association of the Assessee Company. The investments were made with the object of owing/operating hotels ....
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....e present case, the assessee has elaborately explained that on account of restrictions on investment in its hands to buy shares of other public limited companies from whom the assessee was receiving operation fees, the subsidiary company was used to buy above shares and for that purpose loan was advanced to the subsidiary. It was a measure of business prudency. The loan advanced helped the assessee to earn substantial amount of operating fees. In fact, it was more than 60% of total receipts. This was besides dividend to be received from the subsidiary. Having regard to all the circumstances and benefits to the parties, it was agreed that interest on advance be charged 6% per annum. This advance was made wholly and exclusively for the purpose of business and to earn income. I find lot of force in the above submissions. In fact the revenue authorities did not challenge above facts/background which clearly showed that advance was made for purpose of business. It was a measure of business prudency. 19. The other argument accepted by the learned Accountant Member and advanced before me was that the revenue authorities are not justified in prescribing how and in what manner the ....
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....2002-03, the Tribunal had deleted the disallowance of proportionate interest attributable to the advances given by the Assessee to its subsidiary/group companies at concessional interest rate or interest free and held as under: "We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that the similar disallowance on account of interest attributable to the advances given by the assessee to its subsidiary company was made in the case of the assessee for the earlier years. In assessment year 1989-90, this issue was referred to a Third Member and vide the Third Member decision reported as DCIT vs. Indian Hotel Co. Ltd. in 92 ITD 97 (Mum) (TM), the same was decided in favour of the assessee by a majority view holding that the relevant advances having been made by the assessee to its subsidiary company wholly and exclusively for the purpose of its business, the disallowance of interest attributable to the said advance was not justified. Following the said Third Member decision for assessment year 1989-90, the Tribunal has consistently decided the similar issue in favour of the assessee in the subsequent years u....
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....ibunal in the case of the Assessee, we dismiss Ground No. 3 raised by the Revenue. Ground No. 4 46. "4. On facts and circumstances of the case and in law the Hon'ble DRP erred in holding that the second proviso to Section 40(a)(ia) is retrospective ignoring the fact that the second proviso to Section 40(a)(ia) has been inserted by the Finance Act 2012 w.e.f. 01.04.2013 and as such is operative only from Assessment Year 2013-14." 47. During the relevant previous year, the Assessee had paid total credit card commission of INR 14.91 Crores to various banks and claimed deduction for the same. The majority of payments were made to the foreign banks (viz. American Express, Citi Bank and HSBC Bank) which have obtained "NIL" tax withholding certificates. Since the rest of the banks (viz. Axis bank, HDFC Bank and ICICI Banks) had not obtained 'NIL" tax withholding certificates, the Assessing Officer held that the Assessee was liable to be withhold tax on payment of credit card commission aggregating to INR 3.87 Crores. Since the Assessee has failed to withhold tax the provisions of Section 40(a)(ia) of the Act would be attracted resulting in disallowance of INR 3.87 Crores. Acc....
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....request charges, etc. The Ld AO completed the assessment disallowing the expenditure of Rs. 5,02,36,000/- incurred on account of payment of processing charges to HDFC bank on total amount swiped through customer credit card and expenditure of Rs. 49,02,000/- on account of various other bank charges (Cash Management Services) u/s 40(a)(ia) of the Act. According to the Ld AO, tax should have been deducted at source u/s 194 of the Act. On appeal, Ld CIT (A) examined the facts and following the decision in the case of Ahmedabad Stamp Vendors Association vs. UOI (257 ITR 202) and Tata Tele Services Ltd vs. DCIT (TDS) a decision from Bangalore Bench (ITA Nos.308 to 310 and 393 to 396) order dated 27/11/2012, wherein, it was held that there is no requirement of making TDS on the commission retained by Card Companies, opined that the provisions of section 40(a)(ia) r.w.s 194H of the Act are not applicable, deleted the addition. We find no infirmity in the conclusion of the Ld CIT (A) under the facts available on record. His stand is affirmed. Finally, the appeal of the Revenue is dismissed." 6. We have also perused the cited judgment of the Hon'ble Delhi High Court in the case of ....