TaxTMI 
TaxTMI 
2023 (2) TMI 348
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.... to assessee's objections before Ld. DRP. Subsequently, Ld. TPO following directions of Ld. DRP, redetermined ALP pursuant to which final assessment was passed which is in further challenge before us. The grounds raised by the assessee read as under: - 1. The order of the A0/DRP is contrary to law, facts and circumstances of the case. 2. Transfer Pricing Adjustment 2.1 The AO/DRP erred in confirming the adjustment of Rs.10,93,91,827/- to the Arms Length Price. 2.2 The AO/DRP erred in not appreciating that the Fertilizer Market Bulletins (FMB) contain only the range of prices of goods quoted for specific period. 2.3 The AO/DRP erred in not considering the fact that while computing the downward price adjustment for the imported raw materials, the TPO has adopted different bases to arrive at the Arms Length Price. 2.4 The AO/DRP ought to have appreciated that while computing the rate adjustments between the invoice rate and the FMB price on the order date, the higher end price should be adopted uniformly for Anhydrous Ammonia, Rock Phosphate and Sulphur Crude to arrive at the correct adjustment to the Arms Length Price. 2.5 The AO/DRP ought to have appreciated that the a....
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....ing the year. 3.8 The AO/DRP ought to have appreciated that in any case, the disallowance made u/s 14A r.w.Rule 8D cannot exceed the exempted income earned. 4. Disallowance of payment of funded interest converted into loan (FITL) amounting to Rs. 47,26,89,986/- 4.1 The AO/DRP erred in confirming the disallowance of Rs.47,26,89,986/- being the Funded Interest converted as Loan (FITL) on the ground of non submission of a certificate for the payment from the lenders. 4.2 The AO / DRP ought to have appreciated that the said deduction was allowed by the assessing officer at the time of scrutiny assessment proceedings, based on the evidence of payment submitted to him. 4.3 The AO / DRP ought to have considered the Boards clarification issued vide Circular No. 07/2006, dt 07.07.2006 and allowed the deduction based on bank payment advices already furnished by the assessee at the time of scrutiny assessment treating them as evidences of actual payment. 5. The Appellant craves leave to file additional grounds at the time of hearing. As is evident, three issues fall for our consideration - (i) Transfer Pricing Adjustments on import and export transactions; (ii) Disallowance u/s 1....
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....idences which were in the form of agreements with its AEs. The Ld. DRP chose not to admit the same on the ground that these documents were always available with the assessee but the assessee chose not to produce the same before Ld. TPO. The explanation that the person in charge left the taxation department and new incumbent was not fully conversant with the matter, was not convincing. 3.4 Finally, Ld. DRP directed Ld. TPO to adopt the middle value of the price band in FMB price list to iron out the various factors like insurances, extended credit facility etc. The directions of Ld. DRP reduced the TP additions to Rs.1093.91 Lacs which were incorporated in the final assessment order. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 4. We find the dispute to be in a very narrow range. The import and export transactions have been benchmarked on transaction-to-transaction basis on the basis of rates published in FMB bulletin. The price quoted therein gives a broad price range and accordingly, the middle price has been accepted while working out TP adjustments. Another fact is that the published prices do not provide any information about quantiti....
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....eed the investments made by the assessee and the investments are old investments only. If so, interest disallowance would not be justified. Further, while working out the disallowance, only exempt income yielding investments are to be considered by Ld. AO. We order so. This ground stand allowed for statistical purposes. 7. Disallowance of interest converted into loans In the computation of income, the assessee reduced sum of Rs.4726.89 Lacs being funded interest converted as Loan (FITL) on payment basis u/s 43B. In earlier assessment orders for AY 2003- 04, 2004-05 & 2005-06, Ld. AO disallowed FITL for Rs.122.43 Crores as per Explanation 3(c) and 3(d) of Sec.43B on the ground that the interest was converted into loan only and not actually paid. During AY 2010-11, an amount of Rs.89.23 Crores was disallowed for want of certificate from lending bank. Out of above disallowance, the assessee claimed deduction of Rs.47.26 Crores in this year based on actual payment. The assessee submitted that it had taken loans from banks & financial institutions. A certain portion of interest payable was converted into loans which were disallowed in AYs 2003-04 to 2005-06. Out of this disallowance, ....