TaxTMI 
TaxTMI 
2023 (4) TMI 1155
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....00. 2. He further erred in considering the Income Tax Written down value of the said transferred assets in the hands of the transferor as actual cost for the Appellant. 3. He failed to appreciate and ought to have held that: (i) The Appellant had acquired the 'Glass Division' under a slump sale and not under amalgamation and consequently Explanation 7 to Section 43(1) is not applicable; (ii) Allocation over various assets was carried out on a fair basis arrived at by technical experts, and (iii) the said allocation was in accordance with Accounting Standard 10 issued by the Institute of Chartered Accountants of India, the apex accounting body, which requires a company to allocate the composite slump consideration paid for a bunch of assets on a fair basis. 4. The Appellant prays that depreciation as claimed by the Appellant be accepted. GROUND II: ADDITION ON ACCOUNT OF UNUTILISED CREDIT FOR CENTRAL VALUE ADDED TAX CENVAT") U/S 145A OF THE ACT AMOUNTING TO Rs.19,82,740/-: 1. On the facts and circumstances of the case and in law, the A.O. erred in including in CENVAT credit in both opening and closing stock and take the net impact in respect of Unutili....
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....s of the case and in law, the AO erred in making an Arms length adjustment of 8,70,041/- on account of Corporate guarantee and Counter guarantee commission provided by it on behalf of its subsidiary company as the said transaction does not fall within the ambit of section 92 of the Act. 2. The Appellant prays that the aforesaid adjustment to arms length price be deleted. GROUND VII: ADDITION TO ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS FOR INTEREST FREE LOAN ADVANCED TO SUBSIDIARY: 1. On the facts and in the circumstances of the case and in law, the AO erred in making an adjustment of 24,21,663/- of interest on interest free loan advanced to subsidiary as the same has been given by the Appellant to increase and expand the business and thus, doesn't warrant any Transfer pricing adjustment. 2. The Appellant prays that the aforesaid adjustment of arm's length price therefore to be deleted. GROUND VIII: INCORRECT GRANT OF INTEREST U/S. 234D OF THE ACT: 1. On the facts and circumstances of the case and in the law, the AO erred in levying interest u/s.234D of the Act amounting to Rs. 46,34,039/- 2. The Appellant prays that the AO be directed to delet....
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....arned Assessing Officer disallowed the depreciation, which travelled upto the co-ordinate Bench, it allowed the claim of the assessee. However, the Revenue is in appeal before the Hon'ble High Court and therefore, the learned Assessing Officer allowed the depreciation only to the extent of Rs.27,67,97,279/- against the actual claim of the assessee of Rs.34,93,26,095/-. The second issue is with respect to the depreciation on the Written-Down Value (WDV) as recorded in the books of Seller Company. 08. The learned Assessing Officer disallowed a sum of Rs.71,25,000/- on account of provision made for non moving an obsolete inventory of Rs.1.40 crores out of which a sum of Rs. 71.25 lacs were written off. The learned Assessing Officer disallowed the sum. The co-ordinate Bench restored the issue back to the file of the learned Assessing Officer. The ld AO made the same disallowance once again. 09. Assessee has included unutilized CENVAT credit in the value of the closing stock. According to Provision of Section 145A of the Act, the learned Assessing Officer asked the assessee why the same should not be added. After taking the explanation of the assessee, Assessing Officer made the a....
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....ed CIT (A) has not disposed off the issue. Similarly, for A.Y. 2001-02 to 2005-06 and 2007-08 to 2013-14, the matter was restored to the file of the learned Assessing Officer, which is still not adjudicated upon. For some of the assessment years the appeal is still pending before the learned CIT (A). In view of this fact, the assessment year in this appeal is also having impact of the decision in the first year i.e. AY 1999-2000. Accordingly, we also set aside this ground of appeal back to the file of the learned Assessing Officer to give consequential effect of grant of depreciation as well as the issue of actual cost of assets. Accordingly, ground no.1 of the appeal is allowed for statistical purposes. 015. Ground no.2 is with respect to the CENVAT credit addition of Rs.19,82,740/-. During the year, the assessee company has followed the inclusive method for valuation of inventory. Accordingly, the opening stock and closing stock of finished goods are inclusive of excise duty. Therefore, the fact of increase or decrease in the profit on account of element of excise duty has already been taken care of in the books of accounts and therefore, no adjustment was required under Section....
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.... arose in the case of the assessee. The learned Assessing Officer after considering the explanation of the assessee held that there is no concrete evidence of any write off or co-relation of sale out of such alleged written off material, made the addition. The learned Dispute Resolution Panel also confirmed the adjustment and therefore, it was made in the final order also. The mater reached to the co-ordinate Bench. The co-ordinate bench as per Para no.37 of the order for A.Y. 2006-07 has decided this issue. ITAT held that learned Dispute Resolution Panel noted that a sum of Rs.1.76 crores has already been added back to the income of the assessee and out of that only Rs.75.25 lacs have actually been written off during the year which is also disallowed, the learned Assessing Officer was directed to examine the issue of double disallowance. The co-ordinate Bench held that the learned Assessing Officer did not consider the same. Despite the above direction of the learned Dispute Resolution Panel, the learned Assessing Officer made the disallowance and therefore, the co-ordinate Bench held that the learned Assessing Officer has not properly implemented the direction of the learned Disp....
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....he claim of the assessee is that in assessee's own case for A.Y. 2011-12, the Hon'ble High Court has admitted the issue as a question of law that no transfer pricing adjustment is required to be made when the loans are given to subsidiary company to increase and expand the business of the assessee. Therefore, the assessee still contested that no interest can be imputed on the interest free advances given to the above company. Without prejudice, the assessee submitted that transfer-pricing adjustment on loan can be restricted to only libor rates. Assessee also submitted that giving an interest free loan to its subsidiary company for expansion of the business of the assessee is a 'shareholder activity' and further, in subsistence , it is in the nature of quasi equity. Assessee is also submitted that it has sufficient owned funds available at its disposal out of which the loan was given to its subsidiary company therefore, no interest can be imputed. The learned Authorized Representative further submitted that LIBOR is the appropriate rate for benchmarking and adjustment should be restricted to libor rate only. The assessee placed heavy reliance in the decision of the co-o....
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.... permitted borrowing at the rate equivalent to libor + 3% which approximately comes to 7.5% to 8% only. Therefore, libor + 3% rate was applied by the learned Transfer Pricing Officer on the number of days the loan is utilized and computed the interest adjustment of Rs.4,85,083/- on interest free loan. In this case, the findings of the learned DRP clearly is as under:- " we have considered the submission made. In this case, the TPO has adopted LIBOR +300 rate, vile as stated by the assessee, honourable ITAT in the assessee's own case for assessment year 2007 - 08 to 2009 - 10 and in assessment year 2012 - 13 has adopted LIBOR + 200 points. It is also stated in assessment year 2011 - 12 the TPO himself has adopted LIBOR +1.738%. In fact, the said adjustment is made by the TPO in her order dated 28/8/2018 in compliance of the ITAT direction. We have considered the submission made. Looking into the facts of the case, we are of the considered opinion that LIBOR +200 base points justified for benchmarking the transaction. However, the orders of the appeal are not longer appealable by the Department. Therefore, we are of the view that LIBOR +200 points should be used for benchmarkin....
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....ion from granting of loan is not on interest but to protect its investment interest and help the subsidiary company achieve its business objectives thus the said loan was granted in the nature of shareholder activity. It was further stated that though the said interest free loan is a loan in a legal firm but in substance is in the nature of quasi equity. The assessee has merely made the submission however has not substantiated it by putting any financial data to justify the above claim. In the transfer pricing study report also assessee has not given any justification on these grounds. 030. The assessee has also submitted that it had sufficient own funds available at its disposal out of which the loan was given to the subsidiary company to meet its working capital requirements and therefore knowing charging of interest is justified. The learned authorized representative failed to show us any provision of the income tax act in chapter X to show that payment of interest by the lender is a necessary condition to determine the arm's-length price of an international transaction of loan by assessee to its subsidiary company. Therefore, this argument also deserves to be rejected. 03....