AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 153
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....ounds 1. On the facts and in the circumstances of the case and in law, the Assistant Commissioner of Income-tax, Central Circle 7(3), Mumbai ("Ld. AO'), the Assistant Commissioner of Income-tax, Transfer Pricing- 3(2)(1), Mumbai, the Hon'ble Dispute Resolution Panel ('DRP') erred in: 1.1. not appreciating that explanation to section 92B of the Act as amended by Finance Act, 2012 does not alter the basic character of the definition of 'international transaction' u/s 92B and therefore, since provision of guarantee (by the assessee to its AE) did not have any bearing on profits, income, losses or assets of enterprise, it would be outside the ambit of 'international transaction'. 1.2. not appreciating that provision of guarantee is essentially in the nature of shareholder activity and is arising out of implicit support due to passive association of the assessee with its AE; accordingly, ALP for the same should be Nil. 1.3. Adopting the arm length rate for the guarantee commission at 0.50% as directed by DRP. 1.4. without prejudice to the above, the Ld. AO/TPO erred in disregarding the detailed benchmarking ana....
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....en the value adopted by Stamp Duty Authority and value of sale consideration. 4.2. Not appreciating that the stamp duty value does not exceed 105% of the consideration received and is therefore covered by the proviso to section 43CA of the Act. 4.3. On the facts and the circumstances of the case and in law, the learned AO/ DRP failed to appreciate that the said tolerance band of 5% / 10% under first proviso to section 43CA of the Act, is curative in even though stated to be prospective must be held to relate back to date when related statutory provisions were made effective. 4.4. Each one of our previously mentioned grounds of appeal is without prejudice to the other 5. On the facts and the circumstances of the case and in law, Ld AO/DRP, erred in: 5.1. making a disallowance of Rs. 3,20,92,006 under section 40(a) (i) of the Act. 5.2. Not appreciating that services availed by the appellant do not make available any technical knowledge, experience, skill, know-how or processes, etc. to the assessee under Article 12 of the India-Singapore DTAA and hence shall not be subject to tax in India. 5.3. Each one of our previously ....
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.... of shareholder of the associated enterprises for issuance of securities by whom guarantee is given. It was further stated that guarantee was given on behalf of its holding company and was fully indemnified by the holding company. Therefore, no commission was charged. vii. Learned Transfer Pricing Officer held that it is an international transaction and further the assessee should have charged the guarantee commission fee. viii. He issued show cause notice on 20th January, 2021, noted that the M/s Lodha Developers International Limited, Mauritius has taken a loan from the assessee on interest at the rate of 14% which is without guarantee, He stated that Arm's Length Price interest rate without guarantee is 14% and arm's length rate after guarantee is 12% [ Interest on bonds] therefore, interest spread of 2% is saved which is required to be shared between both the entities on the basis of Functions, Assets and Risk ('FAR') analysis. ix. Assessee without prejudice to the earlier submissions computed the guarantee fee adopting interest saving approach. The assessee analyzed the guarantee transaction by determining the creditworthiness of the Asso....
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....he assessee for number of days the guarantee commission was computed at Rs.1,98,25,276/-. 07. Accordingly, the order under Section 92CA (3) of the Act was passed on 29 January 2021, proposing the above adjustment. The learned Assessing Officer incorporated the above adjustment in the draft assessment order. 08. The learned Assessing Officer made following corporate adjustments:- i. Though assessee has not received any dividend income during the year, however, there are investments, which are capable of earning exempt income. Accordingly, the disallowance under Section 14A r.w.r. 8D of the Act was computed at 1% of annual average value of investment amounting to Rs.10,22,402/-. ii. Learned Assessing Officer also noted that assessee has claimed foreign exchange loss of Rs. 99,06,468/- which is incurred because of purchase of material and is revenue expenditure. The learned Assessing Officer held that the foreign exchange loss incurred on material purchases forms part of construction cost and should be part of the cost of the project. Accordingly, he disallowed the foreign exchange loss. iii. During the assessment proceedings, assessee was asked to rec....
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.... v. With respect to the objection no.6 of upward adjustment of Rs.1,98,25,276/- on account of corporate guarantee, ld DRP decided by Para no.20, rejecting benchmarking of the ld TPO without giving any reason following the decision of Hon'ble Bombay High Court in case of CIT vs. Everest Kanto Cylinders Ltd. (2015) 378 ITR 57 (Bom.), held that Arm's Length rate for guarantee commission should be 0.5% accordingly, confirmed the Transfer Pricing adjustment of Rs.99,14,138/- against adjustment of ld TPO of Rs 1,98,25,276/-. 011. Based on this, the assessment order under Section 143(3) of the Act was passed on 30th July, 2022 determining the total income of the assessee as per normal computation of income at Rs.145,67,53,980/- and book profit at Rs.107,90,96,962/-. 012. Assessee is aggrieved with that and has preferred this appeal. 013. During the course of hearing, the assessee has raised an additional ground of appeal as per letter dated 24th November, 2022, raising following two issues:- i. That tax deduction at source of Rs.6,40,23,793/- was claimed by the assessee, however, the learned Assessing Officer granted the credit of only Rs.6,38,02,475/- and theref....
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....ts Book Profits, such Book Profits shall be deemed to be the total income of the assessee and tax shall be payable on such total income @18.5%. Thus, the scheme of the Act is that the computation is first made under the normal provisions of Income-tax Act and, thereafter, under an alternate scheme provided u/s 115JB for computing total income as per the prescribed method. If the tax liability on the basis of total income as per MAT provisions is more than the tax computed under the normal provisions of the Act, then the former becomes the final tax liability of the assessee. The mode of computation of Book Profits has been prescribed under MAT provisions. The issue posed for our consideration is whether computation provisions prescribed for computation of total income under normal provisions with reference to section 14A can or cannot be taken into consideration while computing Book Profits under MAT provisions." 9. Having regard to this decision, the decision cited by the revenue in the case of Sobha Developers (supra) has been considered. At this juncture, it would be beneficial to refer to the co-ordinate bench decision of this Court in the case of Karnataka State Indus....
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.... of transfer pricing assessment, the assessee submitted without prejudice to the other contention the computation of the arm's-length price of the guarantee commission adopting the interest saving approach. The learned transfer pricing officer accepted the interest saving approach however further made an adjustment with respect to the transaction of loan by the assessee to its associated enterprises and further making adjustment on account of currency swap and then distributed the interest saved to the respective parties. However, the learned dispute resolution panel has rejected the finding of the learned transfer-pricing officer and has held that 0.5% is the appropriate arm's-length price of the guarantee commission following the decision of the honourable Bombay High Court. He submitted that the approach of the assessee is also based on the interest saved by the assessee and after that, it has been appropriately allocated between these two parties. Therefore, the arm's-length price determined by the assessee is to be accepted. He submitted that originally, assessee did not compute the arm's-length price, but without prejudice, the ALPA was computed at 0.35%, the ....
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....gued that the corporate guarantee is an additional guarantee, provided by the parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of section 92B does not enlarge the scope of the term "international transaction" to include the corporate guarantee in the nature provided by the assessee therein. The Tribunal held that in case of default, the guarantor has to fulfill the liability and therefore, there is always an inherent risk in providing guarantees and that may be reasons that finance provider insist on non- charging any commission from associated enterprise as a commercial principle. Further, it has been observed that this position indicates that pro- vision of guarantee always involves risk and there is a service provided to the associated enterprise in increasing its creditworthiness in obtaining loans in the market, be from financial institutions or from others. There may not be immediate charge on profit and loss account, but inherent risk cannot be ruled out in providing guarantees. Ultimately, the Tribunal upheld the adjustments made on guarantee commissions both on the guarantees provided by the bank directly and al....
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....he last claim of the ground number 1 that is against the quantum of the guarantee commission. The learned dispute resolution panel has categorically held that they do not agree with the contention of the learned Transfer Pricing Officer. The learned dispute resolution panel after that straight away followed the judicial precedent of the honourable Bombay High Court in case of Everest Kanto cylinders Ltd [TS-200-HC-2015(BOM)-TP] where arm's-length price of the corporate guarantee was held to be 0.5% of the guarantee amount. It was held so only for the reason that the learned transfer-pricing officer in that particular case has compared the corporate guarantee with the bank guarantee. That is not the case before us. In the present case, assessee without prejudice to the other argument, benchmarked the guarantee commission by looking at the credit rating of the company in whose favour of the guarantee is issued, based on that interest saving approach (yield approach) was used to find out difference between interest rates charged, where the loans are guaranteed and interest rates where the loans are not guaranteed. The difference between these two rates was further adjusted by the ....
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....orate guarantee in question is an international transaction under section 90 2B, which is needed to be benchmarked. Therefore, we do not find any reason to interfere with the approach of the TPO in this regard. As far as benchmarking of the rate of guarantee commission is concerned, we do not agree with the approach of the TPO determining the arm's-length rate of commission. Because guarantees by corporate Sara on different footing because it facilitates acquisition of loan by AE's. We find support in the judgment of m/s Everest Kanto cylinders Ltd by the honourable Bombay High Court (Para 10 of income tax appeal number 1165 of 2013, dated 8/05/2015). We find that the issue of charging of rate of guarantee commission has been a matter of adjudication in several honourable Mumbai ITAT decisions. These decisions were 0.5% as the arm's-length and the proper rate of commission on corporate guarantee. Therefore, in our considered opinion, the arm's-length rate for a commission should be adopted at 0.5%, which was the adjustment of Rs. 9,914,138/-. The ground of objection number six with sub- grounds is disposed of accordingly." 028. The learned DRP neither lo....
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....r assessment year, or for even any other transaction between the same contracting parties. Therefore, though, we disagree with the finding of the learned dispute resolution panel that the arm's-length price of the guarantee commission is 0.5%. We also appreciate that the direction of the learned dispute resolution panel are binding on the AO and are not applicable. Therefore, limited choice available with us is now either to uphold the alternative benchmarking of the assessee or to uphold the arm's-length price of guarantee commission at the rate of 0.5%. We find that between the above two, we would be more likely to uphold the benchmarking of the assessee of the guarantee commission based on yield approach, which is derived after the proper credit rating of associated enterprises, on DealsScan database, determining the appropriate interest saving and thereafter attributing it between the two parties. It is also to be noted that the arm's-length price of the guarantee commission by yield method would be the maximum rate. Therefore, we uphold the alternative benchmarking provided by the assessee of the guarantee commission at the rate of 0.35%. Accordingly, ground number....
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.... accounting standard 2 and stated that only the cost of purchases consisting of the purchase price including duties and taxes, freight in verse and other expenditure which are directly attributable to the acquisition are required to be included in the cost of purchases. He further submitted that that identical issue arose in case of ITA number 3035/M/2017 for assessment year 2012 - 13 dated 3/6/2019 wherein the coordinate bench has held that for the purpose of valuation of the closing stock of inventory, foreign exchange gain or loss is not to be included. He specifically referred to paragraph number [8] of that order. He further submitted that in ITA number 3735 and 2013 for assessment year 2009 - 10 dated 29/6/2016 also the coordinate bench per paragraph number 10 has held that foreign exchange gain or loss does not increase or decrease the value of the cost of the raw material and therefore it is not required to be included in the valuation of closing stock or in project cost. He therefore submitted that the treatment given by the assessee in its books of accounts clearly is in conformity with the accounting standards issued by the Institute of chartered accountants of India and....
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....roject. Accordingly, the foreign exchange loss of Rs. 9,906,468/- incurred by the assessee is revenue expenditure and cannot be included in the cost of project. Accordingly, we allow ground number 3 of the appeal of the assessee. 037. Ground number 4 of the appeal is with respect to the addition of Rs 2,03,051/- by invoking the provisions of section 43CA of the act. During the year, the assessee has sold a commercial property to a customer for the sale consideration of Rs. 47,500,000. The stamp duty value of the flat as determined by the stamp duty authority is Rs. 47,703,051/- which exceeded the value of the sale consideration by Rs. 203,051. Thus, the difference between the sale consideration and stamp duty value is merely 0.43%. The learned assessing officer has made the addition of the above sum by invoking the provisions of section 43CA of the act. This was also upheld by the learned dispute resolution panel. 038. The learned authorized representative submitted that first proviso to section 43CA (1) of the act states that where the difference between the sale consideration and value adopted for the purpose of stamp duty does not exceed 1 10% of the sale consideration, th....
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....t, location et cetera and therefore, the learned AO should have referred the matter to the valuation officer. Even otherwise, he submitted that the several judicial precedents have held that it is retrospective in nature. He further referred to the central board of direct taxes Circular number 8 of 2018 dated 26/12/2018 wherein the tolerance band of 5% was provided which is enhanced to 10% with effect from 1/4/2021. He therefore submitted that there is no reason why assessee should not be given a benefit of the above tolerance band. 041. We have carefully considered the rival contention and perused the orders of the lower authorities. 042. We find that identical issue arose before the coordinate bench in case of Sai Bhargavanath Infra v Assistant Commissioner of Income-tax* 2022] 144 taxmann.com 168 (Pune - Trib.) For assessment year 2015 - 16 wherein it has been held that:- "4. We observe from plain reading of sec. 43CA that it provides in a case where consideration received or accruing as a result of the transfer by an assessee of an asset other than the capital asset being land or building is lesser than the value adopted or assessed by any Government authority fo....
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.... 154 of the Act. However, the Tribunal and the Hon'ble High Court upheld the assessee's claim that the said amendment was prospective in nature and did not apply to block period falling before 01 -06-2002. However, the plea of the assessee was rejected by the Hon'ble Supreme Court in CIT v. Suresh N. Gupta [2008] 166 Taxman 313/297 ITR 322 also held that the proviso to section 113 is clarificatory and hence, should be read into block assessment scheme under Chapter XIV-B with retrospective effect. Similar view was reiterated by the Hon'ble Supreme Court in CIT v. Rajiv Bhatara [2009] 178 Taxman 285/310 ITR 105 by holding the proviso u/s 113 to be retrospective in nature. Then the Supreme Court was of the view that the issue ought to be referred to a larger Bench of Five Judges. In this decision, the Hon'ble Supreme Court has given fundamental doctrine of retrospective applicability of provision. It has been held that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in terms of the Act or arises by necessary and distinct implication. The assessment creates a vested right on the assessee. The assessee ....
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....nt year in question i.e. A.Y. 2015-16, from the spirit of Supreme Court decision in Vatika Township (P.) Ltd. (supra) case is analysed. Now, the intent of the legislature is to provide relief to the assessee in case such difference is less than 10% which has been brought into effect from 1-04-2021 thereby providing benefit to the assessee. This being the beneficial provision therefore will even have retrospective effect and would apply to the present assessment year 2015-16. At this juncture we would also refer to the decision of Pune Tribunal in Dinar Umeshkumar More v. ITO [IT Appeal No. 1503 (Pune) of 2015, dated 25-1-2019], where the said proposition of applicability of a beneficial provision was considered in light of Hon'ble Apex Court decision in the case of Vatika Township (P.) Ltd. (supra). In the said Tribunal order, the Bench observed that if the legislature is going to confer a benefit then such an averment will have a retrospective effect. The Tribunal observed that while discussing this issue in para 33 of the said judgment, the Hon'ble Apex Court held that "We would also like to point out, for the sake of completeness, that where a benefit is conferred by leg....
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....tamp duty value of a stock in trade and the transaction value covered by the provisions of section 43CA is less than 10% even prior to 1/4/2021, does not warrant any addition in the hands of the assessee. Accordingly, we direct the learned assessing officer to delete the addition of Rs. 203,051/- made under section 43CA of the act. Ground number 4 of the appeal of the assessee is allowed. 047. Ground number 5 is with respect to the disallowance of Rs. 32,092,006/- under section 40 (a) (i) of the income tax act being amount paid to non-resident without deduction of the tax rejecting the contention of the assessee of applicability of article 12 of the India Singapore double taxation avoidance agreement only if the technical knowledge, experience, skill, know-how or process is made available to the non-resident. 048. Brief facts of the case shows that assessee has availed certain services from foreign service providers for development of certain projects and services are in relation to nature of architectural design layout including designing positioning of various buildings, common amenities, inclusion of certain other common amenities such as swimming pool and clubhouse, plann....
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....t trading of the main power of the assessee would be a prerequisite for subsequent observation and upkeep. Therefore, in our considered opinion, prima facie there was a dominant possibility of make available element being present in rendering of the services. We note that tax deduction mechanism works on tax deduction in the first instance when such payments for such elaborate services are made. We note that at the time of tax deduction the assessee should not itself determine the taxability of such payments under the act/DTAA. We note that the assessee relied upon the certificate issued by chartered accountant. In any case, the taxability of the payment is not dependent upon certificate issued by chartered accountant. The taxability is decided by the provisions of the act/DTAA. We note that the taxability of such payments as income in the hands of the non-resident are recipient is a complex process of law as provided in the act. It should be left to the expertise of respective assessee officer. Therefore, we are of the considered opinion that the export to have been deducted under section 195 of the act and without such deduction, the payments (expenditure) is liable to be disallo....
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.... Vs. DCIT [2019] 103 taxmann.com 344 (Mumbai), wherein considering India UK Double Taxation Avoidance Agreement (DTAA), the services rendered by UK NTT for services provided of consulting did not satisfy the make available. The learned Authorized Representative also relied on DCIT vs. M/s Forum Homes Pvt. Ltd. in ITA No. 5804/Mum/2018 dated 4th October 2021. The learned Authorized Representative further referred to the submissions made before the learned Assessing Officer, Dispute Resolution Panel and form no. 15CB submitted. He also referred to the agreement of the parties as well as the invoices to show that it does not make available many services to the assessee and therefore, it is not chargeable to tax in India according to Double Taxation Avoidance Agreement and therefore, no tax should have been deducted at source. Accordingly, the disallowance made by the learned Assessing Officer is not correct. 052. The learned departmental representative vehemently supported the orders of the lower authorities. It was the claim of the learned departmental representative that these consultants have made available the technology and skill to the assessee and therefore it satisfies the ....
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....rtation for the commercial tower including concept pro-scheme design, design and the DD stage, design development as per tender specification, review of VT tenders these services are including master plan. 3 Lightening planner associates PTE Ltd Singapore Architectural services 33,59,043 It also included concept design, is committing design, design development and documentation. This contract was for overall plan and lighting strategy such as landscape areas, water features and contrary yards 055. The claim of the learned assessing officer is also with respect to applicability of article 12 (4) (b) of DTAA claiming that such services make available technical knowledge, experience, skill, know-how or processes that enables the assessee to apply the technology contained therein. The learned DRP is also stating in its direction that the income is falling in article 12 (4) (b) of the Double Taxation Avoidance Agreement and requires to be tested whether 'make available test' is satisfied or not. It is not the case of the revenue that the services falls under article 12 (4) (C) of the DTAA. 056. While paragraph number 10.3 of the assessment order says that th....
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....ese services. In this case, looking at the limited aspect of article 12 (4) (B) of the double taxation avoidance agreement it is evident that make available test fails and therefore under article 12 (4) (b) the above services cannot be held to be chargeable to tax as fees for technical services as per India Singapore double taxation avoidance agreement. Therefore, the assessee was not required to deduct tax at source under section 195 of the act. 057. The learned authorized representative has relied upon the decision of the i. coordinate bench in case of 72 taxmann.com 238 Gera Developments Private Limited dated 29 July 2016 wherein in case of an assessee was engaged in the business of development of land and construction of the building, the services were with respect to the site requirements, surroundings, conceptual designs and drawings and the issue involved was the interpretation of fees for technical services or royalty with respect to Indo US DTAA which is identically worded as India Singapore DTAA (there were two sub clauses in US DTAA wherein there were three sub clauses in Singapore DTAA) wherein in case of make available condition was applied with respect to ....
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.... the decision that whether coordinate bench is applying article 12 (4) (b) or (c), but it is clear that the nature of the activities of the recipient of the services and the nature of activities of the provider of services are identical as in case before us. Doubt always remains that whether in case of provision of services are consisting of the development and transfer of a technical plan and technical design, the condition of make available applies to that or not. However wordings of the India Singapore Double Taxation Avoidance Agreement which makes an exclusion in article 12 (4) (c) stating that it "excludes any services that does not enable the person acquiring the services to apply the technology contained therein." It gives a hint that it is identical to'make available' condition applicable to article 12 (4) (b) of the Double Taxation Avoidance Agreement. iv. Later on it has come to our notice that coordinate bench in assessee's own case for assessment year 2014 - 15 to 2016 - 17 and 2018 - 19 in ITA number 497 - 500 & 784/M/2022 along with cross objections number 73 - 75 and 85/MUM/2022 dated 24/1/2023 where the learned AO was in appeal against the orde....
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....essing officer. 058. However, as we have made it absolutely clear that the claim of the revenue is that those services fall under article 12 (4) (b) and it has been made available to the assessee, which is unfounded, we hold that the services do not satisfy the make available condition and therefore are not chargeable to tax as per the double taxation avoidance agreement. Thus, assessee was not obliged to deduct tax at source on such payment. Consequently, no disallowance can be made under section 40 (a) (i) of the act. In the result we direct the learned assessing officer to delete the disallowance of Rs. 3 20,92,006/-. Accordingly, we allow ground number 5 of the appeal. 059. Ground number 6 is against initiation of penalty proceedings under section 270A of the act, it is premature, and therefore does not require adjudication, hence dismissed. 060. Accordingly, appeal of the assessee is partly allowed. ITA number 2239/M/2022 Assessment Year 2018 - 19 061. Now we come to the appeal of the assessee for assessment year 2018 - 19 in ITA number 2239/M/2022 wherein the assessee has raised following grounds of appeal. " 1. The learned assessing officer/TPO/DRP....
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.... price of that transaction. The learned transfer pricing officer passed an order under section 92CA (3) of the act on 31/7/2021 wherein he has proposed three adjustment to the international transaction:- i. Adjustment of corporate guarantee commission of Rs. 137,810,366/- on security, guarantee given on the senior notes. The facts relating to this is identical to assessment year 2017 - 18. ii. Corporate guarantee commission of Rs. 569,235/- in respect of tenancy agreement of the overseas associated enterprises. The fact shows associated enterprise of the assessee Lodha UK had taken its office premises only is in United Kingdom for a period of nine years with total rental of GBP 2,589,307 payable on quarterly basis. The rental agreement was signed into thousand nine and the guarantee was issued on 30/12/2009 and the date of releases 30/12/2018. On the requirement of the property owner, assessee has given the guarantee to the property owner for an amount not exceeding the total rental of GBP 2,589,307 over the nine years lease. Towards the unpaid rent if any as well as breach of any other letting terms by the tenant. The unpaid rent as of the financial year 2017 - 1....
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....ed assessing officer has made following corporate addition to the total income of the assessee over and above transfer pricing adjustment:- i. disallowance under section 14 A read with rule 8D of Rs. 62,503,451/- ii. disallowance of loan processing fee of Rs. 46,843,401 iii. addition under section 43CA of Rs. 383,532,986/- on account of the difference between the documented sale price of the stock in trade and the stamp duty value of the same iv. disallowance under section 40 (a) (i) of the act of Rs. 105,373,481/- for non-deduction of tax at source on payment made to 5 Singapore entities for consultancy work with respect to projects 066. Assessee preferred an objection before the learned dispute resolution panel, which passed its direction is on 28/6/2022. Based on that:- i. The learned dispute resolution panel reduced the total adjustment of guarantee commission of Rs. 212,448,083 to only Rs. 98,653,150/- directing the learned transfer pricing officer to follow the decision of the honourable Bombay High Court in case of Everest Kanto and computed the arm's-length price of the guarantee commission fee at Rs. 0.5 percent. ....
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....h respect to the initiation of penalty proceedings. 069. The learned departmental representative also agreed with above statement of facts. 070. We have carefully considered the rival contentions and perused the orders of the lower authorities as well as the direction of the learned dispute resolution panel on this issue. 071. With respect to ground number 1 of the appeal regarding arm's-length price of the guarantee commission fee from associated enterprises. We have already decided this issue in the appeal of the assessee for assessment year 2017 - 18 wherein we have categorically upheld that the arm's-length price of guarantee commission income at the rate of 0.35% with respect to the senior bonds issued by the associated enterprise. 072. Assessee is AE namely Lodha developers UK Limited is a rented office premises only is in United Kingdom for a period of nine years from 30 December 2009 to 30 December 2018 for payment of rent, the unpaid rent as on the end of financial year 2018 was only GBP 520,771. Assessee did not benchmark this guarantee. The learned AO considered the average bank guarantee rate as arm's-length rate for benchmarking the guarantee is....
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....arned AO disbelieved the disallowance and computed the same applying provisions of rule 8D read with section 14 A of the act and arrived at the disallowance of Rs. 62,503,451. The AO also did not grant credit of the original disallowance made by the assessee. The learned dispute resolution panel granted deduction of already disallowance made by the assessee in its computation of total income to the extent of exempt income of Rs. 8,303,761. Therefore disallowance was retained of Rs. 54,199,690/-. 077. The learned authorized representative has made the several arguments against the disallowance however the clinching argument was that the disallowance should be restricted to the extent of the exempt income of Rs. 8,303,761/- which is already been disallowed by the assessee and therefore no further disallowance is called for. 078. The learned departmental representative may mentally submitted that there is no correlation between the amount of exempt income and amount of the disallowance. It can even exceed the amount of exempt income also. 079. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the issue that disallo....
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....h as customers collection et cetera. The net deficit if any is calculated and the weighted average borrowing cost are located on such deficit to arrive at the interest cost, which is capitalized, to the cost of the project. Accordingly, part of loan processing fee has been effectively charged to profit and loss account based on the fund flow of the assessee and the balance is already taken by the assessee to the cost of project. It was the claim of the assessee that such processing fees are revenue in nature and should be allowed to the assessee as deduction. 084. The learned departmental representative vehemently supported the orders of the lower authorities and submitted that when the assessee has loan-processing fee of Rs. 461,656,164/- except the above sum there is no reason that this should be allowed to the assessee as a deduction in this year. Therefore, he vehemently supported the order of the learned assessing officer that the above sum should also be capitalized as a work in progress. 085. We have carefully considered the rival contention and perused the orders of the lower authorities. Assessee is engaged in business of construction and development of realistic pro....
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....ent case, the assessee had undertaken the Project of construction of flats under the Kandivali Project. Therefore, the loan was for obtaining stock-in-trade. That, the Kandivali Project constituted the stock-in-trade of the assessee. That, the Project did not constitute a fixed asset of the assessee. In this case, we are concerned with deduction under section 36(1)(iii). Since the assessee had received loan for obtaining stock-in-trade (Kandivali Project), the assessee was entitled to deduction under section 36(1)(iii) of the Act. That, while adjudicating the claim for deduction under section 36(1)(iii) of the Act, the nature of the expense - whether the expense was on capital account or revenue account - was irrelevant as the section itself says that interest paid by the assessee on the capital borrowed by the assessee was an item of deduction. That, the utilization of the capital was irrelevant for the purposes of adjudicating the claim for deduction under section 36(1)(iii) of the Act - Calico Dyeing & Printing Works v. CIT [1958] 34 ITR 265 (Bom.). In that judgment, it has been laid down that where an assessee claims deduction of interest paid on capital borrowed, all that the ....
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....hat these are fees for technical services, which fails the make available test. While deciding ground number 5 of the appeal for assessment year 2017 - 18 identical ground of the appeal is allowed and the learned AO is directed to delete the about disallowance. For the similar reasons and more precisely when coordinate bench has decided this issue in favour of the assessee while deciding the appeal of the revenue under section 201 holding that there is no failure on the part of the assessee to deduct tax at source is no taxes required to be deducted, we allow ground number 5 of the appeal of assessee and direct the learned assessing officer to delete the disallowance of Rs. 105,373,481. 092. Ground number 6 is with respect to addition under section 43CA of the act amounting to Rs. 344,627,471/- wherein the sale consideration declared by the assessee with respect to its stock in trade is less than the amount of stamp duty value of those properties. The fact shows that during the year the assessee company has sold various properties both commercial and residential in nature. Assessee in its computation of total income with respect to several properties has offered few disallowance....
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....s further stated that the tolerance band of 10% does not apply retrospectively but applies prospectively. 096. Both the parties confirmed that the facts and circumstances of the case and their argument also remains the same as per ground number 04 of the appeal for assessment year 2017 - 18. 097. We have carefully considered the rival contention and perused the orders of the lower authorities. The facts and circumstances of the case identical to ground number 4 of the appeal of the assessee for assessment year 2017 - 18. While disposing off that ground, we have categorically held that the tolerance band limit of 10% though inserted with effect from 1/4/2021 applies retrospectively relying upon the several judicial precedents. 098. Therefore, for the reasons given by us in ground number 4 of the appeal for assessment year 2017 - 18, we direct the learned assessing officer to compute the disallowance afresh after granting the benefit of tolerance band of 10% to the assessee for this year. There is another aspect also in this ground. As per provisions of (2) of section 43CA provides that provisions of subsection (2) and subsection (3) of section 50 C shall, so far as may b....
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....93,198 vii. Lodha Luxuria Residential Majiwada 78,13,643 viii Lodha Luxuria Priva Residential Majiwada 3,54,500 ix Lodha Venezia Residential Parel-Shivdi 5,65,922 x New Cuffe Parade Residential Saltpan 3,65,94,476 xi The park Residential Lower Parel 3,32,13,013 Total 21,71,55,438 1) Commercial Property - Serial no (i) & (1) i. We would like to state that assessee has sold retail shops to customers at Project "Lodha Supremus" and "Lodha Boulevard" and during the year under consideration, the real estate market had been sluggish and slow moving. The commercial real estate market is even worse, where the sales are even more difficult to achieve. The prices have not increased over last few years and the company has been finding it difficult to sell its inventory at the expected prices. This has resulted in piling up of inventory with the company. Considering that the company had significant inventory, and huge amount of funds locked up in it and the company was bound to sell the said properties at the prevailing market prices which was lower as compared to stamp duty value adopted. ....
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....the fair market value of the property after considering all the relevant as under - a. Lodha Boulevard - With respect to this project, we have obtained the valuation from independent registered valuer of Unit No. 32 for "Lodha Boulevard". Copy of the same is enclosed as Annexure - F for your ready reference and records. On perusal of the same, your goodself will observe that in the valuation report it is stated that the sale consideration of the assessee is the fair market value of the property after considering all the relevant factors for determining the fair market value of the property for the period under consideration. Therefore disallowance u/s 43CA is not warranted b. Lodha Supremus (Powai) - With respect to this project, we have obtained the valuation from independent registered valuer of Unit No. 1701 for building "Lodha Supremus". Copy of the same is enclosed as Annexure-G for your ready reference and records. On perusal of the same, your goodself will observe that in the valuation report it is stated that the sale consideration of the assessee is the fair market value of the property after considering all the relevant factors for determining the fair m....
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....ue in a given condition for which it is sold. The Stamp Valuation Authority is bound to value the property as per the circle rates fixed. Further, it is nothing in any law which recognises that the value adopted for the purpose of stamp duty is the fair market value of the property exchanged between the seller and the buyer. ii. Circle rate is nothing, but, a guidance given by the higher ranking Administrative Officer to the subordinate officer. Under the Indian Stamp Act, it has been clearly stated that "The valuation so fixed by the Government shall act as guide/indicator for the purposes of assessing the duty chargeable on the value or the consideration of any immovable property". Thus, the circle rate so fixed cannot only be considered as the decisive factor in valuation of the immovable property without considering the other relevant factors which contributes greatly to the market value of the property. The following are the relevant factors which also contributes in the determination of fair market value of the property- • The area of the plot or the property in question • Nature of the Property • The use of the property ....
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....pendent registered valuer of Flat No. 603 for building "Exotica D - Wing" under project "CASA RIO GOLD". Copy of the same is enclosed as Annexure-I for your ready reference and records. On perusal of the same, your goodself will observe that in the valuation report it is stated that the sale consideration of the assessee is the fair market value of the property after considering all the relevant factors for determining the fair market value of the property for the period under consideration. Accordingly, it is submitted that the other units sold by the assessee company in the same project "CASA RIO GOLD" are also sold at the fair market value and therefore disallowance u/s 43CA is not warranted. c. Lodha Freshía - With respect to this project we would like to bring to your kind attention that, we have obtained the valuation from independent registered valuer of Flat No. 102 for building "D Wing" under project "LODHA FRESHIA". Copy of the same is enclosed as Annexure-J for your ready reference and records. On perusal of the same, your goodself will observe that in the valuation report it is stated that the sale consideration of the assessee is the fair market value o....
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....acts of the issue are that the assessee is claiming tolerance' provided in the proviso to section 43CA of the Act. As held supra, the same is not admissible in the instant AY 2018-19, because it is applicable from AY 2019-20. The assessee submitted valuation reports to the assessing officer to support its claim that the properties were sold at fair market value (FMV), which were lower than the stamp duty valuation of these properties. The assessee claimed before the assessing officer that if the claim under the proviso (in question) was not allowed, then these properties should be referred to a valuation officer, because section 43CA(2)of the Act, provides that the provisions of section 50C(2)/ (3) of the Act would apply for determination of the value adopted or assessed or assessable u/s. 43CA(1) of the Act The assessing officer chose not to accede to the request by the assessee in this regard. We have noted all facts and material brought before us with regard to the issue. We have also gone through the valuation reports submitted by the assessee. We have noted the legal provisions provided in sections 43CA and 50C(2)/ (3) of the Act. We note that section 43CA(2) of t....
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....bmission made by the assessee placed at page number 210 to 222 of the paper book we find that assessee has objected before the learned assessing officer per letter dated 27 September 2021 with respect to the sale value of the property being less than the stamp duty rates. Assessee has submitted company wise, project -wise, type wise (commercial or residential), name of the owners, date of booking of the property, saleable area, sales consideration and stamp duty valuation. It objected by submitting the valuation report prepared by Mr Deven K Dadbhawala dated 2/9/2021 with respect to all properties where there is a difference with respect to project (1) Lodha Boulevard, (2) Lodha Supreme Pawai , (3) casa Rio Gold , (4) Lodha Freshia D Wing. Before the assessing officer, as well as the learned DRP, assessee submitted that if the assessee's contention is not accepted and the valuation reports obtained from independent valuer's stating that the sale consideration of the assessee is the fair market value of the property is disregarded, then, the assessee submitted that the properties in respect of which disallowance/addition is proposed under section 43CA of the act, be referred....
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....of section 50 C (2) (b) the assessee has not given any evidence that the stamp valuation authorities valuation has not been disputed before specified authorities. The plain reading of the provisions of section 50 C (2) the assessee's claim is required only with respect to clause (a) of that section. It does not extend to clause (b) of that subsection. Therefore assessee is not required to show that valuation by stamp duty authorities are not disputed before higher forums. The learned DRP therefore rejected the contention of the assessee on the second condition of section 50 C (2) of the act i.e. 50C(2)(b) of the act. We do not find any justification for rejecting the claim of the assessee by holding that the assessee failed to substantiate that valuation of stamp duty authority is not challenged/disputed. It is not the duty of the assessee. The duty of the assessee to make a claim as per 50 C (2) (a) of the act before the AO that stamp duty valuation exceeds the fair market value of the property. For fair market value, assessee has given the reasons, substantiated it with a valuation report and raised a specific claim before the AO to refer the matter to the valuation cell. Acc....
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....to be allowed in the hands of the amalgamated company. 0111. The learned departmental representative submitted that the provisions of section 72A of the act clearly prohibit such set of. He specifically referred to number 49 of the decision referred by the learned AR. It was further submitted that there is no provision in the act itself to grant any such credit under section 115JAA of the act. 0112. We have carefully considered the contentions of the parties and find that when the effective date of merger is 1/4/2017 whereby 11 companies merged with the assessee company by the order of the National company law Tribunal. since pursuant to an 'amalgamation', (i) all assets and liabilities of the amalgamating company become the assets and liabilities of the amalgamated company, (ii) the amalgamating company ceases to exist and the amalgamated company becomes successor of the amalgamating company. (iii) Act provides as per Section 2(1B), that in an amalgamation "all assets and liabilities" of the amalgamating company should become the "assets and liabilities of the amalgamated company". If all the assets and liabilities of the amalgamating compa....