TaxTMI 
TaxTMI 
2024 (1) TMI 543
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....#39;s length rate of guarantee commission at 1.85% per annum as against 0.65% per annum charged by the Appellant Company as guarantee commission. NON-TRANSFER PRICING ISSUES 2. The Assessing Officer erred in adding the premia income on forward contracts to the total income of the Appellant without appreciating the fact that the premia income had already been offered to tax in the earlier years. 3. Without prejudice to Ground No.2, the Assessing Officer erred in adding an amount of Rs. 49,39,00,893 as the premia income without realising that the said amount represents income already taxed in earlier years and that he ought to have added only Rs. 43,61,51,550 (as he did in the draft assessment order) being the amount claimed as deduction in the return of income. 4. The Assessing Officer erred in not allowing the deduction claimed by the appellant in respect of reversal of provision for doubtful debts without appreciating the fact the said provision had been disallowed by the Appellant in the earlier years. 5. The Assessing Officer erred in confirming an addition of Rs. 1,33,88,722 being interest credited to Profit and Loss account as requi....
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....r erred in not granting DIT relief commensurate with the taxable income as per the Assessment Order. 13. The Appellant craves leave to add to, alter or amend the above Grounds of Appeal as and when advised." 3. Assessee has raised Ground No. 1 in relation to international transaction and other grounds of appeal raised by the assessee are relating to corporate issues. We proceed to deal with the issues raised by the assessee ground wise. 4. With regard to Ground No. 1, brief facts of the case are, assessee filed the original Return of Income for A.Y.2018-19 on 30.11.2018 declaring total income of Rs.. 380,18,41,390/- and subsequently revised the return of income on 27.03.2019 declaring a total income of Rs.. 379,96,10,620/-. The case was selected for scrutiny based on the various reasons discussed in the assessment order. Accordingly, notices u/s. 143(2) and 142(1) of Income-tax Act, 1961 (in short "Act") were issued and served on the assessee. In response, assessee has submitted all the information as per the notices issued by the Assessing Officer. 5. The assessee is a Non-Government Company and it is involved in digital Engineering, mobility and augmented realit....
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....arious other case law. 10. After considering the submissions of the assessee Transfer Pricing Officer dismissed the submissions of the assessee and he observed that the assessee has not discharged its onus and has not provided any comparable to benchmark the transactions and in the absence of any valid comparable in the public domain, he is constrained to benchmark this transaction using the rates applicable to bank guarantee. Further, he observed that the Hon'ble Bombay High Court in the case of Everest Kanto Cylinders Ltd. v. DCIT (supra) and Mumbai ITAT Decision in the case of Glenmark Pharmaceuticals Ltd., (in ITA No. 5031/MUM/2012 dated 13.11.2013 for the A.Y. 2008-09), a downward adjustment to the naked quotes of the rates of bank guarantee has been done in this year. Accordingly, he made the downward adjustment of 0.2% from the average bank guarantee after adjustment he has benchmarked @1.85% to the guarantee amount given to its AE at Rs.. 1,98,65,670/-. Since assessee has already collected corporate guarantee commission of Rs.. 68,02,737/- and made the net adjustment of Rs.. 1,30,62,933/-. 11. Aggrieved with the above order, assessee preferred objection before CIT(DRP....
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.... commission from HDFC bank and SBI bank. Since Transfer Pricing Officer has collected the above said information by issuing notice under section 133(6) of the Act it is normal for the banks to give card rate of charges without considering the financials of the tested parties. Since Transfer Pricing Officer has collected this information through show cause notice under section 133(6) of the Act without giving specific financials of tested parties the rates given by those banks cannot be considered as proper quotes for analysis. It is not clear from the order of the Transfer Pricing Officer that assessee's as well as AE's exposure were shared with those banks. It is fact on record that the assessee has received the quote of sanction of credit facility as well as bank guarantee facility from IDBI bank and ICICI bank, from perusal of the documents submitted by the assessee relating to IDBI bank and ICICI bank we observe that assessee has received the above said quotes from IDBI bank and ICICI bank based on actual utilization of bank guarantee by the assessee. Since assessee has also passed on the above burden to its AE. Therefore, Internal CUP is already available in this transaction. ....
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....ective date commenced from 10.04.2012 was terminated on 10.04.2017 i.e., current assessment year. The POS is an exchange of Principal in two currencies on specific dates with an exchange of fixed interest payments in the two currencies on specific dates. The product is used by customers wishing to cover exchange rate risk on a series of foreign currency cash flows beyond one year. The assessee has submitted the details of income offered to tax over the period for tax periods as under: - Year Amount FY12-13 7,31,08,449 FY 13-14 -1,53,59,107 FY14-15 26,55,84,580 FY 15-16 17,05,66,970 Sub-total 49,39,00,893 20. The above said instrument was matured in 2017 April and therefore the gain/loss on settlement of the transaction was accounted in Profit and loss account. As per the details submitted by the assessee the income on the transaction was already taxed in the years in which premia was booked and the reversal of income of Rs.. 49,39,00,893/- was not effected through profit and loss account a deduction is claimed in the year of maturity, reduced by Rs.. 5,77,49,342. It was submitted that NFAC has denied deduction of Rs.. 43,61,51,550 for premia i....
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....rival submissions and material placed on record, we observe from the record that assessee has booked certain derivative transactions having impact more than one assessment years. The relevant derivative was matured on April 2017 and as per the method of accounting adopted by the assessee prior to this assessment year, assessee has declared profit or loss in the POS transactions. As per the information submitted by the assessee before us clearly shows that assessee has declared FOREX loss / gain in A.Y.2015-16 and 2016-17 and assessee has also brought to our notice the relevant financial records and computation of income. As per the submissions of the Ld. AR the same information was also submitted before Ld. DRP. Now, before us Ld.AR of the assessee submitted that Assessing Officer has failed to consider the above said documents and prayed that the above may be considered. 25. After considering the submissions of the assessee and annual financial report we observe that no doubt assessee has followed method of accounting to declare the gain / loss in the above said POS transaction. However, mere submission of financial records and computation of income does not give clear picture ....
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....sed on the submissions of the assessee, Ld. DRP gave a clear direction to the Assessing Officer to verify the same and after verification it may be allowed. 29. Ld.AR of the assessee submitted that assessee has submitted the relevant profit and loss account and computation of income before Assessing Officer and also he has filed the same in the form of Paper Book before us and he took us through Page No. 284, 290 of the Paper Book to demonstrate that in the financial year end 31.03.2015 and 31.03.2016 assessee has reversed the provision for doubtful debts and he submitted that assessee is following this method of accounting consistently. 30. On the other hand, Ld. DR reiterated the findings of the Assessing Officer that assessee has not filed any information relating to the claim made by the assessee. 31. Considered the rival submissions and material placed on record, we observe that assessee has submitted year end profit and loss account for financial year ending 31.03.2015, 31.03.2016 and also 31.03.2019 to make the claim that assessee reversed the provision for doubtful debts. However, Assessing Officer has rejected the claim for the reason that assessee has not filed o....
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....see has suomoto disallowed the expenses of Rs.. 1,64,33,279/- in relation to exempt income under section 14A of the Act. 34. During the course of assessment proceedings, Assessing Officer observed that provision of section 14A of the Act are applicable in this case as per sub section (2) of section 14A of the Act, Assessing Officer is required to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the Act. Since Assessing Officer has not satisfied with the correctness of the claim of the assessee in respect of the above said expenditure in relation to exempt income he has proceeded to make the disallowance under Rule 8D of I.T. Rules by relying on several case laws. Accordingly, he disallowed 1% of the annual average of investment of Rs.. 2,60,60,61,700/- to the extent of Rs.. 2,60,60,617/-. He adjusted suomoto disallowance of expenditure made by the assessee and disallowed the excess as disallowance of Rs.. 96,27,338/- under section 14A of the Act. 35. Aggrieved assessee preferred appeal before Ld. DRP and before Ld.DRP assessee has submitted that the investments during the year were made in mutual funds ....
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..... 40. Considered the rival submissions and material placed on record, we observe from the record that Assessing Officer while passing the final assessment order made a small clerical error of determining the net disallowance of Rs.. 60,35,270/- instead of Rs.. 6,35,270/- after adjusting the suomoto disallowance made by the assessee. Since the mistake is apparent on record we direct the Assessing Officer to make the disallowance of Rs.. 6,35,270/- only. With regard to the objections raised by the assessee on the non-recording of satisfaction by the Assessing Officer we are not inclined to accept the above submissions. Accordingly, Ground No. 7 raised by the assessee is dismissed and Ground No. 8 raised by the assessee is allowed. 41. With regard to Ground No. 9, brief facts are, at the time of assessment, Assessing Officer observed that as per CBIC report of Export / Import summary data there has been an export to the value of Rs.. 2,47,50,375/- reported as sale of products which has been exported. However, he observed that there has been no reporting of any sale of products as per the profit and loss account statement in the ITR. Accordingly, he issued show cause notice to th....
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....rables. The products exported include hardware components, electronic components, lab equipment, IT assets, etc. ranging from cables, motor jigs, power test jig etc. In our response dated 24.09.2021, we clarified that company being an engineering service company, the operational revenues are included in revenue from operations of the company. The company has reported a turnover of Rs. 3506,55,10,924 during the year, while the NFAC without appreciating the details of exports and re-exports filed by the company has added an amount of Rs. 2,47,50,326 of exports available in Departments database as unexplained expenditure u/s 69C. The NFAC has also completely erred in treating adding the export sale of products (a source of income) as unexplained expenditure u/s 69C. This substantiates that NFAC has mechanically acted to make adjustment to treat a stream of revenue as unexplained expenditure." 43. After considering the submissions of the assessee Ld. DRP unable to concede the additions proposed by the Assessing Officer under section 69C of the Act and they directed the Assessing Officer to verify from the records the details of goods exported, considering the fact ....
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....e filed before Assessing Officer. However, he submitted that additional evidences will prove the nature of transactions. Considering the importance of these documents we deem it fit and proper to admit the additional evidences and remit this issue back to the file of the Assessing Officer to verify the same and after due verification if found proper the claim of the assessee may be allowed. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Accordingly, Ground No. 9 raised by the assessee is allowed for statistical purpose. 47. With regard to Ground No. 10, brief facts relevant to the ground are, Assessing Officer has rejected the claim of the assessee an amount of Rs.. 5,54,08,919/- being the double taxation relief claimed by the assessee for not filing any supporting documents of DIT relief. Assessee filed objection before Ld. DRP and filed the relevant information and Ld.DRP directed the Assessing Officer to verify the claim in line to tax paid in foreign countries on the income the assessee has included....