AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 327
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....3(3) read with section 144C(13) read with section 144B of the Act (the 'impugned order') without providing the Appellant an opportunity of being heard, which is in violation of the principles of natural justice, and therefore liable to be quashed. 2. Interest on borrowings from Embassy Office Parks REIT amounting to INR 7,80,17,976 2.1 The Honorable Dispute Resolution Panel ('Hon'ble. DRP') has erred in upholding the order passed by Learned Transfer Pricing Officer ('Ld.TPO') wherein the Ld.TPO has rejected the benchmarking conducted by the Assessee by adopting 'CUP' method as the most appropriate method for determining the Arm's Length Price ('ALP') of the Assessee with respect to interest paid on loan taken from Embassy office Parks REIT ('EOP REIT') as against 'Other Method' selected by the Assessee. 2.2 The Hon'ble. DRP has erred in upholding the order passed by Ld.TPO wherein the Ld.TPO has determined the arm's length price with respect to interest paid on loan taken from Embassy office Parks REIT under 'CUP method' by adopting the interest rate of 8.95% on the borrowings availed from State Bank of India. 2.3 The Hon'ble. DRP has err....
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....ments other than those specifically prescribed under section 115JB of the Act are permissible. 5. Adjustment carried out under intimation under section 143(1) of the Act ought not to be made to the deemed total income computation under section 115JB 5.1 The NFAC / Ld.AO has erred in adding the adjustment carried out in the intimation under section 143(1) of the Act to the computation of book profits under section 115JB of the Act. 5.2 The NFAC / Ld.AO has erred in not taking cognizance of the submissions made during assessment proceedings that adjustment carried out in the intimation under section 143(1) of the Act is on account of non-consideration of the revised Tax Audit Report filed by the Assessee. 6. Provisions of Chapter XIIB are independent and TP adjustments, if any, ought not be made to the deemed total income computation under section 115JB 6.1 The NFAC / Ld.AO has erred in law and on facts by carrying out the transfer pricing adjustment pertaining to interest paid to the computation of book profits under section 115JB of the Act. 6.2 Provisions of Chapter XIIB are independent and transfer pricing adjustments ought no....
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....sy Office Parks REIT ('EOP REIT') at an interest rate of 12.5% p.a. This transaction qualifies as a 'specified domestic transaction". Further, Qubix has also availed an overdraft facility from the State Bank of India at an interest rate of marginal cost of funds based lending rate plus 0.40%, effectively resulting in interest at the rate of 8.95% p.a. The Ld. TPO has erred in rejecting the benchmarking conducted by the Appellant for determining the arm's length of the interest on borrowings from Embassy Office Parks REIT and proceeded with considering the rate of interest of overdraft facility availed from the State Bank of India, i.e., 8.95% as the arm's length of such interest expense. Further, the Ld.TPO has erred in concluding that the loan taken from Embassy Office Parks REIT, being an unsecured loan, is comparable with overdraft facility availed from the State Bank of India, being a secured loan. In this regard, the Appellant wishes to place reliance on the following judicial precedents - Decision of the Hon'ble Jaipur Tribunal in the case of Deputy Commissioner of Income tax, Central Circle-2, Jaipur vs M/s KsheerSagar Developer....
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.... is the second year of claim. Reliance was placed on the decision of the Apex Court in the case of Commissioner of Income Tax-1 v. M/s Reliance Energy Ltd. 127 taxmann.com 69 [2021] (SC) wherein the Apex Court has held that the profit linked deduction is allowable to the extent of Gross Total Income of the taxpayer and need not be restricted to the extent of income under the head Profits and Gains from Business or Profession. The relevant extract of the decision relied on by the Company has been reproduced below for the reference of the Hon'ble ITAT: 15. In the case before us, there is no discussion about Section 80-IA(5) by the Appellate Authority, nor the Tribunal and the High Court. However, we have considered the submissions on behalf of the Revenue as it has a bearing on the interpretation of sub-section (1) of Section 80-IA of the Act. We hold that the scope of sub-section (5) of Section 80-IA of the Act is limited to determination of quantum of deduction under sub-section (1) of Section 80-IA of the Act by treating 'eligible business' as the 'only source of income. Sub-section (5) cannot be pressed into service for reading a limitat....
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....he assessee, which has been shown as Income from Other Sources in the Return of Income[Page 159 of the paper book]. Ld.AR further submitted that Rs. 2,57,47,042/- is Short Term Capital Gain on sale of assets. Ld.AR invited our attention to CG of the Return of Income. Assessee had show Short Term Capital Gain of Rs. 2,57,90,747/-, after reducing the brought-forward loss of Rs. 43,706/-, the Short Term Capital Gain works out to be Rs. 2,57,47,041/-. 3.1 Ld.AR relied on the decision of Hon'ble Supreme Court in Commissioner of Income Tax-I Vs. Reliance Energy Ltd., [2022] 441 ITR 346 (SC) dated 28.04.2021. Submission of ld.DR : 4. Ld.Departmental Representative(ld.DR) for the Revenue submitted that Assessee had not claimed deduction on Income from Other Sources and Capital Gains under section 80IAB of the Act in the Return of Income and in the Form No.10CCB. Ld.DR for the Revenue took us through the relevant pages of the Return of Income. Ld.DR relied on section 80A(5) of the Income Tax Act. Ld.DR submitted that conjoint reading of Section 80A(5) and Section 80AC makes it clear that Assessee has to claim the deduction in the Return of Income and the Return of Income shall be f....
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....ssing Officer in the Draft Assessment Order passed under section 144C(1) of the Act, dated 27.09.2023 in Para-7 held as under: "7. Considering the documents and submission made, the assessee's claim under section 80IAB is accepted." 5.5 Thus, in the Draft Assessment Order, Assessee's claim of deduction u/sec.80IAB of Rs. 27,52,98,833/- was allowed by the Assessing Officer. In the Draft Assessment Order, the Assessing Officer(AO) proposed Transfer Pricing Adjustment of Rs. 12,11,73,734/-. 6. The Assessee filed Objections against the proposed transfer pricing adjustment suggested in the Draft Assessment Order before the Dispute Resolution Panel (DRP). Assessee for the first time, before the DRP pleaded that Assessee Company is eligible for a deduction under section 80IAB of the Act on Income from Other Sources amounting to Rs. 57,03,058/- and Short Term Capital Gains amounting to Rs. 2,57,47,042/-. Assessee relied on the decision of Hon'ble Supreme Court in the case of CIT-I Vs. Reliance Energy Ltd.(supra) [2022] 441 ITR 346 (SC). The Dispute Resolution Panelheld that there is no variation proposed in the Draft Assessment Order with reference to Assessee's claim of ded....
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....fficer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub- section (5) for further enquiry and passing of the assessment order." 7.1 Thus, the scheme of the section is that Assessing Officer has to prepare the Draft of the proposed assessment order. If Assessing Officer is proposing any variation which is prejudicial to the interest of the Assessee in the Draft Assessment Order, then Assessing Officer shall provide Draft Assessment Order to the Assessee. On receipt of the ....
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....b-Section arising as a consequence of the order of the Transfer Pricing Officer under sub- Section (3) of Section 92CA and even under Section 144C(8). The DRP may confirm, reduce or enhance the variations proposed in the draft order and wherefore the word eligible assessee in Clause (1) and (15) and the proposed draft order referred to under Clause 144c(1) and (8) will have to be given full meaning. It cannot lead to the conclusion that the Dispute Resolution Panel can affirm, reduce or enhance the variations proposed in the draft order and cannot go beyond the proposed draft order, failing which if it is held by accepting the contention of the revenue we will be expanding the provisions of the powers of DRP to a regular appeal to the Commissioner of Income-Tax against an order of assessment which is sought to be given up in view of the provisions of section 92C and Section 144C. The directions issued by the DRP under section 144C is binding on the assessing officer and against the said order of the assessing officer a direct appeal to the Income-Tax Appellate Tribunal. Wherefore we have to look into the proposed draft order in the present case to find out as to whether the directi....
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....f 2011(T-IT)[supra]. ITAT Mumbai Bench in the case of Dredging International N.V.(supra) held that DRP does not have jurisdiction to consider any other issue where there is no variation proposed in the Draft Assessment Order. ITAT Mumbai has also compared the Section 144B which has been deleted w.e.f. 01.04.1989 and the present section 144C of the Act. 8. Revenue had filed an appeal against the said decision of ITAT Mumbai in the case of Dredging International N.V.(supra) before the Hon'ble Bombay High Court. It is observed from the Hon'ble Bombay High Court's website that Revenue's Income Tax Appeal in 429 of 2012 in Director of Income Tax(IT) Vs. M/s.Dredging International N.V. has been dismissed on account of Low Tax Effect. We have not come across any other decision of Hon'ble Jurisdictional High Court on the impugned issue. The ld.Counsel has also not brought to our notice any decision of Hon'ble Jurisdictional High Court on the impugned issue. 8.1 The Hon'ble Bombay High Court in the case of Smt. Godavaridevi Saraf Vs CIT, 113 ITR 589(Bom) has held as under : Quote , " Until contrary decision is given by any other competent High Court, which is binding on a Tri....
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....om Other Sources and Short Term Capital Gain. Therefore, on this ground also, the assessee's claim for deduction under section 80IAB for Income from Other Sources and Short Term Capital Gain is not maintainable. Assessee has relied on decision of Hon'ble Supreme Court in the case of Reliance Energy Limited, however, the issue in that case before the Hon'ble Supreme Court was interpretation of Section 80IA(5) of the Act, therefore, the case is distinguishable on facts. In the case of Reliance Energy Limited, the Assessee i.e.Reliance Energy Limited had claimed deduction under section 80IA which was reduced by the Assessing Officer. In that context, Hon'ble Supreme Court interpreted Section 80IA(5) of the Act. However, in the case of assessee, i.e.Qubix Business Park Private Limited, admittedly assessee had not claimed in the Return of Income deduction under section 80IAB for Income from Other Sources and Short Term Capital Gain. Therefore, the decision of Hon'ble Supreme Court in the case of Reliance Energy Limited is not applicable to the assessee. 9.1 Therefore, even on this ground the Ground No.7 raised by the assessee is dismissed. Ground No.2 : 10. Ground No.2 raised b....
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....ion financing, financing acquisitions, refurbishment expenses and/or working capital requirements of Qubix, and General corporate purposes of the Borrower. Qubix pays interest on the aforementioned loan to EOP REIT at the rate of 12.5% per annum on the outstanding balance of the loan. Based on the information and documents provided by the Company and considering the data available, Other Method was selected as the most appropriate transfer pricing method for determining the arm's length price. The Company has relied on the arm's length review report dated April 2021, for determining the arm's length of the interest payment made on the loans availed Accordingly, it is reasonable to conclude that Qubix's said transaction with EOP REIT appears to be consistent with the arm's length standard from an Indian Transfer Pricing perspective. 10.3 Thus, as per assessee, the assessee has bench marked the impugned transaction by using "other method". Assessee conducted a search for comparable debt instruments in the form of NCDs' on NSDL and BSE database. Assessee selected some comparables, and justified the interest rate paid by assessee to its....