TaxTMI 
TaxTMI 
2025 (11) TMI 2012
X X X X Extracts X X X X
X X X X Extracts X X X X
.... different Assessment Years, therefore, all the three captioned appeals are heard together and accordingly, adjudicated by a common order. First we take the assessee's appeal for AY 2011-12 in ITA No. 3641/Del/2017. ITA No.3641/Del/2017 [Assessment Year 2011-12] [Assessee's appeal] 3. Brief facts of the case are that assessee company is engaged in the business of manufacturing and service of passive telecom infrastructure equipment i.e. PIU, Shelter, AC, PCM etc. used in mobile telecom sites. The return of income was filed declaring loss of INR 78,66,48,709/- on 30.11.2011. As in this case, there were international transactions therefore, a reference was made to the Transfer Pricing Officer ("TPO") for determination of Arm's Length Price ("ALP") in respect of international transactions. The TPO passed the order u/s 92CA of the Act on 12.01.2015 wherein total adjustments of INR 11,62,89,103/- were proposed on the loans advanced to its Associated Enterprises ("AEs") and further adjustment of INR 33,33,195/- is proposed on the outstanding receivables. Thereafter, the AO passed the final assessment order wherein total income of the assessee is assessed at a loss of INR 61,26,35,0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....33,195/- fully as made by Ld. AO on the basis of adjustment proposed by Ld. TPO on account of outstanding receivables is bad in law and against the facts and circumstances of the case and more so when no interest has been charged. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.62,91,336/- u/s 14A of the Act r/w Rule 8D and further erred in taking those investments also which are not yielding any exempt income and that too by recording incorrect facts and findings. 7. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs.62,91,336/- u/s 14A of the Act r/w Rule 8D, is bad in law and against the facts and circumstances of the case. 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.4,81,00,000/- on account of Provision for Warranty and that too by treating it as contingent/provisional liability and that too by recording incorrect facts and f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im of the assessee that as per the modified agreements, all the loans are receivable in US$ at the time of maturity. 9. Heard the contentions of both parties and perused the material available on record. In the instant case, the main allegation of the Revenue is that the assessee as per the modified agreement has agreed that all these loans are receivable in Indian Rupees. In this regard, Ld. AR for the assessee drew our attention to the Paper Book wherein the original agreements of all the loans are placed and as per terms of each agreement, it was provided that same were repayable in US $. Further all the modified agreements entered with the AEs are also placed in the paper book which are available at page 371 to 388. For verification purposes, we took one modified loan agreement with its AE at Mauritius which is at page 372 of the Paper Book wherein as per clause (1) specifically provides that the repayment of the loan shall be made in US $ equivalent currency as on the date of the repayment and as on the time specified. Likewise in respect of the other loans given to AEs at Mauritius as well as at Cyprus, as per modified agreements placed at page 374 to 388 of the Paper Book....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 92B has been inserted to the Income Tax Act with retrospective effect from 01.04.2002, which clarifies the expression 'international transaction' as follows : Explanation.-For the removal of doubts, it is hereby clarified that- (i) the expression "international transaction" shall include- (a) the purchase, sale, transfer, lease or use of tangible property including building, transportation vehicle, machinery, equipment, tools, plant, furniture, commodity or any other article, product or thing; (b) the purchase, sale, transfer, lease or use of intangible property, including the transfer of ownership or the provision of use of rights regarding land use, copyrights, patents, trademarks, licences, franchises, customer list, marketing channel, brand, commercial secret, know-how, industrial property right, exterior design or practical and new design or any other business or commercial rights of similar nature; (c) capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....material available on record. The AO has made the addition of INR 62,91,336/- u/s 14A of the Act after reducing the amount to 41,35,664/- suo-motto disallowed by the assessee. The AO has computed the amount of disallowance in terms of computation provided in Rule 8D of the Rules. The main argument of the assessee is that investment which had not yielded exempt income should be excluded from the monthly average value of investments considered for computing the disallowance in terms of Rule 8D(2)(ii) of the Rules. 23. We find that as per Rule 8D(2)(ii), the average value of investment which has yielded exempt income needs to be considered and therefore, the action of the AO in considering the average value of gross value of investment is not correct. This view is supported by the judgement of Hon'ble Delhi High Court in the case of ACB India Ltd. reported in [2015] 374 ITR 108 (Delhi) and by the judgement of hon'ble Special Bench of the Delhi Tribunal in the case of ACIT, Circle-17(1), New Delhi vs Vireet Investment (P.) Ltd. reported in [2017] 82 taxmann.com 415 (Delhi-Trib.) (SB). 24. In view of the above facts and discussions and by respectfully following the judgement of Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 28. In view of facts as discussed above, we set aside this issue to the file of AO for making necessary verification of fact that whether out of the provisions made during the year towards warranty, how much amount was claimed as incurred in succeeding financial year, if substantial amount is claimed, no disallowance is required to be made. Further since it is ascertained liability, no addition is required to be made in the book profits u/s 115JB of the Act. With these directions, Ground of appeal Nos.8 & 9 raised by the assessee are partly allowed for statistical purposes. 29. In the result, appeal of the assessee is partly allowed. ITA No.4478/Del/2016 [Assessment Year 2010-11] [Assessee's appeal] 30. Ground of appeal No.1 raised by the assessee is general in nature hence, required no adjudication. 31. Ground of appeal No. 2 raised by the assessee is with respect to the addition of INR 38,270/- by holding the investment in shares as unexplained cash credit. 32. Heard the contentions of both parties and perused the material available on record. From the facts of the case, it is seen that the M/s. Jackson Heights Investment Ltd., Mauritius has made investment in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e with respect to the transfer pricing adjustments made on account of interest on loans given to its AEs wherein AO has charged the interest by applying SBI PLR as against LIBOR rate taken by the assessee. This issue has already been discussed and decided in favour of the assessee while deciding Ground of appeal Nos. 2 & 3 in ITA No.3641/Del/2017 for Assessment Year 2011-12 herein above. The observations made therein are applied Mutatis Mutandis to the facts of the present case. Therefore, by following the same, we direct the AO to apply the LIBOR plus 300 points to charge interest on such outstanding receivable as they are receivable in US $. Thus, Ground of appeal Nos. 7 to 10 raised by the assessee are allowed. 38. In the result, appeal of the assessee is partly allowed. ITA No.1074/Del/2023 [Assessment Year 2010-11] [Revenue's appeal] 39. The appeal filed by the Revenue is delayed by 2445 days and the reasons stated in the application of condonation of delay filed before us are as under:- 2. "In this connection, it is hereby stated that this office has received letter from CIT(DR), ITAT-9, New Delhi in which it was mentioned that in this case the appeal of ....