TaxTMI 
TaxTMI 
2023 (6) TMI 1539
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....oduced as under: Revenue's grounds of appeal(AY 2008-09): 1. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to AE at LIBOR + 100 bps is at arm's length by comparing it with interest paid by the assessee on buyers credit facility extended by foreign bank, disregarding the fact that the AE's credit rating and interest rate payable by the AE to banks were relevant rather than the interest rate payable by the assessee to banks" 2. "On the facts and circumstances of the case and in law, the Ld. CIT(A) was not justified in determining the Arm's Length Price of fee on corporate guarantee extended to the lenders by assessee to its five AEs at Rs. 13,72,20,858/- by holding that the TPO had not given any reason for rejecting the assessee's benchmarking even though the TPO has discussed the reasons in detail in the TP order, which have not been considered by the Ld. CIT(A)" 3. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in accepting determination of credit rating of Santa Fe Mining, USA using fina....
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....preciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off." 10. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during F.Y. 2004-05 & F.Y. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in light of the fact that on cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis." 11. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 58,28,74,773/- as Capital Receipt, directing the deletion of disallowance u/s 14A and to consider the income on sale of Certified Emission Reductions ('CER') receipts as Capital Receipt for the purpose of computing book profit u/s 115JB of the Act. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. The appellant craves l....
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....nders by assessee on behalf of five AEs at Rs. 22,62,06,353/-" 3. "On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting determination of credit rating of Santa Fe Mining, USA using financials of parent company and holding company and rejecting the contention of the TPO that credit rating shall be determined using its standalone financials under the arm's length principle." 4. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in accepting the comparable loans transaction from different geography viz. from USA, Canada and Europe when the AEs which had taken loan, were situated in UK and Netherland, for determining the fee to charge on corporate guarantee extended on behalf of AEs viz JSW Steel Service Centre (UK) Ltd and JSW Netherland" 5. On the facts and circumstances of the case and in law, the CIT(A) was not justified in determining the Arm's Length Price of fee on corporate guarantee extended to the lenders by assessee on behalf of the AE, JSW Steel (USA) Inc. at 133.65 bps, same as that in the case of anther AE. JSW Steel Holding (USA) without determining credit rating of JSW St....
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....sequential depreciation in respect of foreign currency loss of incurred during F.Y. 2004-05 & F.Y. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in light of the fact that on cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis." 13. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of purchases of Rs. 2,58,750/- as bogus purchases." 14. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 89,40,89,905/- as Capital Receipt, directing the deletion of disallowance u/s 14A and to consider the income on sale of Certified Emission Reductions ('CER') receipts as Capital Receipt for the purpose of computing book profit u/s 115JB of the Act" Assessee's grounds of appeal (AY 2009-10): 1. "On facts and circumstances of the case and in law, the Hon'ble Commissioner of Income-tax (Appeals) (hereinafter referred to as the 'CIT(A)') has erred....
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....d to AE at LIBOR+200/350 bps is at arm's length." 2. "On the facts and the circumstances of the case and in law, the CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to JSW Steel Netherland and JNRL Mauritius at LIBOR+ spread is at arm's length by comparing it with interest paid by the assessee on buyers credit facility extended by foreign bank, without appreciating that a loan to an AE by the assessee is a different transaction from a buyers credit by a bank to the AE on several factors and under CUP the similarity of products and services is of paramount importance." 3. "On the facts and the circumstances of the case and in law, the CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to IEL, Chile and JSW Holding USA at LIBOR+ spread is at arm's length by comparing it with lons taken by them from banks even though the terms of loans taken by AE from banks and taken from the assessee are not the same." 4. "On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in accepting the Arm's Length Price of fee on corporate guar....
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....ough the receipt is attributable to the business carried on by the assessee company." 11. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions ('CER') receipts as Capital Receipt by relying on the judgement of Andhra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon'ble Supreme Court." 12. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the increased written down value of the assets received from the merged companies thereby allowing additional depreciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off." 13. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during FY. 2004-05 & FY. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in ligh....
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....at provision of corporate guarantee is in the nature of 'quasi equity' not subject to any remuneration." Each of the above grounds are independent of and without prejudice to all others. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds. Revenue's grounds of appeal (AY 2011-12): 1. "On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in holding that interest received by assessee on foreign currency loan advanced to AEs at LIBOR+ spread is at arm's length even though the uncontrolled transactions of loans selected by the assessee were not comparable with the loan transactions between the assessee and As for the reasons pointed out by the TPO at para 5.2 of his order" 2. "On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in accepting the Arm's Length Price of fee at Rs. 7,02,52,115/- on corporate guarantees extended to the lenders by assessee to its three AEs, even though loan transactions selected by the assessee for the benchmarking guarantee fee using interest saving approach were not comparable with the loa....
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....stances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions ('CER') receipts as Capital Receipt even though the receipt is attributable to the business carried on by the assessee company." 10. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (CER') receipts as Capital Receipt by relying on the judgement of Andra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon'ble Supreme Court." 11. "On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the increased written down value of the assets received from the merged companies thereby allowing additional depreciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off." 12."On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowin....
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....hout prejudice to all others. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds. 4. In this background we take up the year-wise cross appeals as follows: ITA No.4632/Mum/2017 AY 2008-09 (Revenue's appeal) First we deal with the Transfer Pricing Issue: Certain International Transactions as carried out by the assessee with its Associated Enterprises [AE] and as reported in Form 3CEB were referred to Ld. Transfer Pricing Officer-1(3), Mumbai [TPO] for determination of Arm's Length Price [ALP]. The details of the transactions, which are subject matter of present appeal before us, are as follows: - Sr No Nature of transaction Adjustment Amount 1. Interest on loan advanced to AE 2,84,526/- 2. Guarantee fee on corporate guarantee 19,75,28,327/- 4.1. Interest received on loan given to Associated Enterprises (Ground 1) 4.1.1. It transpired that the assessee had advanced intra-group unsecured loan of USD 15,00,000/- to its AE, JSW Netherlands on 14.01.2008 and was in receipt of interest of Rs 1,92,949/- against the same. The said loan was in the nature of short term loan which was due t....
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.... TPO proceeded to work out the mean ALP rate on the basis of above factors. The assessee was taken as the tested party and External CUP method was used for benchmarking the aforesaid transaction. External CUP, as per Ld. TPO, could be the Bank Prime Lending Rate [PLR], Corporate Bond Rates or the cost of borrowings in the domestic market. Applying the average spread of 2.19% to assessee's cost of borrowing i.e. 7.59%, cost of domestic borrowings was worked out to be 9.78%. Relying upon safe harbour rules, Prime Lending Rate was worked out to be 12.75%. The ALP based on Indian Corporate Bond Rates was worked out to be 15%. Finally, the Ld. TPO considered the rate of 12.75% out of three rates to benchmark the stated transactions. The ALP interest, thus, worked out to be Rs. 4,77,475/- as per computations made in para 5.10 of learned TPO's order. Adjusting the interest of Rs 1,92,949/- as charged by the assessee from its AE, the net TP adjustment, thus proposed, worked out to be Rs 2,84,526/- 4.1.5. The aforesaid TP adjustment was incorporated in assessment order dated 30/05/2014. The assessee submitted that it did not want to pursue the matter before Ld. Dispute Resolution....
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.... us. 4.1.7. The Ld. CIT-DR supported the reasoning of Ld. AO / Ld. TPO as enumerated by us in the preceding paragraphs; whereas Ld. AR drew attention to the fact that the issue of benchmarking the transactions using LIBOR stood covered in assessee's favour by catena of judicial pronouncements as enumerated in the impugned order. Further the Ld.AR also drew our attention to the decision of assessee's sister concern i.e JSW Energy Limited (ITA No. 2452/M/2017) for AY 2011-12 and (ITA No. 2316/Mum/2017) for AY 2012- 13 wherein identical benchmarking was carried out by the TPO which was subsequently deleted by the CIT (A) as well as the coordinate bench and the method adopted by the assessee was accepted. 4.1.8. We have carefully considered the rival submissions and perused relevant material on record as well as the decision of sister concern. The undisputed fact that emerges is that the assessee has advanced intra-group loan of US Dollar 15 million to its AE situated in Netherland. The assessee has charged interest against the same on LIBOR which is as per the contractual terms. Another undisputed fact is that as per the terms of the contract, the currency of principal a....
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....present appeal as in similar matters the Revenue has accepted the view of the Tribunal which has been relied upon by the impugned order. Accordingly, we see no reason to entertain the proposed questions of law." 4.1.10. A perusal of the above case laws would reveal that the Hon'ble Courts has confirmed the view that the ALP rate of interest in case of loans advanced to Associate Enterprises would be determined on the basis of rate of interest being charged in the country where the loan is received /consumed. Similar is the ratio of several other judgments rendered by various benches of Tribunal which have already been enumerated in the impugned order. Therefore, the conclusion to the extent that the loan to AE was to be benchmarked on the basis of LIBOR would not require any interference on our part. 4.1.11. Now the only question that survives for our consideration is the determination of ALP rate keeping in view the facts and circumstances of the case. The Ld. first appellate authority has confirmed the determination of ALP on the basis of LIBOR. During the course of proceedings before Ld. TPO, the assessee had arrived at mean spread of 100 basis points over LIBOR which ....
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.... of Rs 19,75,28,327/- as Arms Length Guarantee Fee the break-up of which is provided on pages nos. 27 and 28 of the TPO's order. 5.1.3. Before us, the ld. Counsel for the assessee in support of his submissions that corporate guarantee is not an international transaction has placed reliance on Tribunal decisions. The contentions raised by ld. Counsel are unsustainable in the light of decision rendered by Hon'ble Jurisdictional High Court in the case of Everest Kento Cylinders Ltd. (378 ITR 57). Thus, we hold Corporate Guarantee facility provided to overseas AE by the assessee is an international transaction. In so far as the rate of commission is concerned, the Ld.AR of the assessee company relied upon the following judicial pronouncements wherein the commission on corporate guarantee is restricted at 0.25% -0.50%. The same is tabulated as under: Case Authority Citation Guarantee Commission CIT VS. Everest Kento Cylinders Ltd. Bombay High Court 378 ITR 57 0.50% Global Offshore Services Limited Vs ACIT Mumbai Tribunal ITA No.7321/ MUM /2016 0.25% SRF Limited Vs DCIT Delhi Tribunal ITA no. 356/Del/15 and ITANo.5784/DEL/2016 0.....
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....already disallowed Rs. 42,84,300/- U/s 14A and Ld AO has only partially accepted the said disallowance as worked out by the assessee without any justification and satisfaction. He further stated that AO cannot reject the working of assessee merely on the plea that the working of disallowance as per Rule 8D is higher than the amount worked out by the assessee. He also relied upon decision of Supreme Court in case of Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income-Tax and another [2017] 394 ITR 449 (SC). 6.1.4. In our opinion, Rule 8D can be applied only if the assessing officer is not satisfied with the correctness of the claim made by the assessee in respect of the expenditure which the assessee claims to have been incurred in relation to income which does not form part of his total income. In the instant case he has accepted the claim made under 2 limbs of 14A r.w.r 8D and has merely rejected the last limb without providing any reasoning. 6.1.5. Rule 8D is not applicable by default but only if and when the Assessing Officer records his satisfaction and rejects the explanation of the assessee regarding the disallowance of expenditure. In the present ca....
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....he assessee by the decision of Hon'ble Mumbai ITAT in assessee's own case for AY 2006-07 in [2020] 180 ITD 505 (Mumbai - Trib.), where it has been held that subsidy received by the assessee from state Government of Karnataka is for the purpose of setting up of a new industry and in the nature of capital receipt not chargeable to tax. 6.2.2. The Ld. DR, on the other hand, strongly opposing the order of the Ld. CIT (A) submitted that the refund was in the nature of concession and revenue in nature as per the 'Purpose test' of Government of Karnataka scheme. However on perusal of the decision of the assessee's own case, the Ld. DR conceded that the ground of appeal is covered by the assessee's earlier year decision. 6.2.3. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. We find that the coordinate bench of ITAT Mumbai Tribunal in assessee's own case for AY 2006-07 in [2020] 180 ITD 505 (Mumbai - Trib.) had considered an identical issue and held that sales tax subsidy received by the assessee is capital in nature. The relevant findings of the Tribunal are as under: "31.....
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....e of subsidy. The sum and substance of the ratio laid down by various High Courts are that if the assistance/subsidy was given to enable to set up a new unit or to expand the existing unit in the backward area, the receipt of the subsidy was on capital account. 6.2.5. From the above decisions, we are of the considered view that there is no infirmity in the order of the Ld. CIT(A) in treating the receipt of subsidy from state Government of Karnataka as capital in nature and accordingly, we reject ground taken by the revenue. 6.3. Treatment of income on sale of Certified Emission Reduction (CER)as capital receipt instead of Revenue receipt (Ground 7 and 8). 6.3.1. The next issue that came up for our consideration from ground no 7 and 8 of revenue appeal is treatment of income on sale of Certified Emission Reduction (CER) receipts as capital receipts instead of revenue receipts. The ld. AR for the assessee, submitted that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Mumbai ITAT in assessee's sister concern's case for AY 2008-09 in ITA No. 463/Mum/2014 and ITA No. 982/Mum/2013, wherein it has been held that receipts on sale of ....
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....ted due to environmental concerns." We agree with this factual analysis as the assessee is carrying on the business of power generation. The Carbon Credit is not even directly linked with power generation. On the sale of excess Carbon Credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. In the circumstances, we do not find any element of law in this appeal." The Hon'ble High Court has held that the income received on sale of excess Carbon Credits was a capital receipt not chargeable to tax. Quite clearly, the said Judgment supports the plea of assessee in the instant case that the receipt on sale of CERs is a capital receipt not chargeable to tax. 6.3.5. In so far as the reliance placed by the Ld. DR on the decision of Cochin Bench of the Tribunal in the case of Apollo Tyres Ltd (supra) is concerned, ostensibly, the same does not help the case of Revenue, in view of the subsequent Judgment of Hon'ble Andhra Pradesh High Court in the case of My Home Power Ltd. (supra). In fact, the Cochin Bench of the Tribunal has analysed the situation and observed that the earning of Carbon Cred....
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.... the coordinate bench of ITAT Mumbai Tribunal in assessee's own case for AY 2006-07 in [2020] 180 ITD 505 (Mumbai - Trib.) had considered an identical issue and held that sales tax subsidy received by the assessee is capital in nature. The relevant findings of the Tribunal are as under: "15. We have heard both the parties, perused the material available on record and gone through orders of the authorities below along with certain case laws cited by both the parties. The only dispute under consideration is whether, the written down value of the assets transferred on amalgamation was to be computed in the hands of the amalgamated company considering the unabsorbed depreciation, i.e depreciation not given effect to, in the assessment of the amalgamating companies. The provisions of Explanation (2) and (3) to section 43(6), which explains what, will be the WDV of assets in the hands of amalgamated company, in the cases of amalgamation. Similarly, section 32(2), which provides for carry forward of unabsorbed depreciation and section 72A, which provides for carry forward of business loss and unabsorbed depreciation in the hands of the amalgamated company in the cases of amal....
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.... (3) to section 43(6) of the Act, seeks to find certain anomalies which would have otherwise exists under the Act. The intention of explanation (3) is not a simply to nullify the provision of Explanation (2) to section 43(6), as has been read by the Ld.AO. This is also evident from the fact that the Explanation (2) has been introduced from 01.4.1988, whereas Explanation (3) was always on statute, which clearly implies that Explanation (3), which is a legal/ deeming fiction, was not introduced to nullify the impact of Explanation (2) of the Act. Accordingly, in terms of Explanation (3) to section 43(6), in the present case, unless the unabsorbed depreciation of the amalgamating companies is carried forward in the hands of the amalgamated company u/s 32(2) of the Act, Explanation (3) cannot be read into Explanation (2) to simply conclude that depreciation 'actually allowed' also includes unabsorbed depreciation. 16. The meaning of the term actually allowed is interpreted by the Hon'ble Supreme Court, in the case of CIT v. Doom Dooma India Ltd. [2009] 310 ITR 392/ 178 Taxman 261, wherein it has been held that, the term 'depreciation actually allowed' means....
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.... of Ld. CIT(A) and reject the ground taken by the revenue. 6.5. Issue regarding disallowances of depreciation on forward exchange contract (Ground 10) 6.5.1. The next issue that came up for our consideration from ground no 10 of revenue appeal is disallowances of depreciation of Rs 3,23,41,176/- on loss arising on cancellation of forward foreign exchange contracts during the assessment year 2005-06 and Rs 22,20,563/- for 2006-07. In this ground, the assessee company is seeking consequential depreciation for the current year on loss that arising on the forward foreign contracts settled/ cancellation in the previous year relevant assessment year 2005-06 and 2006-07.The ld. AR for the assessee, submitted that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Mumbai ITAT in assessee's own case for AY 2006-07 in [2020] 180 ITD 505 (Mumbai - Trib.), where it has been held that such loss arising on forward foreign exchange contracts should be added to the cost of asset in terms of section 43A of the Act, and consequently, depreciation should be allowed on the same. 6.5.2. We find that ITAT, Mumbai bench in assessee's own case held that....
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....nd treated as capital receipt by us in the earlier paras, thus the question of adding the same to the books profits of the appellant does not arise. Further the authorised representative during the course of hearing submitted that the said issue is covered by the assessee's own case for AY 2006-07, wherein the issue is allowed in favour of the assessee. The Relevant extract is reproduced as under: "In this view of the matter and considering the ratio of case laws discussed hereinabove, we are of the considered view that when a particular receipt is exempt from tax under the Income tax law, then the same cannot be considered for the purpose of computation of book profit u/s 115JB of the I.T. Act 1961. Hence, we direct the Ld. AO to exclude sales tax subsidy received by the assessee amounting to Rs. 36,15,49,828/- from book profits computed u/s 115JB of the I.T. Act, 1961." 6.6.2. Further the issue of addition of 14A disallowance made to book profits, it is mentioned that it is well settled law that book profit u/s. 115JB cannot be computed by including disallowance made u/s. 14A of the Act. Recently the Supreme Court of India in the case of Atria Power Corporation Lt....
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....ly allowed and appeal of assessee dismissed. ITA No.5325/Mum/2017 AY 2009-10 (Revenue's appeal) 7. The issue raised in ground No.1 in Revenue's appeal pertains to interest received by assessee from foreign currency loan. The details of interest charged by the assessee on foreign currency loan to its AE is mentioned on page 2 of the TP order dated 30.11.2013. In this year also, the TPO rejected the benchmarking done using LIBOR rate and proceeded to calculate the ALP interest rate by considering the SBI Prime Lending rate. Since the issue is similar to one as decided by us in ground No.1 in ITA No.4632/Mum/2017 of Revenue's appeal, therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.1 in Revenue's appeal. Accordingly, ground No.1 of Revenue's appeal is rejected. 7.1 The next issue raised in ground No.2 to ground No.5 in Revenue's appeal deals with issue of commission charged on corporate guarantee provided to AE's. The details of guarantee and related loans as on 31.03.2009 is mentioned on page 18 of the TP order dated 30.11.2013. Since the issue involved i.e commission of CG provided is similar to one as....
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....d to delete interest levied by the TPO on preliminary expenses incurred by the assessee which were later recovered on cost to cost basis. We do not find any error in the order of the CIT(A) hence we inclined to uphold the CIT(A) order and reject ground raised by the revenue. Accordingly, ground No.6 of Revenue's appeal is rejected. 7.3 The issue raised in ground No.7 in Revenue's appeal deals with the deletion of disallowance made u/s 14A r.w.r 8D of the Act. Since the issue raised is similar to one as decided by us in ground No.5 in ITA No. 4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.7 in Revenue's appeal. Accordingly, ground No.7 of Revenue's appeal is rejected. 7.4 The issue raised in ground No.8 in Revenue's appeal deals with direction given by the CIT(A) to AO to consider the refund of sales tax as capital receipt. Since the issue raised is similar to one as decided by us in ground No.6 in ITA No. 4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.8 in Revenue's appeal. Accord....
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....that the transaction entered into with Riya Trading Company Pvt Ltd was genuine in nature. Further the CIT(A) also submitted that the addition cannot be made merely on the basis of information received from sales tax departments and on the statement of party without actually verifying or without providing opportunity of cross examination. 7.8.2. Before us, the ld. AR for the assessee, submitted that the similar additions, i.e., merely on information received from sales tax departments, addition of bogus purchase were made in the hands of the JSW Steel Limited (Successor on amalgamation of JSW Ispat Steel Ltd) Vs. DCIT in AY 2011-12 in ITA No. 4068/Mum/2018, wherein the Hon'ble Mumbai Tribunal held that additions made on account of bogus purchases only on the basis of information received from sales-tax department ignoring evidences filed by the assessee is incorrect and needs to be deleted. The relevant extract is reproduced as under: "8. Coming to the issue in question, the AO has made addition of Rs.5,67,000/- towards purchases claimed to have been made from M/s Kotson Impex Pvt Ltd on the ground that although assessee has produced bills and payment proof, but fai....
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....cided by us in ground No.11 in ITA No. 4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.14 in Revenue's appeal. Accordingly, ground No.14 of Revenue's appeal is rejected. ITA No. 5459/Mum/2017 AY 2009-10 (Assessee's appeal) 7.10 Ground 1 of the assessee appeal related to limitation issue of the assessment order. Before us Ld.AR of the assessee company submitted that though this ground of the assessee is fully covered by the decision of Madras High Court in case of Roca Bathroom Products Private Ltd (445 ITR 537), however, since the other issues raised in department appeal is fully covered in favour of the assessee by previous years orders, hence as per instruction of the assessee, he requested not to adjudicate this ground and keep it open. Considering the request of the assessee and since the issues raised in revenue appeal is mostly covered in favour of the assessee, hence the limitation issue become academic and accordingly not required to be adjudicated. Thus, ground raised by the assessee is rejected for statistical purpose. 7.11 Ground 2, 3 & 4 are related to corporate gua....
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.... the ld. AO was not having any of the documents as asked by the assessee in the letters dated 10/03/2015, 17/04/2015 and 13/05/2015 and the ld. AO was having only some pages of corroboration of 7 pages of PIL diary in his records. These papers are enclosed in page Nos. 7-13 of the paper book filed before us. We have gone through the same and all those pages does not contain any seized document reference, does not contain the details of persons from whose hands those documents were seized etc., Hence, even on merits, these documents could not be relied upon in any manner whatsoever for framing an addition in the hands of the assessee. 24. We also find that the very basis of addition was primarily reliance on the PIL filed in the Hon'ble Jharkhand High Court .Vide an order dated 06/01/2014,the Hon'ble Jharkhand High Court had categorically taken note of the report of the CBI which mentions that it would not be in a position to register any regular case and it would not be possible for CBI to conduct an enquiry in the matter. Hence, the very basis on which the addition itself was made had been dismissed by the Hon'ble High Court. Hence, the contention of the ld. C....
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....appeal are partly allowed. 8.2 The next ground of appeal i.e., ground No.8 of Revenue's appeal deals with deletion of disallowance made u/s 14A r.w.r 8D of the Act. Since is raised is similar to one as decided by us in ground No.5 in ITA No.4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.8 in Revenue's appeal. Accordingly, ground No.8 of Revenue's appeal is rejected. 8.3 The issue raised in ground No.9 in Revenue's appeal deals with direction of the CIT(A) to AO to consider the refund of sales tax as capital receipt. Since the issue involved is similar to one as decided by us in ground No.6 in ITA No.4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.9 in Revenue's appeal. Accordingly, ground No. 9 of Revenue's appeal is rejected. 8.4 The issue raised in ground No. 10 and ground No.11 in Revenue's appeal deals with the direction of the CIT (A) to consider income on sale of Certified Emission Reduction (CER) receipts as capital receipts. Since the issues involved is similar to one a....
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....neness of the expenses. Further the 3 parties have been regularly supplying skilled and semi-skilled manpower to the assessee or its manufacturing activity. Further there is no co-relation that the payment towards donations made by three independent companies are through assessee company. There is no other connection of the appellant company with these companies. There is no document or other evidence based on which conclusion regarding non commensurate payment to these companies was drawn by the Ld.AO. Ld. CIT(A) considering the facts of the case concluded that the addition made by Ld.AO is purely on surmises and lacks credibility and needs to be deleted. 8.7.3. Aggrieved by the order of CIT (A), the revenue is in appeal before us. Ld. DR argued that placed strong reliance on the order of the AO and stated that the expenses are not incurred for business purpose. The ld. AR for the assessee, submitted that the Ld.AO had proceeded to make the disallowance with pre-conceived baseless notion, without examining and verifying payments made to vendors. The Ld.AR further submitted that the Ld.AO made disallowance without bringing any connection of donation with the appellant or any tra....
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....emption reserve is not a reserve but money set apart in the accounts of the company to redeem the debentures and therefore must be treated as money set apart to meet a known liability. While the above Supreme Court decision was given in context of Super Profit Tax Act, 1963 but the ratio of this decision has been applied by the Hon'ble Kolkata ITAT bench in the case of IOL Ltd. Vs. DCIT (2003) 81 TTJ 525. In this direct decision of ITAT, it was held that the sum appropriated by the assessee as debenture redemption reserve in the P&L account of the relevant previous year cannot be held to be a "reserve" within the meaning of clause (b) or the amount set apart to meet unascertained liabilities within the meaning of clause(c) to the Explanation to Section 115JB(1). In this decision, it was also held that none of the other clauses i.e. clause (a) and clause (d) to (1) of the Explanation to Section 115J are relevant to consider the additions of 50 lakhs i.e. the debenture redemption reserve. Further in the case of Hindalco Industries Ltd. Vs. ACIT (2010) TIOL 762 ITAT Hon'ble Lucknow ITAT Bench had also followed the ratio laid down by the Hon'ble Supreme Court in the case of....
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....he benchmarking done using LIBOR rate and proceeded to calculate the ALP interest rate by considering the SBI Prime Lending rate. Since the issue involved is similar to one as decided by us in ground No.1 in ITA No.4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.1 in Revenue's appeal. Accordingly, ground No.1 of Revenue's appeal is rejected. 9.1 The issue raised in ground No.2 to ground No.6 in Revenue's appeal deals with issue of commission charged on corporate guarantee provided to AE's. The details of guarantee and related loans as on 31.03.2011 is mentioned on page 24 of the TP order dated 30.11.2013. Since the issue involved i.e commission of CG provided is similar to is similar to one as decided by us in ground No.2 to ground No.4 in ITA No. 4632/Mum/2017 of Revenue's appeal. Therefore, our decision/finding in the above ground would mutatis mutandis apply to ground No.2 to ground No.6 in Revenue's appeal. Accordingly, grounds No.2 to ground No.6 of Revenue's appeal are partly allowed. 9.2 The issue raised in ground No.7 in Revenue's appeal deals with disa....