TaxTMI 
TaxTMI 
2026 (6) TMI 1258
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.... and are decided by common order to avoid the conflicting decisions. For appreciation of facts, the facts in AY 2013-14 are treated as lead case. The revenue has raised following grounds of appeals; (1) Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the transfer pricing adjustment of Rs. 80,59,129/- on account of addition made by the transfer pricing officer towards interest on loans advanced by the assessee to its Associated Enterprises. (2) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment by relying on the order of Hon'ble ITAT in the case of JSW Energy Ltd vs DCIT, in ITA No. 2316/Mum/2017 without appreciating that the facts of the international transaction of JSW Energy Ltd were different than that of the assessee's international transaction of loans of current year? (3) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment by applying the judgment in the case of the assessee for A.Y 2008-09 to A.Y 2011-12 without considering the fact that the transfer pricing stu....
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.... considered for every case and every year independently and that a rate decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 10B? (10) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision other cases, which is in violation of provisions of Rule 10B of IT Rules as credit ratings and the interest rate vary every year? (11) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without adopting any of the methods prescribed in Section 92C which is violation of law? (12) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of the deduction claimed amounting to Rs. 58,87,28,619/-....
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....stitutional validity of the Rules framed.? (17) Whether on the facts and in the circumstances of the case and in law, the Ld. CII(A) erred in allowing the deduction amounting to Rs. 17,07,64,671/- claimed u/s. 80-1A in respect of income from the sale of CERs, without properly appreciating the facts and circumstances brought out by the AO that the alleged receipt is not derived from eligible business and not considered it as capital receipt? (18) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction amounting to Rs. 17,07,64,671/- claimed u/s. 80-1A in respect of income from the sale of CERs, without properly appreciating the facts and circumstances brought out by the AO that the alleged receipt is not derived from eligible business and not considered it as capital receipt? (19) The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. On receipt of notice of memorandum of appeal of revenue, the assessee filed its C.O. raising following grounds; (i) On the facts and circumstances of the case as well as law, the ld CIT(A)has erred in confi....
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....guarantee fee. On receipt of report of TPO, the AO forwarded a draft of the proposed order of assessment under section 144C(1) of the Act on 30.12.2016. The assessee instead of filing objections before Dispute Resolution Penal (DRP), opted to file appeal before CIT(A). Thus, the AO passed final assessment order u/s. 143(3) r.w.s. 144C (3) on 10.02.2017 assessing the total income of the appellant at Rs. 16,51,87,470/- by making additions/ disallowances, consisting adjustment on account of interest on loans given to AE amounting to Rs. 80,59,129/-, adjustment on account of Corporate Guarantee fee amounting to Rs. 15,71,28,336/-, disallowance of deduction claimed under section 80IA of the Act on account of Rail System amounting to Rs. 58,87,28,619/-, disallowance of deduction claimed under section 80IA of the Act on account of water supply system amounting to Rs. 37,37,39,881/-. Additional disallowance under section 14A of Rs. 44,37,99,039/- and also added such disallowance of Rs. 45,11,00,884/- while computing book profit under section 115JB for MAT calculation. Disallowance of deduction claimed under section 80IA of the Act on account of Sale of CER amounting to Rs. 17,06,64,671/-. ....
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....view that ALP rate of interest in case of loan advanced to AE would be determined on the basis of rate of interest being charged in the county where the loan is received / consumed. Such ratio has been followed in a series of decision. We find that assessee has already shown to have charged interest of more than the interest rate directed in assessee's group case in JSW Energy Ltd. (supra). The assessee has charged interest on LIBOR + 500 bps from February, 2013 and LIBOR + 350 bps from April 2012. Thus, in view of aforesaid factual and legal position we do not find any merit in the grounds of appeal raised by assessee. 10. Ground no. 3 to 11 relates to TP adjustment on account of corporate guarantee. The ld. AR of the assessee submits these grounds of appeal are also covered in favour of assessee in assessee's own case for A.Y. 2008-09 to 2011-12 wherein the appeal of revenue has been dismissed and restricted the adjustment on corporate guarantee commission at 0.35%. 11. On the other hand, the ld. CIT-DR for the revenue submits that there are contrary decision wherein similar corporate guarantee, commission has been considered @ 0.50%. 12. We have considered the rival sub....
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....ies and have gone through the orders of lower authorities carefully. We find that assessing officer, in para 5.1 of assessment order has recorded that assessee has been claiming deduction in respect of rail system from A.Y. 2008-09 and it was allowed by assessing officer. However, the ld. Pr. CIT-4, Mumbai revised the order from A.Y. 2008-09 to 2011-12. However, in A.Y. 2012-13, the claim of assessee for deduction under section 80IA in respect of rail system and water system was disallowed. The AO in A.Y. 2013-14 disallowed claim of rail system as well as water system under section 80IA on the basis of his predecessor. However, on appeal before ld. CIT(A), the assessee contended that order of Pr. CIT under section 263 for A.Y. 2008-09 to 2011-12 has been quashed by Tribunal in ITA No. 4062, 4063, 4064 & 4086/Mum/2017 dated 30.11.2017. The ld. CIT(A) by following the decision of Tribunal allowed relief to assessee in respect of Rail system as well as water system. We find that further appeal by revenue before High Court has not been admitted. Thus, both the issues have attained the finality. In the result, ground no. 12 to 14 are dismissed. 16. Ground no. 15 & 16 relates to delet....
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....tion that investment which has been made in tax free securities, has come out of interest free funds available with assessee and hence no disallowance of interest is warranted. So far indirect expenditure being 5.00% of average value of monthly investment at Rs. 14.29 crore, is concerned, the ld. CIT(A) directed that AO to compute the disallowance @ 0.5% of average value of only those investments which yielded exempt income during the year and also to consider suo moto disallowance and thereby allowed part relief. We find that while given such direction, the ld. CIT(A) followed the decision of jurisdiction High Court in HDFC Bank Ltd. (supra) as well as decision of Special Bench in case of Vireet Investments (P) Ltd. (supra). We find that while allowing part relief to the assessee the ld. CIT(A) followed the binding precedent. Thus, we do not find any reasons to interfere with the finding of ld. CIT(A). In the result, ground no. 15 & 16 of the appeal is also dismissed. 19. Ground no. 17 & 18 relates to allowing the deduction in respect of sale of Certified Emission Reductions (CERs). The ld. AR of the assessee submits that these grounds of appeal are also covered by the decision....
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....ying the judgment in the case of the assessee for AY 2008-09 to AY 2011-12 without considering the fact that the transfer pricing study is highly fact-based exercise based on contemporaneous data and it differs from case to case and that all the factors in Rule 108 have to be considered for every case and every year independently and that a rote decided in a different case for different set of facts and for different year cannot be adopted as such to the instant assessee, which would be violative of the specific provisions in Rule 10B? 4. Whether on the facts and circumstances of the case and in lave, the Ld. CIT(A) was justified in directing to restrict the TP adjustment of Corporate Guarantee to 0.35% instead of 2.00% mule by the Transfer Pricing Officer on account of corporate guarantee fee issued by assessee in favour of its associated enterprises? 5. Whether on the facts and circumstances of the cave and in low, the Ld. CIT(A) is justified in setting the corporate guarantee rate at 0.35% without considering the fact that in the benchmarking undertaken by the assessee they had arrived at ALP corporate guarantee commission rate which is more than 0.35%, for ins....
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....e case and in law, the Ld. CIT(A) was justified in directing the Assessing Officer to consider the gain on prepayment of Sales Tax deferrals of Rs. 160,85,02,589/- as Capital Receipt Ignoring the fact that the gain prepayment of Sales tax was in the nature of incentive/concession and revenue in nature as per the propose test of Government of Karnataka's Scheme? 13. Whether on the facts and the circumstances of the case in love, the Lal CITA) was justified in directing the Assessing Officer to exclude sales tax subsidy while computing income 115JB of the Act without appreciating the facts and circumstances of the case? 14. Whether on the facts and in the circumstances of the cave, and in law, the Ld. CIT(A) was Justified in granting deduction u/s. 80IA in respect of the Railway system, without appreciating the fact that the Rail system was not un infrastructure facility within the meaning of the explanation to Section 80IA(4)(i) of the IT Act and that the assessee had not set up on enterprise to curry on the business of developing, operating and maintaining on infrastructure facility within the meaning of that section? 15. "Whether on the facts and in ....
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....account of corporate guarantee commission. We find that these grounds of appeal are similar to the ground no. 3 to 11 in appeal for A.Y. 2013-14 which we have already dismissed by following the decision of Tribunal in assessee's own case in A.Y. 2008-09 to 2011- 12 dated 30.06.2023. Thus, following the principle of consistency these grounds of appeal are dismissed with similar observation. 26. Ground no. 12 relates to considering the Sales Tax deferrals as capital receipt. The ld. AR of the assessee submits that this ground of appeal is covered by the decision of Tribunal in assessee's own case for A.Y. 2008-09 to 2011-12 wherein decision in assessee's own case for A.Y. 2006-07 reported in (2020) 180 ITD 505 (Mumbai Trib.) was followed. 27. On the other hand, the ld. CIT-DR for the Revenue submits that refund was in the nature of concession and purpose test has to be considered. Though, the ld. CIT-DR for the Revenue submits that there is favourable decision in assessee's own case in earlier year. 28. We find that before the assessing officer, the assessee in order to claim Sales Tax deferrals as capital receipt relied upon the decision of Special Bench of Mumbai Tribunal ....
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.... of Rs. 29.44 crore as provisions no longer required, return back in respect of project creditors. The assessing officer brought the same to tax such provision by taking view that credit balance on losing its character of a liability is return back in the P & L A/c and to be taxed as income under section 28(iv) of the Act. We find that in assessee's own case for A.Y. 2012-13, the assessing officer made identical observation while making addition under section 28(iv) of the Act. We find that co-ordinate bench of Tribunal in assessee's own case for A.Y. 2012-13 on similar ground of appeal and on relying upon the decision of Tribunal in assessee's own case for A.Y. 2004-05 in ITA No. 930/Bang/2009 dated 13.01.2017 allowed relief to the assessee. Thus, we find that this ground of appeal is covered in favour of assessee and against the revenue. In the result, ground no. 17 of the appeal is dismissed. 34. Ground no. 18 & 19 relates to deleting the disallowance under section 14A and excluding from such disallowance from book profit under section 115JB. We find that these grounds of appeal are similar to the ground no. 15 & 16 in appeal for A.Y. 2013-14, which we have already dismissed ....
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....corporate guarantee commission rate in the range of 0.215 to 1.71% for different corporate guarantees? 6. Whether on the facts and in the circumstance % of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without considering the benchmarking undertaken by the assessee and the benchmarking undertaken by the TPO? 7. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the adjustment without considering the flaws pointed by the TPO in the benchmarking undertaken by the assessee? 8. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in setting the corporate guarantee rate at 0.35% without giving any findings as to how the judgments relied by Hon'ble ITAT applied to the case of the assessee? 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the fee for the guarantee issued by the instant assessee for the loans availed by the AE should be fixed at 0.35% placing reliance upon the decision in other cases, without realizing the fact that the transfer pricing study is highly facts-based ....
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....prepayment of Sales Tax deferrals of Rs. 441,08,53,217/- as Capital Receipt ignoring the fact that the gain of prepayment of Sales tax was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka's Scheme? 15. Whether on the facts and the circumstances of the case in law, the Ld. CIT(A) erred in directing the Assessing Officer to exclude sales tax subsidy while computing income u/s. 115JB of the Act without appreciating the facts and circumstances of the case? 16. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) is right in holding that the benefit received by the assessee on account of waiver of principal loans and interest payable is capital in nature and is not taxable while ignoring the ratio laid by Hon'ble Apex Court in the case of Commissioner of Income Tax vs. T. V. Sundaram lyengar & Sons? 17. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 19,42,13,629/- u/s. 28(iv) of the Act on account of write off of Project Creditors, without appreciating the facts as discussed by the Assessing....