TaxTMI 
TaxTMI 
2026 (7) TMI 342
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....he facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting disallowance made under section 14A of the Income Tax Act, 1961to the extent of tax exempt income earned during the year by overlooking the clarification of legislative intent provided by the CBDT vide Circular No. 5/2014 dated 11.02.2014 and to this effect even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961." 3. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance u/s. 14A of the Income Tax Act, 1961 r.w.r. 8D(2)(iii), to the extent of exempt income received by the assessee during the year under consideration without, appreciating the Circular No.5 of 2014 dated 11.02.2014 of CBDT and to this effect even an amendment was made by Finance Act, 2022 by way of insertion of Explanation to Section 14A of the Income Tax Act, 1961." 4. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance made u/s. 14A of the Income Tax Act, 1961 to the book profit of the assessee without appreciating the provisions of clause (f) of ex....
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..... Case was selected for scrutiny. During assessment, the assessing officer (AO) noted that assessee has reported international transaction with its associate enterprises (AE) for provision of Management Consultant Services. Consequent upon reporting international transaction in its report in Form 3CEB, the AO made reference to Transfer Pricing Officer (TPO) for computation of Arms' Length Price (ALP). The TPO entered into reference under section 92CA. During transfer pricing proceeding, the TPO noted that assessee has entered into service agreement with its Essar Africa Holdings Ltd. (EAHL) in January, 2012 for providing Management Consultant Services to its associate enterprises / subsidiaries. The assessee has received a service fee at a cost plus mark-up of 17% for said services. The assessee has charged Rs. 4.61 crore as fees for provision of management consultant services. The assessee benchmarked its transaction by adopting Transaction Net Margin method (TNMM). The assessee selected five comparable company, operating profit / operating cost (OP/OC) and weighted average of such comparables were at Rs. 13.52%. The OP/OC of assessee is at 17%, thus, the assessee claimed its tran....
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....s in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed submission on disallowance under section 14A as well as against the TP adjustment on account of provision for Management Consultancy Services. The ld. CIT(A) on considering the submission of assessee and the assessment order, allowed relief on the disallowance of section 14A. However, transfer pricing adjustment was upheld. Thus, further aggrieved both the parties have filed their respective appeals raising the various grounds of appeal which we have recorded above. 5. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the ld. Senior Departmental Representative (ld. Sr. DR) for the Revenue. Firstly, we are considering the appeal of Revenue in ITA 2544/Mum/2025. At the outset of hearing, the ld. AR of the assessee submits that the grounds of appeal raised by the revenue is covered in favour of the assessee. Initially the similar disallowance was made by AO in A.Y. 2010-11, however, on appeal before Tribunal in ITA No. 1831/Mum/2020 in order dated 06.01.2020, the disallowance was restricted to the exempt income. Similar ....
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....ecision of co-ordinate bench of Tribunal in assessee's own case as well as by Jurisdictional High Court, we upheld the order of ld. CIT(A). No contrary facts or law is brought to our notice to take other view. In the result, grounds of appeal raised by Revenue are dismissed. 8. In the result, appeal of Revenue is dismissed. ITA No. 2997/Mum/2025 by assessee 9. At the outset of hearing the ld AR of the assessee submits that he is not pressing ground No. 1 of the appeal. On the other hand, the ld Sr DR for the revenue submits that he has no objection, if this ground of appeal is dismissed as not pressed. Considering the submissions of ld AR of the assessee ground No.1 of the appeal is dismissed as not pressed. 10. Ground No.2 of the appeal relates to exclusion of two comparable included by TPO and inclusion of five comparable selected by assessee. The ldAR of the assessee submits that the assessee would be fully satisfy, if two comparable i.e. Axis Integrated System Limited (Axis) and Inmacs Management Services Limited (Inmacs) are excluded from final set of comparables. The assessee will not press for inclusion of any of the five comparable selected by them. The ld AR of....
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....le with the assessee. We find that in a recent decision in Asian Paints Limited (supra) the coordinate bench of Mumbai Tribunal excluded Axis by holding that this company traded in digital certificate and qualitative details of the trade as mentioned in Note-26 of financial statement. Further complete business details are not available. The operative part of the order of Tribunal is extracted below; "17. We have considered the submissions of both sides and perused the material available on record. As per the assessee, it is difficult to trace the exact business description/activity of the company undertaken during the year, and therefore this company cannot be considered as comparable to the assessee. From the perusal of the annual report of Axis Integrated Systems Ltd., for the year ending 31/03/2013, forming part of the supplementary factual paper book from pages 8-30, we find that there is no description of the business undertaken by this company during the year under consideration. Further, the company has claimed to have earned its revenue from operations from sales, liaison charges, and reimbursement of expenses. It is pertinent to note that there are no details as t....