TaxTMI 
TaxTMI 
2025 (4) TMI 2182
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....since the initial burden of proving the claim of investment in share capital was not discharged by the assessee by producing share certificates. 4. The Ld. CIT(Appeals) erred in holding that the Revenue could not produce contrary evidence even when the assessee failed to prove its claim by discharging the initial burden lying on it. 5. The Ld. CIT(Appeals) erred in holding that entries in books of account and other approvals from regulatory authorities cannot be disregarded even when the assessee failed to produce share certificates which are the primary evidence. 6. The Ld. CIT(Appeals) erred in deleting the TP adjustment ignoring the fact that the alleged investment of Rs. 2,73,06,977/- in PT, VPR Laxmindo in F.Y. 201011 and receiving the same amount back on disinvestment in F.Y.2015-16 when viewed in totality does not represent a rationale behavior by independent parties. 7. The Ld. CIT(Appeals) erred in determining the interest on delayed receivables from Associated Enterprises at the rate of Libor + 2% basis points ignoring the fact that potential loss of the assessee in India is the ALP factor which contributes to the additional income attr....
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....re Pvt Ltd. (herein after VPRMIPL) on 06.10.2015. Consequent to search and seizure operation, notice u/sec.153A of the Income tax Act, 1961 was issued on 29.09.2016 for block assessment years from 2010-11 to 2015-16, requiring the assessee to file returns of income for the above assessment years. In response to the said notice issued u/sec.153A, the assessee company filed the return of income on 18.02.2017 admitting total income of Rs. 40,47,24,690/-including an additional income of Rs. 11,00,00,000/- as undisclosed income admitted during the course of search for the F.Y 2014-15 relevant to the assessment year 2015-2016. Subsequently, the Assessing Officer issued notice u/sec.143(2) of the Act dated 12.06.2017 for the assessment years 2010-11 to 2015-16 which was duly served. Further, the Assessing Officer also issued notices u/sec.142(1) and u/sec.142(1) r.w.s.129 on 13.12.2017 and on 30.07.2018, respectively, calling for relevant information based on the seized material. In response, the assessee appeared from time to time and furnished the information. 6.2. The Assessing Officer after due verification and examination of the seized/impounded material and information furnished ....
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....earned CIT(A), the Revenue is in appeal before the Tribunal. 9. The first issue that came-up for consideration from ground no.2 to 5 of Revenue's appeal is TP adjustment in respect of outstanding receivable from AE towards reimbursement of shipping expenses and it's re-characterisation as "loan" and imputing of interest. During the course of TP proceedings, the TPO noticed that the assessee had incurred expenditure of Rs. 5,01,01,126/- on shipping and customs clearance in connection with transportation of the leased equipment from the premises of the assessee in India to the premises of the AE in Indonesia. As per clause-5(H) of the lease agreement dated 24.02.2011, the transportation charges and other incidental charges to be borne by the AE. However, the assessee had incurred said expenditure and claimed it as an expenditure against the lease rental without recovering the same from the AE during the F.Y. 2011-2012. Therefore, the Assessing Officer treated the amount of shipping expenditure incurred by the assessee for transportation of lease equipment as incurred on behalf of the AE and the same to be recovered by the assessee. Since the assessee has not recovered the amount a....
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.... is an international transaction, the learned CIT(A) has rightly directed the Assessing Officer/TPO to adopt LIBOR + 200 basis points as against the SBI PLR @ 14.75% adopted by the Assessing Officer/TPO. Therefore, the order of the learned CIT(A) should be upheld. 14. We have heard both the parties, perused the material on record and the orders of the authorities below. Although, the assessee has not treated shipping and other expenses incurred on behalf of the AE for transportation of leased machinery is an international transaction and reported in Form No.3CEB, but the TPO has re-characterised the said transaction as receivable from the AE and imputed interest by adopting SBI PLR @ 14.75% p.a. Before the learned CIT(A), although, the assessee has contended re-characterisation of transaction, but, made an argument for adopting LIBOR + appropriate spread for imputing interest. The learned CIT(A) has held that the transaction between the assessee and it's AE is an international transaction which needs to be benchmarked and accordingly, applied LIBOR + 200 basis points for imputing interest. Therefore, the issue on hand to the extent of re-characterisation of transaction is reache....
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....d CIT(A) should be reversed and the addition made by the Assessing Officer should be upheld. 19. Shri S K Gupta, Learned Counsel for the Assessee, on the other hand, supporting the order of the learned CIT(A) submitted that the assessee has filed all evidences including initial investment made with AE and subsequent sale of said investment by filing relevant evidences. The assessee also proved the claim of receivable from the AE by placing relevant evidences for receipt of consideration in the subsequent financial year. The learned CIT(A) after considering the submissions of the assessee has rightly treated the amount as investment and accordingly directed the Assessing Officer/TPO to delete the TP adjustment in respect of interest on receivable on said transactions. Therefore, he submitted that the order of the learned CIT(A) should be upheld. 20. We have heard both the parties, perused the material on record and the orders of the authorities below. The TPO treated the transaction between the appellant and it's AE at Indonesia as loan on the ground that the appellant has not filed relevant evidences including share allotment certificate, annual report of AE to prove the same....
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....2B of the Income Tax Act, 1961. In fact, the assessee has accepted the recharacterisation of receivable as international transaction. However, disputed the rate of interest applied by the Assessing Officer and standard credit period allowed for computing the interest. The Assessing Officer allowed standard credit period of 30 days and applied SBI shortterm deposit rate and computed interest on receivables. The learned CIT(A) has adopted LIBOR + 200 basis points as against the SBI short-term deposit rate. In our considered view, there is no error in the reasons given by the learned CIT(A) to adopt LIBOR + 200 basis points because relevant rate of interest for benchmarking the interest is the country of residence of the AE and currency in which the said amount is receivable. Since the outstanding receivable from AE is receivable in foreign currency, in our considered view, the internationally recognized rates is appropriate for benchmarking the interest receivable. The learned CIT(A) after considering the relevant facts, has rightly adopted LIBOR + 200 basis points as against the SBI short-term deposit rate applied by the TPO/Assessing Officer. Thus, we are inclined to uphold the fin....
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....e tax is a compensatory in nature, but, not penal in nature. Therefore, in our considered view, there is no error in the findings recorded by the learned CIT(A) to allow relief to the assessee in respect of disallowance of interest on service tax. Thus, we are inclined to uphold the findings of the learned CIT(A) and reject ground no.9 of the Revenue. 30. The next issue that came-up for consideration through ground no.8 of Revenue's appeal is, challenging the findings of the learned CIT(A) in deleting the addition made by the Assessing Officer towards various disallowances in light of date of search and first proviso to sec.153A of the Act. 31. Ms. M Narmada, learned CIT-DR, referring to the date of search i.e., 06.10.2015 submitted that the assessment year in question is an 'abated' assessment which is evident from the date of search and the time limit available for issue of notice u/sec.143(2) of the Act. However, the learned CIT(A) by taking note of return of income filed by the assessee i.e., dated 27.02.2012 held that time limit for issue of notice u/sec.143(2) is expired before the date of search and the assessment is "unabated" and accordingly, the additions made by th....