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2016 (7) TMI 1499 - ITAT MUMBAITransfer pricing adjustment incorporated in the assessment order is on account of fees for guarantee issued by the assessee in favour of its Associated Enterprise - Held that:- The issue under consideration is squarely covered by the decision of ITAT Mumbai in the case of Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] wherein the Tribunal held that guarantee commission rate of 0.5% can be said to be at arms length. This decision of Tribunal has been upheld by Hon’ble Bombay High Court, which is reported at [2015 (5) TMI 395 - BOMBAY HIGH COURT]. Thus we direct the AO to restrict bank guarantee commission at 0.5%. Transfer pricing adjustment made in the assessment order on account of interest on advances given by the assessee to its AE - Held that:- The assessee had given advances to its Associate Enterprise Grabal Alok International Ltd ('GAlL') of ₹ 81,08,748/-. The said advance were given in the normal course of business and adjusted against payables. Based on the various precedents of Courts and Tribunals, it has been held that ALP interest in the case of foreign currency loans should be arrived on the basis of LIBOR. Thus we direct the AO to restrict the disallowance in respect of notional interest adjustment towards advance granted to AE, on the basis of LIBOR. We direct accordingly. Disallowance of expenses u/s.14A - Held that:- In the appellate order passed for AY 2008-09 and AY 2009-2010, the CIT(A) has accepted the fact of the investments (including share application money) being funded through own funds of the assessee and has deleted the disallowance of interest expenditure. Further the assessee had sufficient owned funds of ₹ 144.1 crores for making incremental investments during the year of ₹ 5.24 crores in Alok Industries Limited (excluding share application money converted into shares during the year. In view of the decision of Hon’ble Jurisdictional High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] as well as various judicial pronouncements referred by ld. AR, no disallowance on account of interest is to be made u/s.14A, when the investments are made from own funds. Accordingly, we direct the AO not to make any disallowance on account of interest. Since the assessee has suo-moto disallowed ₹ 8,10,663/- in its Return of Income. The additional disallowance under Section 14A should be ₹ 4,33,544/-. Treating interest subsidy received under Technology Upgradation Fund (TUF) Scheme as revenue receipt - Held that:- DEPUTY COMMISSIONER OF INCOME TAX VERSUS M/S GLOSTER JUTE MILLS LTD [2014 (7) TMI 172 - ITAT KOLKATA] held that in order to sustain competitiveness in the domestic as well as international markets and overall long-term viability of the industry, the concerned Ministry adopted the TUFS scheme envisaging Technology Upgradation of the Industry. Hence the subsidy received in this regard falls into capital field.
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