2021 (4) TMI 998 - ITAT AHMEDABAD

Contribution to Ranbaxy Community Healthcare Society (RCHS) u/s. 37(1) and disallowing on the ground of non-deduction of TDS u/s. 40(a)(ia) - HELD THAT:- As identical issue on similar fact has been adjudicated in the case of the assessee itself in its favour by the Co-ordinate Bench of the ITAT Ahmedabad for assessment year 2009-10 [2019 (9) TMI 438 - ITAT DELHI] - The ld. Departmental Representative is fair enough not to controvert these undisputed facts that the instant issue in this ground of appeal is covered by the aforesaid cited decision of the ITAT wherein direct to delete the disallowance of contribution made by appellant to Ranbaxy Community Healthcare Society and Ranbaxy Science Foundation. Furthermore regarding failure to deduct tax on this sum, Ld. DR. could not point out particular section, which warrants deduction of tax at sources on this payment.

Therefore, we also hold that in absence of specific section under which the tax is required to be deducted on such contribution without their being any service rendered by the recipient of the contribution disallowance u/s 40a(ia) also cannot be made

TP Adjustment - Erred in not considering overseas associated enterprise as tested party being the least complex of the transacting entities and instead considering assessee as tested party thus violating basic principles of transfer pricing - HELD THAT:- As relying on own case [2019 (9) TMI 438 - ITAT DELHI] we restore this issue to the file of the TPO for fresh adjudication considering A.E’s. as tested party. Therefore, this ground of appeal of the assessee is allowed for statistical purposes.

Disallowance u/s 14A - HELD THAT:- Respectfully following the decision of the Hon’ble High Court of Gujarat in the case of Corrtech Energy Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] wherein held that in case no dividend income is claimed as exempt no disallowance is to be made u/s. 14A of the Act. Therefore, following the decision of Hon’ble Gujarat High Court as cited above, this ground of appeal of the assessee is allowed.

Disallowance of deduction claimed u/s. 80IB and 80IC - assessee claimed these deductions in respect of undertakings located in backward area for deduction u/s. 80IB (Goa Unit) and for deduction u/s. 80IC (Paontashahib, Himachal Pradesh) - Assessing Officer stated that no separate books of account have been maintained in respect of the eligible undertaking and concluded that as held in the earlier assessment year the assessee was not eligible for deduction u/s. 80IB/80IC - HELD THAT:- In view of the discussion and following the order of the ITAT Delhi [2019 (9) TMI 438 - ITAT DELHI]in which the deduction claimed by the assessee under section 80IB/80IC was completely allowed.

Market to market gain as taxable income - disallowance of market to market loss made while completing assessment year 2009-10 - why these expenditure should not be added back to income for the relevant accounting period? - HELD THAT:- Following the decision of ITAT on the identical issue [2019 (9) TMI 438 - ITAT DELHI] we hold that the amount written back by the assessee cannot be subject to tax either under normal computation of income tax act or under section 115JB of the Act in the year under consideration. Therefore, following the decision of the ITAT as supra reversal of amount is not taxable under the normal provision and ₹ 1534.16 Mn under section 115JB of the Act as the same was already suffered to tax in the preceding assessment year 2009-10. Therefore, following the decision of the ITAT as supra, this ground of appeal of the assessee is partly allowed.

Disallowance on premium paid on FCCB - HELD THAT:- There is clear distinction between bonds and share capital because a bond does not represent ownership of equity capital. Bonds are interest bearing instrument which represents a loan. Therefore, FCCB issued by the assessee company were debt instrument issued by assessee company engaging its liability to pay the debt amount. These bonds are distinguishable from shares since bonds forms part of the loan and does not represent ownership in share capital.

Therefore, the premium paid on redemption of FCCB is interest eligible for deduction. The liability to pay premium is contingent upon the right of redemption being exercised by the assessee company. The liability to pay premium is further contingent upon the right of conversion of FCCB to equity share not being exercised by the holders of the FCCB. Therefore, payment of interest in the form of premium which is incurred wholly and exclusively for the purpose of business is to be allowed in the year in which it is incurred. Therefore we consider that premium on redemption of debenture is in the nature of interest allowable as deduction under the provision of the act, therefore, this ground of appeal of the assessee is allowed.

Disallowing weighted deduction u/s. 35(2AB) merely on account of failure to produce form 3CL - HELD THAT:- As relying on own case 2016 (12) TMI 1539 - ITAT AHMEDABAD] we direct the Assessing Officer to allow the claim of the assessee after verification of the necessary particulars as directed in the above decision of the ITAT. Therefore, this ground of appeal of the assessee is allowed.

Weighted deduction u/s. 35(2AB) on cost of assets provided to employees working in approved R & D facilities and engaged in execution of R &D activities) - HELD THAT:- The ground raised before us is identical to the issue raised before Delhi ITAT in the case no. [2016 (5) TMI 157 - ITAT DELHI]. Hence taking the same view on such issue, we set aside the order of ld. CIT-A to the AO for fresh adjudication. Hence the ground of appeal of the assessee is allowed for statistical purposes.

Claim towards investment made by company in overseas subsidiaries expenses) on account of Adjustment of hedging charges - HELD THAT:- Following the decision of the ITAT in the case of the assessee itself [2019 (9) TMI 438 - ITAT DELHI] this ground of appeal of the assessee is allowed with direction to the Assessing Officer to adjudicate this issue de-novo as per the direction laid down in the findings of the ITAT as cited above.

Deduction for the cess paid by the assessee - Whether the said cess is revenue expenditure (ii) the said cess is not rate or tax debarred by seciton40(a)(ia) of the act.? - HELD THAT:- The similar issue on identical facts was adjudicated by the Co-ordinate Bench of the ITAT Ahmedabad in the case of Jindal Worldwide Ltd. [2020 (12) TMI 439 - ITAT AHMEDABAD] and the matter was restored to the A.O. for deciding afresh in view of the judicial pronouncement and the circular of the CBDT as referred above. Therefore after taking into consideration the circular of the CBDT and decisions of M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and SESA GOA LIMITED, [2020 (3) TMI 347 - BOMBAY HIGH COURT]we restore this issue to the file of the Assessing Officer for deciding afresh after taking into consideration the direction laid down in the aforesaid decisions of the Hon’ble High Court and the Circular of the CBDT.