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2024 (2) TMI 921 - ITAT MUMBAIExpenditure by way of payments made to clubs - HELD THAT:- As decided in assessee's own case for AY 2005-06 [2020 (3) TMI 799 - ITAT MUMBAI] as noted that in assessee’s own case for Assessment Year 1996-97, 1997-98 & 1998-99, the co-ordinate bench of Tribunal in allowed similar claim in favour of assessee as held that the payment made to clubs are revenue in nature and are allowable as such. Decided in favour of assessee. Addition u/s 14A - expenditure incurred on earning exempt income - HELD THAT:- As relying on the decision of Hon’ble jurisdictional High Court in the case of Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd [2016 (3) TMI 755 - BOMBAY HIGH COURT] wherein it has been held that where the Appellant's own funds are in excess of investments then it should be presumed that the investments are made from the Own Funds and not from Borrowings, consequently disallowance u/s. 14A of the Act cannot be made - there is no need to discuss alternative arguments raised by the assessee. As far as disallowance of 0.5% on average investment is concerned, it is found there is no specific finding or working has been done by the AO and Ld. DRP, hence same need not be sustained here also. In view of the above, ground no. 2 raised by the assessee is allowed and AO is directed to delete the same. TP Adjustment - transaction of providing Letter of Comfort would fall within the ambit of the term 'international transaction' u/s. 92B or not? - HELD THAT:- As decided in assessee own case [2020 (3) TMI 799 - ITAT MUMBAI] held that Letter of Comfort merely indicates the appellant's assurance that respondent would comply with the term of financial transaction without guaranteeing performance in the event of default. The co- ordinate bench of Tribunal in India Hotels Co. Ltd. (2019 (9) TMI 1340 - ITAT MUMBAI] on similar ground of appeal held that Letter of Comfort does not constitute international transaction. So far as contention of Id. DR for the revenue that after amendment in Explanation to section 92B is concerned, we have noted that co- ordinate bench in SIRO Clinpharm P. Ltd. (2016 (5) TMI 633 - ITAT MUMBAI) held that amendment in Explanation to section 92B by Finance Act, effective from 01.04.2012 is to be treated as effective at the best from A.Y. 2013-14. TP adjustments - interest on delayed realisation of sales proceeds from its AEs - applicability of interest rate on amounts due from AEs is to be calculated based on PLR rate declared by RBI (being Central Bank of India where assessee is based) or LIBOR rate (as AE is based outside India) - HELD THAT:- It’s a legal issue and precisely the same issue has been dealt in by the Hon’ble Delhi High Court in the case of CIT-I vs. Cotton Naturals (I) (P) Ltd [2015 (3) TMI 1031 - DELHI HIGH COURT] as held Chapter 10 of UN Transfer Pricing rightly stipulates that inter-company loans would require examination of the loan agreement, comparison of the terms and conditions of loan agreements, the determination of credit rating of the lender and the borrower, identification of comparable third party loan agreements and suitable adjustments should be made. In addition to the aforesaid factors, the comparability analysis should also take into account the business relationship and the functions performed by the subsidiary AE for the parent company. Normally there would be a difference between the lending rate and borrowing rate in each country. Some authors and writers suggest that the average or mid-point between the two should be taken. However, others like Klaus Vogel have suggested that economic purpose and substance of the debt-claim or debt for which granting of credit calls for the lending rate would be determinative. Thus, in case of a capital investment, the borrowing rate will apply, whereas in case of credit allowed to a customer on sale of goods, the lending rate would apply. We do not deem it necessary to enter into this controversy and express our view as regards the same. Decided in favour of assesee. Disallowing expenditure by way of Additional Sales Tax paid - HELD THAT:- As gone through the application for admission of additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. Assessee submitted appeal orders and challan in relation to additional sales tax liability (not submitted earlier before the authorities below). We find the same is in order and complying with Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. In view of above, this matter is restored to the file of the jurisdictional AO for verification and to examine the nature of payment made i.e. payment is not in the nature of penalty and the same is allowable as per law. In the result, this ground of assessee is allowed for statistical purposes. Disallowing expenditure by way of professional charges paid - HELD THAT:- It is found that assessee is substantially failed to adduce any evidence of services rendered in the category of professional fee. We have gone through the contents of agreement reproduced nowhere it looks like an agreement for rendering professional services. Assessee’s argument that for earlier 2 years, the same expense was allowed and they are relying on the decision of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] is not applicable here based on the facts of the case. Principle of consistency should have been followed as far as possible and permitted by the facts of the case, but as the concept of res-judicata is also there, to be considered before any adjudication. Hence, in the present situation we also asked the AR of the assessee to substantiate the claim by placing on record any cogent evidence which confirms delivery of service by M/s. VCCPL. But at this stage also, assessee is substantially failed to substantiate its claim. MAT addition on disallowance u/s 14A - held that:- As no addition under clause (f) of Explanation 1 to section 115JB (2) of the Act is warranted and as hold that the appellant has not incurred any expenditure towards earning exempt income addition otherwise also cannot be made. In view of this AO is directed to delete the addition made u/s. 115JB of the Act. Charging an amount as "Amount already refunded" - HELD THAT:- As in the computation sheet attached to the Assessment Order, the AO has mentioned that amount has been refunded to the appellant. The appellant has not received any refund for the Assessment Year under reference. A copy of Indemnity Bond filed with the Ld. AO is enclosed herewith. In view of the above, the appellant requests to give necessary direction to grant relief after verification. Additional Income Tax and Interest Payable on Distributed Profits" - HELD THAT:- The appellant during the year under reference distributed dividend of Rs. 4,00,00,000/- and has paid dividend distribution tax of Rs. 67,98,000/- on the same on 19th September 2007. The said details are duly reflected in the Income Tax Return filed by the appellant and Tax Audit Report for the year under reference. Relevant extract of Income Tax Return and Tax Audit Report are enclosed herewith, the appellant requests to give necessary direction to grant relief after verification. Recovering interest u/s. 244A though the same was not received by the appellant - HELD THAT:- As mentioned above in Ground No 9, the appellant has not received any refund for the year under reference and accordingly have not received interest u/s. 244A of the Act. In view of the same the appellant requests to give necessary direction to grant relief after verification.
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