2023 (9) TMI 1466 - AT - Income Tax

TP addition on account of corporate guarantee - HELD THAT - As per the same issue in the earlier Assessment Years in 2023 (5) TMI 1324 - ITAT MUMBAI we are inclined to sustain the corporate guarantee of 0.60% proposed to be charged by the bank of the assessee as the ALP rate for all the corporate guarantees given by the assessee including the corporate guarantee given to SAE Tower Holding LLC, considering the fact that the corporate guarantee given in A.Y. 2011-12 may not be proper since the assessee has not brought on record any material on the subsequent corporate guarantee awarded to SAE Tower Holding LLC , in our considered view the same rate of 0.60% may be sustained for all the corporate guarantee given by the assessee under consideration. Accordingly, ground raised by the assessee is partly allowed. Addition to income based on service Tax Return - AO observed that assessee has reported higher turnover in service tax return as compared to ITR and AO has considered the turnover reported as per service tax return - HELD THAT - As per the prudent method of accounting, assessee has to declare the revenue in its Books of Accounts only to the extent of services provided not the total amount received by the assessee for which there may be certain services to be provided. In this case assessee has recorded as revenue for the value of actual services provided and as per the information submitted before us from the Form ST-3 the assessee has received an amount of ₹.36,72,24,482/- as advances. Similarly, Form ST-3 an amount of ₹.6,70,38,441/-. From the above two service tax return, it clearly shows that these payments were received by the assessee only as advances. Therefore, the above said amount cannot be treated as revenue for the current Assessment Year. We observe that Ld.CIT(A) has considered the issue in a different dimension wherein he has gone with the notion of Percentage of completion of the project, without considering the fact that assessee has to declare the revenue to the extent of services provided by it but not for the services which is pending to be performed. Therefore, we are not inclined to accept the findings of the Ld.CIT(A). Accordingly, ground raised by the assessee is accordingly, allowed. Power with appellate authorities to entertain the fresh claim for deduction - HELD THAT - As held in the case of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT appellate authorities can entertain the fresh claim for deduction otherwise than by revised return of income - we are inclined to remit these issues back to the file of Assessing Officer with a direction to verify the records submitted by the assessee on merit and as per law. It is needless to say that assessee may be given a proper opportunity of being heard. Accordingly, the issues under consideration are remitted back to the file of Assessing Officer for statistical purpose.

Summary

Issues Involved:
1. Non-compliance with section 144B of the Act.
2. Transfer pricing addition on account of corporate guarantee.
3. Addition to income based on Service Tax Return.
4. Claim for taxes paid outside India.
5. Deduction u/s. 80JJAA.
6. Short TDS credit granted.
7. Short credit of Regular Tax Paid.
8. Interest levied u/s 234B & 234C.

Summary:

1. Non-compliance with section 144B of the Act:
The ground related to non-compliance with section 144B was not pressed by the assessee and was dismissed accordingly.

2. Transfer pricing addition on account of corporate guarantee:
The assessee contested the transfer pricing addition of Rs. 13,97,23,463/- made at the rate of 1.16% of the guarantee amount. The ITAT noted that in earlier years, similar issues were resolved by sustaining the corporate guarantee at 0.60% for certain entities and 0.20% for others. The ITAT decided to follow the rule of consistency and sustained the corporate guarantee at 0.60% for all guarantees, including those given to SAE Tower Holding LLC, due to lack of evidence for subsequent corporate guarantees.

3. Addition to income based on Service Tax Return:
The assessee argued that the amount of Rs. 43,42,62,923/- reflected in the service tax returns was an advance from customers and not actual turnover. The ITAT observed that the assessee had correctly accounted for revenue based on services provided and not advances received. The addition was deleted as the amounts were indeed advances and not revenue for the current assessment year.

4. Claim for taxes paid outside India:
The ITAT remitted the issue back to the Assessing Officer (AO) for verification of records and determination on merits, allowing the assessee an opportunity to be heard.

5. Deduction u/s. 80JJAA:
Similar to the previous issue, this was remitted back to the AO for verification and determination on merits.

6. Short TDS credit granted:
This issue was also remitted back to the AO for verification and determination on merits.

7. Short credit of Regular Tax Paid:
The ITAT remitted this issue back to the AO for verification and determination on merits.

8. Interest levied u/s 234B & 234C:
This ground was deemed consequential and was not adjudicated at this stage, keeping it open for future consideration.

Conclusion:
The appeal by the assessee was partly allowed, with several issues remitted back to the AO for further verification and determination on merits, and the addition based on service tax returns was deleted. The corporate guarantee rate was adjusted to 0.60% for consistency.