9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 255 - AT - Income TaxValidity of order passed by the TPO - period of limitation - Whether order has been passed by the TPO within the limitation prescribed u/s 92CA(3) of the Act, i.e. 60 days prior to the limitation expiry date ? - HELD THAT - Respectfully following the above decision of M/s Emerson Electric (Company) India Pvt. Ltd 2022 (5) TMI 1460 - ITAT MUMBAI we hold that the order passed by the Transfer Pricing Officer on 30.01.2014 is barred by limitation and therefore, the transfer pricing adjustments made in the Final Assessment Order, dated 26.02.2015 are deleted. Additional Ground No. 1 raised by the Assessee is allowed and Ground No 2 to 6 pertaining to the transfer pricing issues raised in the appeal are disposed of as being infructuous. Disallowance u/s 14A r.w.r. 8D - suo-moto disallowance offered by the Assessee - HELD THAT - We find merit in the submission advanced on behalf of the Assessee that the benefit of decision of the Special Bench of the Tribunal in the case of Vireet investments Private Limited 2017 (6) TMI 1124 - ITAT DELHI should be granted to the Assessee. Accordingly, we direct the Assessing Officer to verify the investment which yielded exempt income during the year and re-compute disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules by taking into consideration only the investments which yielded exempt income during the previous year for the purpose of calculating Average Value of Investment. Ground raised by the Assessee is, therefore, partly allowed. Deduction for foreign exchange loss - Assessee had claimed deduction for Foreign Exchange Loss in the return of income for the Assessment Year 2009-10 even though the same was changed to Profit Loss Account only in the Assessment Year 2010-11 which is under consideration - Assessee made an alternate claim during the assessment proceedings of the Assessment Year 2010-11 and claimed deduction for the aforesaid Foreign Exchange Loss - HELD THAT - Rejection of the alterative claim resulted in double disallowance in the hands of the Assessee first disallowance made by the Assessing Officer in assessment proceedings for Assessment Year 2009-10 and second the suo moto disallowance made in return for AY 2010-11 by the Assessee. However, in appeal preferred by the Assessee for the Assessment Year 2009-10, the assessment order for the AY 2009-10 has been quashed by the Tribunal on jurisdictional issue. As a consequence therefore, the return filed by the Assessee for the Assessment Year 2009-10 stands accepted. The alternative claim of the Assessee has, therefore, become infructuous. However, the Learned Authorised Representative for Assessee submitted that the Assessee wishes to reserves the right to contest the alternative plea in case the assessment for the Assessment Year 2009-10 is restored in appeal. Deduction for foreign exchange loss on revaluation of shareholders' deposit - HELD THAT - While preparing return of income the Assessee has treated the exchange loss on revaluation of Shareholders Deposits as capital in nature, during the assessment proceedings the Assessee has claimed the same to be Revenue in nature while retaining the stand that the exchange gain on revaluation of Shareholders Deposits in earlier years is capital in nature. While there is no bar on taking any inconsistent or alternative pleas, mutually repugnant and contradictory pleas which are destructive of each other cannot be permitted to be urged simultaneously. Disallowance of interest u/s 36(1)(iii) - interest bearing funds were used by the Assessee for making the investments instead of using the same for the purposes of business of the Assessee - HELD THAT - The Assessee has been able to demonstrate before the DRP as well as in the present appellate proceedings that the investments made by the Assessee in IHMS and TIHK were made on account of commercial expediency. The investments have been made for the purpose of business as per its main objects contained in the Memorandum of Association of the Assessee-Company. The said investments were made towards its objective of owning and operating hotels. Both the companies were primarily engaged in the business of owning equity interests in entities that own, operate and/or manage hotels and hospitality business and therefore, helped in furthering the business objectives of the Assessee. Following the above decision, in Assessee s own case for Assessment Year 1994-95 1998-99 to 2002-03, the Tribunal had deleted the disallowance of proportionate interest attributable to the advances given by the Assessee to its subsidiary/group companies at concessional interest rate or interest free - Decided against revenue. Addition u/s 40(a)(ia) - Whether second proviso to Section 40(a)(ia) is retrospective? - HELD THAT - Second proviso to Section 40(a)(ia) is retrospective in nature, we note that the Tribunal had, in the case of Rajiv Kumar Agarwal 2014 (6) TMI 79 - ITAT AGRA had held that the Second Proviso to Section 40(a)(ia)of the Act was declaratory and curative in nature and therefore, applied retrospective with effect from 01.4.2005. The aforesaid decision of the Tribunal was approved by the Hon ble Delhi High Court in the case of CIT-1 vs. Ansal Land Mark Township (P.) Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT . In the case of PCIT vs. Perfect Circle India Pvt. Ltd. 2019 (1) TMI 1532 - BOMBAY HIGH COURT has also held that the second proviso to Section 40(a)(ia) of the Act being beneficial to the assessee and declaratory/curative in nature, must be given retrospective effect. - Decided against revenue.
Issues Involved:
1. Transfer Pricing Adjustments 2. Disallowance under Section 14A of the Income Tax Act 3. Deduction for Foreign Exchange Loss 4. Taxation of Foreign Exchange Gain 5. Deduction for Foreign Exchange Loss on Revaluation of Shareholders' Deposit 6. Credit for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) 7. Computation of Total Demand 8. Levy of Excess Interest under Section 234D 9. Retrospective Application of Second Proviso to Section 40(a)(ia) Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustments: The Assessee argued that the Transfer Pricing Officer's (TPO) order dated 30.01.2014 was barred by limitation as per Section 92CA(3A) read with Section 153 of the Income Tax Act. The Tribunal agreed, citing the Hon'ble Madras High Court's decision in M/s Pfizer Healthcare India Pvt. Ltd. and other judicial precedents, holding that the TPO's order was indeed passed beyond the prescribed time limit. Consequently, the transfer pricing adjustments made in the Final Assessment Order were deleted, making Grounds No. 2 to 6 of the Assessee's appeal and Grounds No. 1 & 2 of the Revenue's appeal infructuous. 2. Disallowance under Section 14A: The Assessee contended that the suo moto disallowance of INR 8.70 Crores was sufficient and no further disallowance was warranted. The Tribunal directed the Assessing Officer to recompute the disallowance under Rule 8D(2)(iii) by excluding investments that did not yield exempt income, as per the Special Bench decision in ACIT Vs Vireet Investments Private Limited. Thus, Ground No. 7 was partly allowed. 3. Deduction for Foreign Exchange Loss: The Assessee claimed a deduction for Foreign Exchange Loss of INR 11.63 Crores, which was not debited to the Profit & Loss Account in AY 2009-10. This claim became infructuous as the assessment order for AY 2009-10 was quashed by the Tribunal. Therefore, Ground No. 8 was dismissed. 4. Taxation of Foreign Exchange Gain: The Assessee argued against the taxation of Foreign Exchange Gain of INR 4.09 Crores, which was deferred in the books. The Tribunal upheld the DRP's order, stating that the gain was correctly offered to tax in AY 2010-11. Ground No. 9 was dismissed. 5. Deduction for Foreign Exchange Loss on Revaluation of Shareholders' Deposit: The Assessee's alternative claim for deduction of INR 52.43 Crores was dismissed as the primary issue of treating exchange gains as capital in nature was settled in earlier years. The Tribunal held that mutually destructive pleas could not be urged simultaneously. Hence, Ground No. 10 was dismissed. 6. Credit for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS): The Tribunal remanded the issue to the Assessing Officer for verification and directed to grant credit for TDS and TCS amounting to INR 1,63,09,096/- as per law. Ground No. 11 was allowed. 7. Computation of Total Demand: The Assessee contended an excess demand of INR 17,83,810/- was determined. The Tribunal directed the Assessing Officer to consider this while computing the demand. Ground No. 12 was allowed. 8. Levy of Excess Interest under Section 234D: This issue was disposed of as being consequential in nature, dependent on the resolution of other grounds. Ground No. 14 was thus disposed of. 9. Retrospective Application of Second Proviso to Section 40(a)(ia): The Tribunal upheld the DRP's deletion of disallowance of INR 3.87 Crores under Section 40(a)(ia), noting that the second proviso to Section 40(a)(ia) is retrospective, as held in judicial precedents including PCIT vs. Perfect Circle India Pvt. Ltd. Ground No. 4 of the Revenue's appeal was dismissed. Conclusion: The Assessee's appeal was partly allowed, and the Revenue's appeal was dismissed. The Tribunal's decisions were based on judicial precedents and the factual matrix of the case, ensuring legal consistency and fairness.
|
