9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 631 - AT - Income TaxTPA on account of interest payment on FCCDs - HELD THAT - As the assessee s calculation of estimated mean coupon rate of 16.95% on the remaining six comparables, chosen from BSE/NSE appears to be closure. It was also observed by ld CIT(A) that the 15% coupon rate paid by the assessee on the FCCDs is close to the prevalent SBI prime lending rate of 14.75% as well. Considering these facts, ld CIT(A) held that the upward adjustment made by the TPO/assessing officer the total income of the assessee by reducing the interest rate paid @ 15% to 12.58% was held to be not justified and therefore ld CIT(A) deleted the same. We have gone through the above findings of ld CIT(A) and observed that conclusion reached by ld CIT(A) is correct. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Disallowance u/s 14 A - sufficiency of own funds - HELD THAT - We note that during the appellate proceedings, the ld CIT(A) noted that assessee has sufficient tax-free funds available with it, which is verifiable from the copy of balance sheet attached with the financial statements filed. Investments that were brought forward at the beginning of the year (01.04.2014) were reduced to Nil at the end of the year (31.03.2015). Therefore, ld CIT(A) observed that since the assessee had sufficient interest free funds at its command as against the investments that resulted in earning of exempt income, hence ld CIT(A) deleted addition - No infirmity in the findings of ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the ground raised by the Revenue.
Issues Involved:
1. Upward adjustment of Rs. 2,81,77,494/- on account of interest payment on FCCDs. 2. Deletion of addition made on account of disallowance under section 14A of the Act amounting to Rs. 11,54,002/-. 3. Reversal of suo-motu disallowance made by the assessee under section 14A of the Act. Summary of Judgment: Issue 1: Upward adjustment of Rs. 2,81,77,494/- on account of interest payment on FCCDs The Revenue challenged the deletion of an upward adjustment of Rs. 2,81,77,494/- proposed by the TPO on account of interest payment on FCCDs. The TPO had re-computed the Arm's Length Price (ALP) of interest payment on FCCDs at 12.58% p.a. instead of 15% p.a. as determined by the assessee. The assessee argued that the same interest rate was accepted in the previous assessment year (AY 2013-14) and there was no change in the terms of the debentures. The CIT(A) found the TPO's comparables to be inappropriate as they included companies in different industries and with different credit ratings. The CIT(A) accepted the assessee's comparables and concluded that the 15% coupon rate was close to the prevalent SBI prime lending rate of 14.75%. The Tribunal upheld the CIT(A)'s decision, emphasizing the principle of consistency and noting no change in facts from the previous assessment year. Issue 2: Deletion of addition made on account of disallowance under section 14A of the Act amounting to Rs. 11,54,002/- The Revenue contested the deletion of an addition made under section 14A of the Act amounting to Rs. 11,54,002/-. The assessee had earned dividend income and made a suo-motu disallowance of the same amount under section 14A. The Assessing Officer (AO) applied Rule 8D and computed a higher disallowance. The CIT(A) deleted the additional disallowance, noting that the assessee had sufficient interest-free funds to cover the investments and relied on precedents that support no disallowance under section 14A when the assessee has surplus funds. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the conclusion that the assessee had sufficient non-interest-bearing funds. Issue 3: Reversal of suo-motu disallowance made by the assessee under section 14A of the Act The assessee's cross-objection sought the reversal of the suo-motu disallowance made under section 14A. The Tribunal noted that this issue was already addressed in the context of the Revenue's appeal and thus dismissed the cross-objection as infructuous. Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decisions on both issues. The cross-objection filed by the assessee was also dismissed as infructuous.
|
