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TMI Blog2017 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... en decided in favour of the assessee for AYs 2006-07 and 2007-08 wherein reassessment was made u/s 153A consequent upon the search and seizure operation conducted on 21.01.2011. Vide order dated 14.12.2016 (supra), Hon’ble jurisdictional High Court held, in assessee’s own case for AYs 2006-07 and 2007-08 by following the law laid down in Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT), that completed assessment u/s 143(3) of the Act interfered with by AO/TPO u/s 153A is not tenable in the eyes of law. In view of what has been discussed above, we are of the considered view that without entering into the merits of this case, the addition made in this case u/s 153A/144C of the Act is not sustainable in the eyes of law, hence deleted. - Decided in favour of assessee. - ITA No.1085/Del./2015 - - - Dated:- 28-12-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Ved Jain, Advocate and Shri Ashish Goel, CA For The Reveneu : Shri T.M. Shiva Kumar, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, M/s. Baba Global Limited (hereinafter referred to as the assessee company ) by filing the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 143(3) of the Act after due application of mind. 10. On the facts and circumstances of the case, the learned AO has erred both on facts and in law in making assessment at income of ₹ 1,47,01,367/- as against loss of ₹ 64,05,101/- declared by the assessee. 11. On the facts and circumstances of the case, the learned AO has erred both on facts an in law in making addition of ₹ 2,11,06,468/- as difference in arm's length price determined by the Transfer Pricing Officer (TPO) in pursuance of DRP's order. 12. On the, facts and circumstances of the case, the learned AO has erred both on facts and in law in making the addition of an amount of ₹ 2,11,06,468/- on account of difference in arm's length price on the transaction of interest on loan given to the subsidiary. 13. On the facts and circumstances of the case, the learned TPO has erred both on facts and in law in making the said adjustment despite the fact that the said transaction does not come under the ambit of 'international transaction'. 14. That the assessing officer erred on facts and in law in making an adjustment of ₹ 2,11,06,468 to the arm's length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred both on facts and in law in applying the Safe Harbour Rule while determining the aforesaid rate of interest despite the fact that the said Rules are not applicable to the relevant assessment year. 22c. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 2. Briefly stated the facts of this case are : initially return of income was filed by the assessee on 26.10.2005 declaring NIL income which was processed u/s 143 (1) of the Income-tax Act, 1961 (for short the Act ) on 11.02.2006 but subsequently assessee has revised its return of income on 27.07.2006 and assessment was completed u/s 143 (3) of the Act vide order dated 05.10.2007 determining NIL income by allowing carry forward of the business loss of ₹ 64,05,101/- and long term capital loss of ₹ 80,57,197/-. 3. Thereafter, a search and seizure operation u/s 132 of the Act was conducted in case of assessee company being part of DS Group on 21.01.2011 and consequently notice u/s 153A was issued on 09.01.2012 requiring the assessee to file return of income within 16 days of the receipt of notice. In response to the notice, assessee filed return declaring business loss of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date Balance in INR Days Interest on loan @ 10.25% 01.04.2004 19,06,17,000.00 Dr 193 10331180 11.10.2004 21,37,02,000.00 Dr 92 5521123 11.01.2005 23,38,79,500.00 Dr 79 5188601 31.03.2005 23,34,29,180.00 Dr 1 65552 Total 265 21106456 (ii) Account : Baba Global (BD) Ltd. Loan Account Date Balance in INR Days Interest on loan @ 10.25% 31.03.2005 41,307.00 Dr 1 12 Grand Total (i) + (ii) 21106468 9. Consequently, addition on account of transfer pricing adjustment at ₹ 2,11,06,468/- on account of intra group loan is made and added to the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing loss of ₹ 23,61,299/- on 24.01.2012; that assessee entered into two international transactions with its AE during the period under assessment; that assessee has lent foreign currency loans to its subsidiaries, namely, (i) Baba Global Company (FZC) UAE to the tune of ₹ 23,67,52,340/- and (ii) Baba Global Co (BD) Ltd. to the tune of ₹ 15,60,495/-; that no new loan has been advanced by the assessee company to its AE during the year under assessment; that addition made for AY 2006-07, 2007-08 and 2008-09 on the basis of search and seizure operation carried on 21.01.2011 have already been deleted by the Tribunal and the said decisions have already been affirmed by the Hon ble Delhi High Court vide order dated December 14, 2016 passed in ITA 821 822 / 2016. 15. In the backdrop of the aforesaid undisputed facts, the first question arises for determination in this case is, as to whether the AO is justified to complete the assessment u/s 153A by making an addition of ₹ 2,11,06,468/- for AY 2005-06 on account of intra group loan even in the absence of any incriminating material deemed found during the search conducted u/s 132 of the Act? 16. Identical i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs 2002-03, 2005- 06 and 2006-07. On the date of the search the said assessments already stood completed . Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 17. First of all, the first contention raised by ld. DR that the issue as to the absence of incriminating material during the search and seizure operation was never raised before the ld. DRP nor before AO is not tenable in the face of the fact that assessee company filed submissions dated ..... 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