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TMI Blog2018 (2) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... hat:- At the time of hearing both the sides agreed that this ground is consequential in nature and no speaking order has been passed. Therefore, we restore this issue to the file of the Assessing Officer with a direction to pass a speaking order as per fact and law after giving due opportunity of being heard to the assessee. - ITA No.1426/Del/2014 - - - Dated:- 30-1-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Ravi Sharma, Adv. For The Respondent : Shri Sanjay I. Bara, CIT-DR ORDER PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 02.01.2014 passed by the Assessing Officer u/s 143(3) r.w.s. 144C of the I.T. Act relating to assessment year 2009-10. 2. The grounds raised by the assessee are as under :- Grounds relating to Transfer Pricing Matters That on the facts and circumstances of the case and in law: Ground 1. Hon'ble DRP/Ld. AO has erred in disregarding the order of higher appellate authorities ( Hon'ble ITAT ) in the Appellant's own case for the Assessment Year 2001-02 and Assessment Year 2002-03, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total cost used by TPO is : Rs.150 Using a markup of 10%, mark up is : Rs.15 Arm Length Price : Rs.165 Hon'ble DRP/ Ld. AO has computed arm's length price as ₹ 165, since 50 was notional cost, the 'income' in relation to international transaction, having regard to such arm's length price should be ₹ 15 and not ₹ 65. Hence, without prejudice to the above grounds, in the alternative, the addition should be limited to the notional income of ₹ 15 only and not ₹ 65 as considered by Hon'ble DRP/Ld.AO. Ground 4. Hon'ble DRP/Ld. AO has erred by not accepting the economic analysis undertaken by the Appellant's in accordance with the provisions of the Income-tax Act, 1961 ( the Act ) read with the Income-tax Rules, 1962 ( the Rules ), and conducting a fresh economic analysis for the determination of the arm's length price of the impugned international transaction and holding that the Appellant's international transaction is not at arm s length. Ground 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the R D cess which has already been disallowed by the assessee in its return of income for A Y 2009-10 under Section 43B of the Act, therefore, leading to double disallowance of the same amount in the hands of the assessee. Ground 11: Disallowance under Section 14A of the Act 11.1 That on the facts and circumstances of the case and in law, the Hon'ble DRP/ Ld. AO has erred in disallowing a sum of ₹ 1,59,60,691 under Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 ('the Rules') as expenditure incurred in connection with earning exempt dividend income. 11.2 That on the facts and circumstances of the case and in law, the Hon'ble DRP/ Ld. AO has erred in invoking the provisions of Section l4A of the Act without considering the fact that no expense, whether directly or indirectly, has been incurred by the Appellant towards earning the alleged exempt income. 11.3 That on the facts and circumstances of the case and in law, the Hon'ble DRP/Ld. AO has erred in framing a disallowance in accordance with Rule 8D of the Rules without appreciating that the application of Rule 8D is not automatic and it is imperati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of reinstatement of location fees on 31.03.2009 payable to McDonald Corporation. It has been further observed that the assessee has paid ₹ 5,35,13,112/- on account of License and Location fee to McDonald Corporation and the TPO has computed the Arm s Length Price of NIL in respect of this international transaction of assessee with AE and made Transfer Pricing adjustments of ₹ 5,35,13,112/- on the above payment (mentioned as Initial Franchisee Fee in the order of TPO). It is evident that the foreign exchange fluctuation loss of ₹ 1,75,31,988/- is part of the above payment and the assessee failed to furnish the above information either in the Audit Report filed in Form 3CEB or during the course of Transfer Pricing proceeding. Since, the TPO has already determined Arm s Length Price of NIL, hence, the foreign exchange fluctuation loss of ₹ 1,75,31,988/- is disallowed and added back to the total income. 7. Ld. counsel for the assessee submitted that since the TPO has computed the arm s length price at Nil in respect of these transactions and since the assessee has accepted the MAP, therefore, there is no justification on the part of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same reasonings, we restore this issue to the file of the Assessing Officer/TPO for deciding the issue afresh in the light of the MAP resolution. 13. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee while adjudicating the ground of appeal no.9 and 10. 14. Ground no.11 relates to disallowance of amount of ₹ 1,59,60,690/- u/s 14A of the I.T. Act. 15. After hearing both the sides, we find the Assessing Officer made disallowance of ₹ 1,59,60,691/- by invoking the provisions of section 14A r.w. Rule 8D on the ground that the assessee has made huge investment of ₹ 317.79 crores. Rejecting the explanation of the assessee that no dividend income has been received by the assessee during the year and, therefore, no addition could have been made, the Assessing Officer, relying on various decisions disallowed an amount of ₹ 1,59,60,691/-. It is the submission of the ld. counsel for the assessee that in absence of any dividend income received by the assessee during the impugned assessment year, no disallowance could have been made u/s 14A r.w. Rule 8D. We find merit in the above argument of the ld. counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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