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TMI Blog2018 (6) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any payment merely on the basis of holding of the earlier units. We, therefore, hold that to the facts of the case on hand, Section 94(8) has no application and any addition made on that basis cannot be sustained. - ITA No.1579/Del/2015 - - - Dated:- 27-6-2018 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER For The Appellant : Shri Vishal Kalra, Advocate And Shri S.S. Tomar, Advocate For The Respondent : Shri Sanjay I. Bara, CIT DR ORDER PER K. NARASIMHA CHARY, J.M. This is an appeal by the assessee against the directions dated 28.11.2014 of the Dispute Resolution Panel -III, New Delhi (for short hereinafter called DRP ). 2. Munjal showa Limited was established in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions was reduced to nil. Learned AO treated the expenditure on account of royalty and technical fee as capital in nature and disallowed the expenses to the extent of ₹ 35.56 lacs by invoking Section 14A of the Act, and lastly, disallowed set off of short term capital losses to the tune of ₹ 22,486/- by invoking Section 94(8) of the Income-tax Act, 1961 ( the Act ). Consequently, assessment order was passed by making addition of ₹ 26,61,83,302/- on account of transfer pricing issue, ₹ 35,46,805/- on account of disallowance of expenditure u/s 14A of the Act and ₹ 22,486/- on account of disallowance u/s 94(8) of the Act. 5. Assessee filed objections before the learned Dispute Resolution Panel (DRP). Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s own case in ITA No.4675/Del/2010 and 4242/Del/2011 for AYs 2006-07 and 2007-08 respectively at paras 27 to 39 of the said earlier year order, it was observed that this issue was decided in favour of the assessee for AYs 2002-03 to 2004-05 also by the Tribunal, appeal against such order preferred by the Revenue before the Hon ble Delhi High Court was dismissed and in accordance with such orders, the matter had to be remitted to the TPO to decide afresh after providing an opportunity of being heard to the assessee. 9. In the order for the AYs 2006-07 and 2007-08, a coordinate bench of this Tribunal observed as follows: 28. The assessee s case is that it had limited right to use the technology of Showa Japan. The ownership / prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned AR that in assessee s own case following the decision of the Hon ble Delhi High Court for the AYs 1993-94 to 1995-96 and AYs 2002-03 to 2004-05, a coordinate bench of this Tribunal in ITA No.1030/Del/2014 by order dated 22.11.2017 held that payment of royalty and technical fee does not lead to enduring benefit to the assessee and hence, the expenditure is allowable as revenue deduction. We have gone through the order dated 22.11.2017 referred to above and found vide paras 16 to 20, this issue was decided in the light of the observations of the Hon ble jurisdictional High Court in ITA No.5611/Del/2009, ITA No.85/2009 and ITA No.86/2009 by judgment dated 6.9.2010. Since such a finding was returned basing of the binding decision of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement between assessee, Birla Mutual Fund and Citi Bank, there were neither direct nor administrative expenses. So also in view of the fact the reserves and surpluses of the assessee exceed investment, no question of interest element involved in it. 14. We have perused the balance sheet of the assessee incorporated at page 363 of the paper book wherein the share capital and the reserves and surpluses of the assessee for the relevant assessment year are about ₹ 180.54 crores and it is recorded that the value of investment was only ₹ 50.01 crores. There is a presumption in law that when the assesse s own funds exceed investment, it shall be taken that the assessee own funds are invested and no interest expense could be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, direct the learned AO to delete the same. Ground Nos.10 to 10.2 are answered accordingly in favour of the assessee. 16. Now coming to the disallowance of set off of short term capital losses of ₹ 22,486/- by invoking the provisions of Section 94(8) of the Act, learned AO held that since no details have been furnished u/s 94(8) of the Act, short term capital losses cannot be allowed to set off against the capital gains. Learned AR contended that in this matter, Section 94(8) of the Act has no application inasmuch as all the three conditions u/s 94(8) has to be cumulatively satisfied. According to him, clause (b) thereof is not satisfied in this matter inasmuch as there is no question of allotment of additional units without an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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