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TMI Blog2018 (10) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... rent year are same. In this view of the matter disallowance on account of interest for making the tax-free investments is not sustainable. Furthermore, the learned counsel of the assessee placed reliance upon the decision in the case of HDFC Bank Ltd. [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] is also cogent in this regard. As regards the disallowance of 0.5% on the average value of investment is concerned the submission of the learned counsel of the assessee is cogent that the special bench in the case of Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that for computing the average value of investment only investments which yield exempt income is to be considered. Accordingly, we remit this issue to the file of assessing officer to consider the issue afresh in light of the decision of special bench in the case of ACIT vs. Vireet Investment Pvt. Ltd. for the necessary computation in this regard. Deduction u/s.80IA - assessee opted not to claim the deduction under this section for the current year and the deduction will be claimed by it for 10 consecutive years beginning from any of the subsequent assessment year as may be decided by the company - HELD T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ECTION 80IA OF THE ACT FOR FUTURE YEARS (PARA 8 OF THE ORDER) 5. On the facts and in the circumstances of the case and in law, the Honorable CIT (A) erred in confirming the action of the learned ACIT in disallowing the claim of deduction u/s. 80IA of the Act for future years on the plea that the Appellant has not satisfied all the conditions laid down in that section. 6. In view of the above, the learned ACIT be directed to allow the deduction under section 80IA of the Act for future years as each year's assessment is separate assessment. D. GENERAL 7. All the above Grounds of Appeal are independent of and without prejudice to, each other. 8. The Honorable CIT (A)'s Order being contrary to the law, evidence and facts of the case, should be set aside, quashed or modified on the grounds deduced above. Apropos ground A: 3. Brief facts of the case are as under: The assessee company is engaged in the business of manufacturing and trading of diesel engine, trading in engineering goods, other engineering service. On the impugned issue, the TPO noted that the assessee has shown among others inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey for the purposes etc, In a third party situation, there could be no such practices followed. In the facts of the case, it is clear that the appellant initially performed as an agent of the AEs through which the services rendered by the third parties were delivered the AEs. In such facts of the case, the appellant performing as an agent for delivery of such services should have been adequately at arm's length compensated. 6. He proceeded to affirm the TPO's order. 7. Against this order assessee is in appeal before us. 8. We have heard both the counsel and perused the records. Learned counsel of the assessee submitted that this is a mere reimbursement of some expenses on cost to cost basis. That there is no element of service; hence he submitted that the action of the revenue in providing a markup of 10% is not at all sustainable. Furthermore, the ld. Counsel of the assessee submitted that the method adopted for computing the arm'slength price by the transfer pricing officer is not as per the provision of law. In this regard he referred to that methods for computation of arm's-length price prescribed in section 92C(1). He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered to be an international transaction and Chapter X of Act would be applicable as holding companies of both the companies had entered into a global agreement for sale of its business. On appeal, the Tribunal held that the transaction would not be covered by the definition of international transaction as ALP for transfer of its imaging business as determined by assessee was reasonable and ALP was arrived at by the Transfer Pricing Officer (TPO) by not adopting any of the methods prescribed under section 92C. The prayer for restoration to TPO to apply the prescribed method was rejected. Held that the revenue had not disputed finding of fact arrived at by the Tribunal that transfer of imaging business was independently done on its own terms and conditions de hors global agreement arrived at between their holding companies and ALP for transfer of its imaging business as determined by assessee was reasonable. The Tribunal held that method adopted by revenue to determine ALP was alien to the methods prescribed under section 92C and, therefore, declined to restore the issue to the Assessing Officer for redetermining the ALP by adopting one of the methods as listed out i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income have to be computed as per the procedure mentioned in the said rules. However, as the assessee had failed to compute the same as per Rule 8D of Income-tax Rules, 1962, though notified and applicable for the current assessment year under consideration, therefore the AO computed the disallowance as per Rule 8D as under :- Working of expenses attributable to exempt income as per Rule 8D of the Income-tax Rules, 1962 I Expenses directly attributable to exempt income Rs. Nil II Formula : A X B /C A : Expenses not directly related to exempt income (interest) i.e. 16064854 Rs.61,81,569 B: Average value of investment on the opening and closing day of the previous year i.e. (890397722+ 1229520019)72= 1059958871 C : Average value of assets on the opening and closing day of the previous year i.e. ( 2575255721 + 2934052783)72 = 2754654252 16064854 x 1059958871 2754654252 = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Dy. CIT (in Writ Petition No. 1753 of 2016 vide order dated 25.02.2016), the learned counsel submitted that no addition for the disallowance of interest is sustainable. Furthermore, without prejudice to the above, the learned counsel referred to the decision of ITAT Special Bench in the case of the ACIT vs. Vireet Investment Pvt. Ltd. (in ITA No. 502/Del/2012 and CO No.68/Del/2014 vide order dated 16.06.2017 (SB)(Del)) for the proposition that only investments which earn exempt income should be considered for computing the average value of investment. 17. Per Contra, the learned departmental representative submitted that there is due satisfaction by the assessing officer. He submitted that the issue was duly raised by the assessing officer and the assessee could not provide cogent answer. He submitted that even before the learned CIT(A), the assessee himself offered ₹ 5 lakh as expenditure incurred for earning of exempt income. Hence, the learned counsel submitted that the addition in this regard is fully justified. 18. Upon careful consideration we note that the submission that there is no satisfaction of the assessing officer the same is not sustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yield exempt income is to be considered. Accordingly, we remit this issue to the file of assessing officer to consider the issue afresh in light of the decision of special bench in the case of ACIT vs. Vireet Investment Pvt. Ltd. (supra) for the necessary computation in this regard. Apropos ground no. 3: 20. Brief facts of the case are as under: The Assessing Officer observed that in Exhibit 12 of Clause 26 of notes to the account, the assessee company have claimed that it has an option of claiming the deduction u/s.80IA of the Act and it has opted not to claim the deduction under this section for the current year and the deduction will be claimed by it for 10 consecutive years beginning from any of the subsequent assessment year as may be decided by the company. In this regard, in the course of assessment proceeding, the assessee was asked to furnish the separate profit and loss account and balance sheet if it is maintained. In response to same, the assessee simply stated that it has not claimed any deduction u/s.80IA of the Act. In view of the same, the assessee has not maintained any separate books of account and balance sheet in this regard as also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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