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TMI Blog2019 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. K. M. Gupta, Adv ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against the Assessment Order dated 25.04.2014 passed by the Assessing Officer u/s 143 (3) read with Section 144C of the Income Tax Act, 1961, for Assessment Year 2010-11. 2. The grounds of appeal are as under:- 1. The Ld.CIT(A) erred in law and on facts of the case in deleting the adjustment of ₹ 5,63,84,899/- made by the A.O on account of computation of ALP. 2. The Ld.CIT(A) erred in law and on facts of the case in deleting the A.O to restrict the disallowance u/s 14A of the I.T Act read with Rule 8D of the IT Rules to the administrative cost. 3. The Ld.CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 15,475/- made by the A.O on account of late payments of ESI. 3. The assessee is a manufacturer of oncology formulations and bulk drug which are used for curing cancer related diseases. With growing overseas market, the company was keen to set-up subsidiaries outside India such as Dabur Oncology Pic ( Dabur UK ), Dabur Pharma (Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OTAL 147,115,890/- The assessee benchmarked these interest on loan taking resident foreign currency (RFC) issued by and arrived at average rate of interest on such RFC on the basis of 5 banks as under:- Sl No. Bank Name RFC Deposit rate (in%) 1 Hongkong and Shanghai Banking Corporation (HSBC) 0.76 2 ICICI 2.39 3 Industrial Credit and Investment Corporation of India (IDBI 2.39 4 Punjab National Bank (PNBP 2.44 5 State Bank of India (SBI) 2.39 AVERAGE 2.07% Applying CUP m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer. As regards Ground No. 2, the Ld. DR submitted that the Assessing Officer was right in making disallowance u/s 14A read with Rule 8D (3) which should have been sustained by the CIT(A) as regard to administrative cost. The Ld. DR further submitted that in relation to Ground No. 3, the late payment of ESI Contribution is also rightly added by the Assessing Officer to the assessee s income. 6. The Ld. AR submitted that Ground No. 1 is covered in favour of the assessee by Tribunal s order in Assessment Year 2008-09, 2009-10 being ITA No. 3013 6264/Del/2015 order dated 31/12/2018. As regards Ground No. 2, the Ld. AR submitted that the investment in domestic bank was only 2.5 lakhs and total availability of assessee s own fund was approximately ₹ 2 crores. Thus, the CIT(A) has rightly directed the Assessing Officer to restrict the disallowance u/s 14A read with Rule 8D (3) being administrative cost. As regards Ground No.3, the Ld. AR submitted that the assessee has paid the ESI Contribution before the due date. Therefore, the CIT(A) has rightly deleted this addition. 7. We have heard both the parties and perused the material available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter from RBS Bank has more evidentiary value as it is from the very same bank which gave loan to Dabur UK. The Ld. Commissioner of Income Tax (A) has also recorded a finding that he has also examined the terms and conditions of the loan agreement dated 17.3.2006 between ABN AMRO Bank, Dabur UK and that Dabur UK has provided adequate security collaterals to the satisfaction of the Bank. The Ld. Commissioner of Income Tax (A) has also mentioned that the bank had the first charge on the assets of the borrower as security for the loan. The Department was not able to point out any factual infirmity in this categorical observation of the Ld. Commissioner of Income Tax (A). However, we do not fully agree with the findings of the Ld. Commissioner of Income Tax (A) in this regard that the benefit of interest saving of 1% should be shared Fresenius Kabi Oncology Ltd. between the AE and the assessee equally as no cogent reasoning has been given for the same and, accordingly, we deem it fit to modify the order of the Ld. Commissioner of Income Tax (A) in this regard to the extent that corporate guarantee fee @1% should be applied in the case of the assessee in place of 0.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h after Fresenius Kabi Oncology Ltd. considering the directions of the Ld. DRP in this regard in assessment year 2006-07 and after giving the assessee a proper opportunity present its case. Accordingly, this ground stands allowed for statistical purposes. 11. So, respectfully following the said order dated 03.10.2018, this ground is partly allowed for statistical purposes as has been directed in the said order dated 03.10.2018. In the present assessment year also the facts remains the same and there is no distinguishing factors pointed out by the Ld. DR. Thus, Ground No. 1 is partly allowed for statistical purpose. 8. As regards Ground No. 2, the CIT(A) was right in directing the Assessing Officer to restrict the disallowance u/s 14A of the Act read with Rule 8D of the Rules to the Administrative Cost as the investment is running into 2.14 lakhs and the funds available with the assessee was running into 100s of crores. Therefore, Ground No. 2 of Revenue s appeal is dismissed. 9. As regards Ground No. 3, the CIT(A) has rightly deleted the addition on account of late paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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