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TMI Blog2020 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... tently followed by it. Accordingly we confirm the order of Ld CIT(A) on this issue. Corporate Social Responsibility (CSR) Disallowance - addition on the ground that those expenses were not incurred for business purposes - HELD THAT:- We set aside the order of the Ld. CIT(A) on the above ground of appeal and restore the matter to the file of the AO to pass an order afresh after (i) following the order of the Tribunal in assessee s own case for AY 2008-09 to AY 2010-11 and (ii) examining whether the expenditure has been incurred for the purposes of business. We direct the assessee to file the relevant documents/evidence before the AO. Claim for set off of share of loss from AOP under the provisions of section 70 against business income the appellant is not allowable - see assessee's own case [ 2013 (1) TMI 367 - ITAT MUMBAI] Deduction u/s 80IA(4) rejected - HELD THAT:- This issue was decided against the assessee by the co-ordinate bench of Tribunal in the assessee s own case relating to AY 2003-04 and 2007-08, referred above by holding that the assessee has acted as a Contractor in various projects and not as a developer. Consistent with the view taken in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/MUM/2018 - - - Dated:- 13-1-2020 - Shri Vikas Awasthy (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. H.P. Mahajani / Ms. Shweta Mahadik, ARs For the Revenue : Mr. Anand Mohan, CIT-DR ORDER PER N.K. PRADHAN, A.M. The captioned cross appeals filed by the assessee and the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-56, Mumbai [in short CIT(A) ] and arise out of the assessment order passed u/s 143(3) of the Income Tax Act 1961, (the Act ). ITA No. 2351/MUM/2018 (A.Y.2011-12) 2. The 1st ground of appeal 1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in not accepting the contention of the appellant that, for the purposes of determining estimated total profit/loss from the project, unaccepted EOT Claim of ₹ 200 Crores in respect of Bandra Worli Sea Link Project should be excluded from the estimated Contract value and estimated loss should be recomputed at ₹ 434.24 Crores as against ₹ 252.07 Crores, considered by the learned CIT(A). 3. The assessee is a public limited company and is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of appeal. 5. The 2nd ground of appeal 2. On facts and in the circumstances of the case and in law the learned CIT(A) erred in disallowing the expenses incurred by the appellant on account of Corporate Social Responsibility' alleging the same as not related to the business. The disallowance made by the learned CIT(A) be deleted. 6. The AO disallowed expenses of ₹ 2.92 crores debited under the head Corporate Social Responsibility (CSR) on the ground that those expenses were not incurred for business purposes. In appeal, the Ld. CIT(A) confirmed the said disallowance on the basis of the order of the Tribunal in assessee s own case for AY 2008-09 to AY 2010-11. 7. Before us, the Ld. counsel for the assessee submits that though in AY 2008-09 to AY 2010-11, this issue was decided against the assessee, it involves fresh examination of facts - whether the expenditure has been incurred for the purposes of business. On the other hand, the Ld. Departmental Representative (DR) explains that on similar facts, the Tribunal has decided the issue against the assessee in AY 2008-09 to AY 2010-11. 8. We have heard the rival submissions and peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1 We follow the above order of the Co-ordinate Bench. However, it is contention of the Ld. counsel that in the year under consideration, it is to be examined whether the above expenditure has been incurred for the purposes of business. Considering the facts of the instant appeal, we set aside the order of the Ld. CIT(A) on the above ground of appeal and restore the matter to the file of the AO to pass an order afresh after (i) following the order of the Tribunal in assessee s own case for AY 2008-09 to AY 2010-11 and (ii) examining whether the expenditure has been incurred for the purposes of business. We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the order. Thus the 2nd ground of appeal is partly allowed for statistical purposes. 9. The 3rd ground of appeal 3. a) On facts and in the circumstances of the case and in law, the learned CIT (A) has erred in not accepting the contention of the appellant that no amount (interest and other expenses) was disallowable u/s 14A of the Act in as much as no expenditure was in fact inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld CIT(A) on this issue. 14. Facts being identical, we follow the above order of the Co-ordinate Bench, and dismiss the 4th ground of appeal. 15. The 5th ground of appeal 5. On facts and in circumstances of the case and in law, the learned CIT (A) erred in confirming disallowance of Appellant's claim for deduction u/s 80-IA(4) of the Income tax Act on the ground that the appellant was purely executing works contracts for payment and was not the 'developer' of the projects in question. The claim of the appellant be allowed. 16. The AO has followed the order of the Tribunal for earlier years and refused the claim of the assessee for deduction u/s 80IA of the Act. The Ld. CIT(A) dismissed the appeal filed by the assessee by following the order of the Tribunal in assessee s own case for AY 2008-09 to AY 2010-11. 17. We find that this ground of appeal is same as per assessee s appeal for AY 2008-09 to AY 2010-11. The Tribunal vide order dated 06.04.2016 held : 20. The next issue contested by the assessee relates to the rejection of claim for deduction u/s 80IA(4) of the Act. This issue was decided against the assessee by the co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,191,341/- by adopting LIBOR + 400 int. rate minus ₹ 38,772,155/- by adopting LIBOR + 300 int. rate). The AO followed the order of the TPO. In appeal, the Ld. CIT(A) upheld the ALP by the TPO which was as per alternative without prejudice submission by the assessee. 21. Before us, the Ld. counsel for the assessee submits that this is the first year of transfer pricing addition.It is further stated that in the TP proceedings, the assessee was called upon to show cause why ALP of interest be not determined by the Prime Lending Rate Method using either Indian Corporate Bond Rates or SBI PLR. The assessee submitted before the TPO that the rate of interest charged by it is more than the prevailing market rate. However, as a defence against ALP by the PLR method, the assessee submitted that since the AE had borrowed Exim Bank at that rate of interest, LIBOR plus 400 bps may be considered as the comparable rate. The Ld. counsel further submits that the TPO has reproduced the submissions on the comparability of lending to the AE by Exim Bank and by the assessee; the comparable security of the two loans has been tabulated in the TP order. The Ld. counsel submits that without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the character of an international transaction. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) was not justified in deciding that the corporate guarantee provided by the assessee to EXIM Bank on behalf of its AE, HCC Mauritius Enterprises Limited, was not an international transaction without appreciating the fact that the transaction was of nature of guarantee given and the AE got benefit from the corporate guarantee provided by the assessee, which was a facility/service provided to its AE. 3. (a) On the facts and circumstances of the case and in law, the Ld. CIT(A) was not justified in deciding that the Corporate guarantee provided by the assessee to EXIM Bank on behalf of its AE, HCC Mauritius Enterprises Limited, was not an international transaction without appreciating that the term 'guarantee' is clearly mentioned in Explanation (i)(c) below section 92B of IT Act 1961 as an International Transaction and that the explanation was applicable with retrospective effect from 01.04.2002. (b) That the Ld. CIT(A) failed to notice and consider a number of ITAT rulings existed before the decision in the case of Bharti Airtel (ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2014), ignoring the fact that the said decision was not followed by the Hon ble ITAT in is subsequent judgments in the case of the same assessee i.e. Videocon Industries for AY 2011-12 (ITA No. 1310/M/2016 dated 24.02.2017) and AY 2012-13 (ITA No. 149/Mum/2017 dated 26.07.2017). 7. (a) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying on the judgment of ITAT Delhi on Bharti Airtel (ITA No. 5816/Del/2012) , without considering that this decision has not been followed by the coordinate benches of the tribunal in subsequent decision including Prolific Corporation (ITA No. 237 of 2014 Hyd dated 31.12.2014), Foursoft Pvt. Ltd. (ITA No. 1903 of 2014 Hyd. dated 28.02.2014), Xchanging solutions (ITA No. 1294/Bang/2012 166/Bang/2014 dated 31.10.2016). (b) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying on the judgement of ITAT Delhi on Bharti Airtel (ITA No 5816/Del/2012), without appreciating the fact that the Bharti judgement proceeded on misreading and misinterpretation of section 92B which used the plural word enterprises (assessee and the AE) whereas, in the Bharti judgement, in number of parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 299 (Ahd. Trib.), Aurionpro Solutions Ltd. v. Addl. CIT [2013] 33 taxmann.com 187 (Mumbai-Trib.). 26. On the other hand, the Ld. counsel submits that the assessee has not considered the Corporate Guarantee as an international transaction and relied upon the decision of the order of the Tribunal in the case of M/s Four Soft Ltd. v. DCIT (ITA No. 1495/Hyd/2010). It is stated that the loan obtained by the AE was for the purpose of investment in Karl Steiner AG, Switzerland and hence the main purpose was to expand its own business activity. In this regard, reliance is placed by him on the decision in Britannia Industries Ltd. v. DCIT (107taxmann.com 138 Kolkata-Trib.), IL FS Technologies Ltd. v. ACIT (105 taxmann.com 117 Mumbai-Trib.), CIT v. Everest Kento Cylinders Ltd. (58 taxmann.com 254 Bombay HC), CIT v. Glenmark Pharmaceuticals Ltd. (85 taxmann.com 349 Bombay HC), CIT v. Glenmark Pharmaceuticals Ltd. (Appeal 12632/2017). Without prejudice to the above, it is submitted by the Ld. counsel that if commission to be charged, then it should be at 0.5%. 27. We have heard the rival submissions and perused the relevant materials on record. We are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring that disallowance not to exceed exempt income earned c. Ensuring that Strategic investment not earning dividend, if any, to be eliminated before computing disallowance A draft computation must be provided to assessee on extent of disallowance to be retained before passing order giving effect to this order and their views is to be taken before implementing this direction. No order prejudicial to assessee shall be passed without granting opportunity of being heard. 30. A perusal of the above order passed by the Ld. CIT(A) clearly indicates that he has directed the AO to re-compute the disallowance u/s 14A by following the judicial decisions. We agree with the order of the Ld. CIT(A) on the above issues. Only addition we make is to direct the AO to also follow Maxopp Investment Ltd. v. CIT [2018] 91 taxmann.com 154 (SC). 31. The 11th ground of appeal is as under : 11. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in excluding the disallowance u/s 14A while computing Book Profit u/s 115JB. 32. We find that the Ld. CIT(A) has rightly directed the AO to follow the order of the Special Bench of the Tribunal in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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