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TMI Blog2019 (2) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... o its AE meaning thereby had the AE borrowed funds from the Bank directly , these would have been available at the same rate of interest i.e. Libor + 100 basis point. In our view, the order of CIT(A) cannot be sustained on this point for this reason that the AE of the assessee and DVB Merchant Bank (Asia) Ltd., is operating from the same country, so the reasons sought by the TPO and CIT(A) are not reasonable, accordingly we direct the AO the delete the addition. The ground no. 6 is allowed. Addition u/s. 14A r.w. Rule 8D - assessee is covered by Tonnage Tax Scheme - HELD THAT:- Once the department has allowed the option to the assessee under Clause (1) Sub-section (3) of Section 115VP of the Act, then, we are of the view that disallowance u/s. 14A will not be attracted - direct the AO to delete the disallowance u/s. 14A r.w. Rule 8D. Ground of appeal no. 7 is allowed. Including tax free interest on Government Bonds as taxable interest income - vide letter dt. 09-09-2009 the assessee claimed that same is not taxable - HELD THAT:- We are of the view that the income which is totally exempt from tax i.e., tax free interest income on 6.85% tax free bonds cannot be included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from AE on the loan advanced was adjudicated by us herein above vide para No.3.7 upholding the CUP method for banking transactions and also upholding LIBOR+100 basis points. Therefore, the addition is covered by the said decision on this issue. We accordingly dismiss this limb of the ground no. 1 of the Revenue. Addition to the book profits on account of profit on sale of depreciable assets - as per the Income Tax rules, sale price is deductible from written down value of Block of Assets and therefore there is no profit on sale of fixed assets while calculating the book profit u/s. 115JB - HELD THAT:- Since the facts of the case before us are same as decided by the Co-ordinate Bench in the case of the Shivalik Venture (P) Ltd., Vs. DCIT [ 2015 (8) TMI 979 - ITAT MUMBAI] respectfully following the same, we direct the AO not to include the profit on sale of Vessel while computing book profits u/s. 115JB. Disallowing the set-off of Long-term Capital Loss arising on account of units of mutual funds on which STT has been paid against Long-term Capital Gains on which no STT is paid - HELD THAT:- After carefully perusing the decision of the co-ordinate Bench in Raptakos Brett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost common in all these appeals, we have heard them together and adjudicated by this common order. ITA No. 8077/Mum/2011 AY 2006-07: 2. We would like to first decide the issues involved in the present appeals on merits. Accordingly, we are taking up ITA No. 8077/Mum/2011, deciding the grounds on merits first. In this appeal, the assessee has raised the following grounds: 1. APPELLANT IS A SHIPPING COMPANY AND APPROVED TO BE TAXED UNDER THE PROVISIONS OF TONNAGE TAX SCHEME UNDER CHAPTER XIIG OF THE ACT: The Learned A.O. as well as Learned CIT(A) have erred in overlooking that Appellant is a Shipping Company and has been granted option to be taxed under the TONNAGE TAX SCHEME under Chapter XIIG of the Act and Section 115VA of the Act begins with a non- obstinate clause which reads as NOTWITHSTANDING anything to the contrary contained in Sections 28 to 43 C in the case of a Company, the income from business of operating Qualifying Ships may at its option be computed in accordance with the provisions of thus Chapter and such income shall be deemed to be the profits and gains of such business chargeable to tax under the head PROFITS AND GAINS OF BUSINESS OR PROFESSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Scheme. 5. The Learned CIT(A) has erred in mentioning in para 4.4.3 of Appeal Order that in scheme of things under the Income-tax Act the income from international transactions are to be treated as an additional and separate source of income under international transaction overlooking that there is no such provisions in Income-tax Act as treating the income on account of international transactions as separate source of income as the provisions of Transfer Pricing is a method of arriving at Taxable Income and the same cannot be considered as separate source of income. 6. The Learned CIT(A) has erred in considering in para 8.4 sub para xi that interest on loan given to subsidiary Company should be worked out at a rate of interest at LIBOR plus 200 basis points as against interest at LIBOR plus 100 basis points charged by Appellant overlooking that loans utilized by subsidiary Company was for short period of three months and the Appellant was not running any risk as the loan was giving loan to its wholly owned subsidiary Company and the prevailing rate of interest under CUP Method was LIBOR plus 100 basis points as the Appellant Company itself has availed a term loan of USD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 in appeal before Hon'ble CIT(A) but in para 11.3 of appeal Order the Learned C1T(A) rejected the ground of appeal. 10. The Learned A.O. has erred in not allowing deduction of Municipal Taxes as well as Society charges amounting to ₹ 75,549/- while computing income under the head PROPERTY INCOME eventhough the same was claimed before A.O. vide letter dated 9.9.2009 and the said claim has been rejected by the Learned CIT(A) vide para 12.3 of the appeal Order only on the ground that the said claim was made in the letter dated 9.9.2009 but not claimed in the Return of Income. 11. The Learned A.O. has erred in including sum of ₹ 25,12,533/- under the head MISCELLANEOUS INCOME overlooking the facts that the same was refund of INCOME-TAX for Assessment Years 1993-94 and 1994-95 and not Miscellaneous Income as submitted before Learned A.O. and the Learned CIT(A) rejected the claim in para 13.3 of appeal Order on the ground that the said claim was not made in the Return of Income filed. 12. Appellant craves leave to submit precised (summary) grounds of appeal add and or alter the above grounds of appeal . 3. In Ground No. 6, the assessee has challenged the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company has also given loan to its AE, operating in Singapore. Therefore, the question of geographical difference does not arise and observation of TPO are against the facts of the case while the rate of interest charged by the assessee to the AE is at arm s length. However, the AO brushing aside the submissions of assessee made an adjustment/addition to the tune of ₹ 10,23,204/- by benchmarking the transaction with AE at LIBOR+300 basis points as proposed by the TPO. 3.2. In the appellate proceedings, Ld. CIT(A) partly allowed the appeal of assessee, after considering the submissions of assessee, as reproduced in para 8.3 of the appellate order by observing and holding as under: 8.4 I have considered the facts of the case and submissions of the appellant as against the observation/findings of the AO/TPO in their orders. The contentions raised, by the appellant as against its ground, of appeal are being discussed and decided as under: i. There is no dispute to the fact that for the loan which has been advanced to the AE interest is to be charged at the ALP rate. ii. Further the method applied by the appellant has also not been disputed by the TPO. ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int x. It is the fact of the case that the loan to the AE is short term loan and is for the period of one year. The all in cost ceiling of RBI would be closest rate for short term loan in foreign currency which would be LIBOR + 200 basis point which is applicable from 01.08.2005. Thus the period of the transaction under consideration would be covered by the circular No. 5 of the RBI dated 01.08.2005 and according to which rate which could be taken and which would be nearest to the transaction of the appellant would be LIBOR + 200 basis point, which what is considered suitable to be adopted instead of LIBOR + 300 basis point which has been adopted by the TPO, for which no basis has been given. Accordingly the AO/TPO is directed to work out the adjustment to arrive at the ALP of the interest received by the appellant by adopting rate of interest at LIBOR + 200 basis points. xii. This ground of appeal is accordingly partly allowed . 3.3. Ld. AR vehemently argued before the Bench that the CIT(A) has grossly erred in partly sustaining the addition qua the interest on loan advanced to AE in Singapore by directing the AO to bench mark the loan transaction at LIB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al submissions and perused the material on record including the impugned order including decisions cited by the parties. We observe from the record that assessee has borrowed the money from DVB Merchant Bank (Asia) Ltd., at LIBOR+100 basis points. The said bank is operating from Singapore, from where the AE of the assessee is also operating. Assessee has benchmarked the transaction with AE at LIBOR+100 basis points on the same rate of interest at which the assessee has borrowed money from DVB Merchant Bank (Asia) Ltd. The TPO benchmarked the transaction at LIBOR+300 basis points on the ground that they have geographical differences and the Ld. CIT(A) partly allowed the appeal of assessee by directing the AO to charge interest at LIBOR+200 basis points. After considering the facts of the case in totality and decisions relied upon by the Ld. DR, we find merits in the contention of Ld. AR that there was no geographical difference as observed by the TPO for the reason that DVB Merchant Bank (Asia) Ltd., Singapore and assessee is operating from the same country i.e., Singapore. In our opinion, assessee has rightly followed the CUP method to benchmark the international transaction at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, is clearly applicable in respect of disallowances of corresponding expenditure debited by the appellant in its P L A/c. Apart from the direct costs that may have been incurred in respect of employee's salary handling this work in the company, there would costs associated with the infrastructural facilities used for investments, there would be certain direct and indirect expenses relating to such investments, such as expenses relating to portfolio management, supervisory charges, audit charges, taxation and law charges etc. Therefore, it cannot be said that there are no costs/expenses attributable to earning of the income which is not forming part of the total income, and accordingly the disallowance has to be worked out in view of section 14 A of the Act. (ii) The AO at para 5 on page 17 of his order has stated that that the as per provisions of Sec 14A, no deduction shall be allowed in respect of expenditure incurred in relation to the income which does not form part of the total income. Hence, the expenditure on exempt income was calculated as per Rule 8D and accordingly ₹ 45,54,204/- was disallowed and added to the total income. (iii) The AO has arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO while computing the disallowance u/s 14A restricted the disallowance of expenditure computed at one half per cent of the average of the value of investment at the opening and close of the year, income from which does not or shall not form part of the total income and disallowed a sum of ₹ 45,54,204/- u/s 14A computed us per provisions of Rule 8D. We are to submit that the appellant had not incurred any expenditure directly for earning tax free income which can be disallowed u/s 14A. Further, the appellant has also not incurred any interest expenditure which is attributable to earning tax free income since all the loans have, been availed for acquisition of ships and therefore the same have not betn used for purchase of investments yielding tax free income. The Learned AO has accepted the submission of the appellant and he restricted the disallowance of expenditure computed at one half per cent of the average of the value of investment at the. opening and close of the year, income from which does not or shall not form part of the total income. That the appellant company is covered by the provisions of Tonnage. Tax Scheme - Chapter XIIG wherein income of the shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was proposed to the appellant vide this office notice dated 13.09.2011 and same is followed. As per the same, the disallowance is worked out to ₹ 18,24,946/-. (vii) The AO has made a total disallowance under section 14A of ₹ 45,54,204/-. Accordingly as a consequence of this ground of appeal, the appellant gets relief of ₹ 27,29,258/-i.e. (₹ 45,54,204 - ₹ 18,24,946) . Thereby sustaining the addition to the extent of ₹ 18,24,946/-. 4.3. Ld. AR argued before the Bench that the assessee has not claimed any expenses as deduction, while computing taxable income under any of the heads of income and therefore, there is no question of disallowance of any expenses which is attributable to income of dividend u/s. 14A of the Act. Ld. AR submitted that the income is computed on presumptive/deemed basis on the tonnage capacity of the ship irrespective of shipping income earned or shipping expenditure incurred. Therefore, while making computations of tonnage income, no expenses have been claimed and therefore the order of CIT(A), upholding the disallowance to the tune of ₹ 18,24,946/- is incorrect and should be set aside. Ld. AR in defense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax Central Rg.4, Mumbai Once the department has allowed the option to the assessee under Clause (1) Sub-section (3) of Section 115VP of the Act, then, we are of the view that disallowance u/s. 14A will not be attracted. The similar view has also been upheld by the various decisions, relied on by the Ld. AR as stated supra. 4.5.i. We, therefore, respectfully following the decision of the Co-ordinate Bench, direct the AO to delete the disallowance u/s. 14A r.w. Rule 8D. Ground of appeal no. 7 is allowed. 5. The issue raised in Ground No. 8 is against the order of AO and CIT(A) including tax free interest on Government Bonds amounting to ₹ 2,46,050/- as taxable interest income even though vide letter dt. 09-09-2009 the assessee claimed that same is not taxable. 5.1. The facts in brief are that assessee while computing the income, erroneously offered to tax, the tax free interest income of ₹ 2,46,050/- on account of interest received from 6.85% tax free bonds. The said interest is exempt u/s. 10(15)(iv)(h) of the Act and should not have been part of the taxable income as well as book profits under MAT provisions. Assessee brought the facts to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the considered view that the income which is exempt and does not fall in the charging provisions of the Act has to be excluded from the total income. In this regard, we direct the AO to exclude the amount of ₹ 2,46,050/- from the total income of assessee. This ground no. 8 is allowed. 6. The issue raised in Ground No. 9 is not pressed, therefore, the same is dismissed. 7. The issue raised in Ground No. 10 is against the order of the CIT(A), not allowing deduction of Municipal Taxes amounting to ₹ 75,549/- while computing total income. 7.1. The facts in brief are that assessee, while computing the income, forgot to claim the Municipal Taxes of ₹ 75,549/- from property income. Realizing his mistake, assessee vide letter dt. 09-09-2009, made a claim before the AO, which did not find favour and ultimately, the same was rejected by the AO. 7.2. In the appellate proceedings, the CIT(A) also rejected the appeal of assessee on this issue by holding that neither the claim was made by assessee in the return of income nor any revised return was filed. In this connection, Ld. AR of the assessee relied on the decision of Goetze India Ltd., [157 Taxman 1] for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax accordingly. However, the refund of principal amount of ₹ 25,12,477/- was wrongly shown under the head Miscellaneous Income and the same was also offered to tax. During the assessment proceedings, assessee vide letter dt. 09-09-2009, submitted to the AO that an amount of ₹ 25,12,477/- should be excluded from the income of assessee as the same represents the refund of income tax exclusive of interest thereon for AYs. 1993-94 1994-95. However, the AO did not agree to the contention of assessee. 8.2. In the appellate proceedings, CIT(A) also upheld the action of AO by observing that the assessee has not made claim either in the original return of income or by way of revised return of income and just following the decision in the case of Goetze India Ltd., [157 Taxman 1] (supra), appeal of the assessee was dismissed. 8.3. Having regard to the rival contentions and perusing the material on record before us and decision(s) relied on, we are of the view that even if the assessee has inadvertently and erroneously offered refund of income tax in his total income, there is no bar in making correction of mistake in the return of income. Ld. CIT(A) is not correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8D to ₹ 18,24,946/- and further holding that the provisions of Rule 8D are applicable only for and from A.Y. 2008-09 onwards. 4. The appellant prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored. 5. The appellant craves leave to amend or alter any ground or add any other ground which may be necessary . 11. The issue raised in first ground of appeal is against deleting the addition/adjustment of ₹ 9,69,74,059/- by the CIT(A) as made by the AO/TPO by applying profit split method, ignoring the fact that TPO has rejected the CUP method after giving detailed reasons in the order passed u/s. 92CA(3) of the Act. 11.1. The facts in brief are that assessee has entered into a contract with a Government undertaking for transporting cargo from Queensland, Australian ports to Indian ports at freight rate Per Metric Tonne as and when cargo is available. At the time Government undertaking asks the assessee to make available the ships, if assessee does not have own ships available due to preoccupation and pre-engaged with existing commitments, then the assessee makes arrangement to incharter vessel of similar capacity from associate con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed and decided as under: i. It is observed that the appellant had carried out transportation of cargo through its own ships. Out of the voyages that the appellant company carried out in respect of transportation of cargo, it is seen that only in case of 7 voyages, the AE s ship were engaged. This was because the ships of the appellant company were not available at the specific time when the Charterers called for transport of cargo from specific port. It is obvious that if the appellant company was not able to present the ship at the nominated time and place, it would have to suffer for non performance of contract with the government undertaking and would have to incur financial loss including the payment of damages. ii. Conclusion regarding comparability in Transfer Pricing are subject to analysis of four factors determining comparability. They are: a) Characteristics of property or services b) Functional Analysis c) Contractual Terms d) Economic Circumstances The TPO has specially ignored the contractual terms which had made the appellant liable to make available ships as per contract, as and when it required. Thus hiring of AE ships for 7 voyages was a bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) in a very comprehensive manner, giving detailed findings and reasons for deleting the addition. 11.5. We find that similar addition was made in the earlier years and deleted by the appellate authority. The Ld. CIT(A) followed the earlier years orders allowed the ground in favour of the assessee. After perusing the facts on record and order of the Ld. CIT(A), we do not find any reason to deviate therefrom the conclusion drawn by the First Appellate Authority. Accordinly the ground of the revenue is dimissed. 12. The issue raised in Ground No. 2 has already been decided by us while deciding Ground No. 1, hereinabove and requires no separate adjudication. Ground is dismissed. 13. The issue raised in Ground No. 3 is against the reduction in disallowance by CIT(A) as made by the AO u/s. 14A r.w. Rule 8D to ₹ 18,24,946/- as against ₹ 45,24,204/-by the AO. 13.1. We have already decided the issue of disallowance u/s. 14A r.w. Rule 8D are not applicable to the assessee in the assessee s appeal in para no.4.6 by holding that provisions of section 14A r.w.r 8D not applicable as the income of assessee is assessed to tax under Tonnage Tax Scheme. Therefore, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Aztech Software vs. Asst. C.I.T., 224 ITR (AT) 32 (Bang.) (SB): Where the language used by the Legislature is clear and unambiguous, the plain and natural meaning of the words should be supplied to he language used and recourse to any rule of interpretation to unfold the intention is permissible only where the language is ambiguous. Courts are not required to look into the object or intention of the Legislature by resorting to aids to interpretation where the language of the provision is clear and unambiguous. Consequently the meaning of each word used by the Legislature is to be given its plain and natural meaning and no word should be ignored while interpreting provision of a statute. In my view, the profit on sale of depreciable assets cannot be excluded from the Book profits for the purpose of section 115JB of the I.T. Act. The Hon ble Supreme Court in the case of Apollo Tyres in 255 ITR 273 has held that the A.O. cannot disturb the Book profit computed under the provisions of the Companies Act except the items of income listed in section 115JB of the I.T. Act. 5.5 The Hon ble ITAT in the case of Frigsales (supra) has decided the issue in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. Even with regard to 115JA, the Hon ble Madras High Court in the case of CIT vs. Kovai Maruti Paper Board (P) Ltd., 294 ITR 57 (Mad) and Hon ble Delhi High Court in the case of CIT v. C.J. International Hotels Ltd. 15 DTR (Del.) 166 have held so. 5.8 Respectfully following the Hon ble Supreme Court, Hon ble Madras High Court and Hon ble Delhi High Court and also due to the fact that the profit from sale of depreciable asset is not exempt under normal provisions of the Income Tax Act (para 5.6 of this order) I hold that the profits from sale of ships cannot be excluded from the Book profits for the purpose of section 115JB of the I.T. Act. 15.2. The Ld. AR of the assessee argued that the issue is squarely covered in favour of assessee by the decision of the Coordinate Bench in the case of Shivalik Venture (P) Ltd., Vs. DCIT [60 taxmann.com 314] (Mumbai-Trib) wherein it has been held that profit arising from transfer of capital asset by the assessee to wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer as given in section 2(47) of the Act but section 47 specifically provides certain exemptions by holding that certain transactions shall not be regarded as transfer, meaning thereby even if a transaction falls under the definition of transfer as per the provision of section 2(47) yet they shall not be chargeable under section 45 of the Act in view of specific provisions of section 47. The Ld. A.R. vehemently submitted that the transfer of assets by a company to wholly own subsidiary company is not considered a transfer under section 47 of the Act and accordingly the profit arising from the said transfer is not chargeable to tax under section 45 of the Act and if the said profits and gains are not chargeable to tax under section 45 same would not be considered as income at all under the definition of income given in the section 2(24) of the Act. Without prejudice argument taken by the ld AR is with regard to the fact when the block of assets is existing in the books of assessee and no profit is determined while computing the depreciation as per the Income Tax Act, the same cannot be included while computing book profits u/s. 115JB of the Act. Ld. AR submitted that this issue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while computing total income under normal provisions of the Act. The contention of the assessee is that the same is also required to be excluded while computing Book Profit u/s 115JB of the Act for the reasons cited by it. The contention of the revenue is that the provisions of sec. 115JB are a self contained code and the Book Profit has to be strictly computed in accordance with the provisions stated therein. 12. The provisions of sec. 115JB shall come into operation, only if the income tax payable under the normal provisions of the Act by an assessee, being a company, is less than the prescribed percentage of book profit . The expression Book Profit is defined under Explanation 1 to sec. 115JB of the Act. According to this Explanation book profit means the net profit shown in the profit and loss account for the relevant previous year prepared under sub-section (2) (i.e., prepared in accordance with the provisions of Part II of Schedule VI to the Companies Act, 1956..), as increased/reduced by the items listed out in the Explanation. In the instant year, the provisions of sec. 115JB come into operation for the assessee, since the tax payable by the assessee under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book profit u/s 115J of the Act, it claimed the amount of depreciation as deduction from the Net profit disclosed in the Profit and loss account. The Hon'ble High Court considered the aforesaid aspect of the controversy in the following words:- The answer to this poser is found in sub-section (6) of section 211 of the Companies Act, which provides that except where the context otherwise requires any reference to a balance sheet or profit and loss account shall include the notes thereon or documents annexed thereto, giving information required to be given and/or allowed to be given in the form of notes or documents by the Companies Act. As already noted it is obligatory under clause 3(iv) of Part II to Schedule VI to the Companies Act to give information with regard to depreciation, which has not been provided for along with the quantum of arrears. According to us, once this information is disclosed in the notes to the accounts it would clearly fall within the ambit of the Explanation to section 115 J of the Act which defines book profit to mean net profit as shown in the profit and loss account for the relevant assessment year . To our minds, as long as the depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit means the net profit as shown in the Profit and Loss account for the relevant previous year prepared under sub-section (2), as increased by- In sec. 115JB(2), it is provided that the profit and loss account shall be prepared in accordance with the provisions of part II of Schedule VI to the Companies Act, 1956. So the profit and loss account prepared as per the provisions of Companies Act is required to be considered for the purpose of provisions of sec. 115JB of the Act, meaning thereby the interpretation given to the various provisions of Companies Act are relevant here. We have noticed that the starting point for computation of book profit is the Net profit as shown in the Profit and Loss account . In the above said three decisions, it has been held that the items disclosed in the Notes to accounts are required to be adjusted to the Net profit disclosed in the Profit and loss account. In order to understand the significance of Notes to accounts or Notes forming part of accounts , we may refer to the provisions of sec. 211(6) of the Companies Act, which read as under:- (6) For the purpose of this section, except where the context otherwise requires any referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Profit and loss account, which means that the Net profit shown in the profit and loss account is the figure arrived at after making such kind of adjustments. From these discussions, it follows that, for the purpose of making such kind of adjustments, it is not necessary that those items should have been specified in items of increase or reduction given in the Explanation 7, since the net profit itself is arrived at by adjusting the effects of notes given in the Notes to accounts, i.e., the same forms part of the process of arriving at Net Profit at the source level . 15.4.i. Since the facts of the case before us are same as decided by the Co-ordinate Bench in the case of the Shivalik Venture (P) Ltd., Vs. DCIT [60 taxmann.com 314] (Mumbai-Trib) (supra), respectfully following the same, we direct the AO not to include the profit on sale of Vessel while computing book profits u/s. 115JB of the Act. 16. The issues raised in the assessee s appeals in Ground Nos. 1 2 in AY 2005-06, ground nos 1 to 5 in AY 2007-08 2008-09, Addl. Ground no. 1 in AY 2009-10 and ground Nos.10 to 12 in AY 2010-11 are legal issues relating to applicability of Transfer Pricing and are id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the facts of the case and after carefully perusing the decision of the co-ordinate Bench of the Mumbai Tribunal in the case of Raptakos Brett Co Ltd. ITA No. 3317/Mum/2009 1692/Mum/2010, we agree contentions of the Ld. AR that this ground of appeal is covered in favour of the assessee. We therefore, respectfully, following the same, allow Ground No. 8 of the assessee. 22. Ground of appeal No. 9 in AY. 2008-09 in assessee s appeal is against not allowing cost of acquiring shares of foreign subsidiary company to be increased while computing LTCG when the sale price of ship increased under Transfer Pricing provisions. 22.1. The facts in brief are that during the year the assessee sold some shares of its Singapore AE allotted in lieu of the value of ships transferred to the said AE during the financial year 2003-04. The price of the ship was increased to ₹ 50,00,00,000/- in place of ₹ 45,32,45,000/- by making TP adjustments as per tribunal order in ITA No. 1491/Mum/2008 for AY 2003-04 order dated 30.04.2013. The assessee submitted before the AO that the price of the share should be taken at ₹ 50,00,00,000/-.The ld CIT(A) did not adjudicate the issue. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-08-2014 (iii) Asst. CIT vs. Vireet Investments P. Ltd (2017) 82 Taxmann.com 415 (Delhi-Trib) (SB) (iv) Bharat Petroleum Corporation Ltd. vs. Asst. CIT (2018) 63 ITR (TRIB) 244 (Mum) Since the facts of the assessee s case are similar to the facts of the above decisions, we accordingly allow Ground No. 11 of the assessee by directing the AO to delete the disallowance. 24. Ground No. 13 in AY 2008-09 is against the order of ld CIT(A) including profit on sale of ship u/s.115JB (MAT) as the same is not covered by Explanation 1 to Section 115JB(2) and therefore the profit on sale of ship should be reduced from Book Profits considered u/s.115JB. 24.1. This ground has already been adjudicated in Ground of appeal No. 1 and 2 for the AY. 2003-04 and Ground of appeal No. 7 for the year under consideration in assessee s appeal. The additions on Transfer pricing adjustment and section 14A have been deleted and 94(7) has been upheld. The AO is directed accordingly. 25. As regards the additional grounds raised by the assessee of appeal for the AY. 2005-06, it is contended by the Ld AR that the additional grounds of appeal have been taken as the same inadvertently have not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY. 2007-08 which are reproduced as under:- (i) Interest Income received from 6.85% IIFCL Tax-free Bonds which are exempt u/s.10(15)(iv)(h) of the Income-tax Act, 1961 and therefore the same are not taxable. - ₹ 2,46,050/- (ii) Interest Income received from staff members employed for shipping business covered under Tonnage Tax Business and therefore the same is part of shipping business income not taxable as Income from Other Sources - ₹ 3,37,050/- (iii) Interest Income received on account of delayed freight payment as decided by Arbitrator -₹ 5,93,454/- (iv) Interest Income on security deposit and Bank guarantees on account of cases pertaining to custom duty which are part of shipping business covered under Tonnage Tax scheme ₹ 28,52,858/- 26.1. Since we have already restored these ground to the file of the AO in AY. 2005-06, we are therefore restoring these for the AY. 2007-08 also. The AO is directed to decide these grounds as per law and facts after giving reasonable opportunity to the assessee. 27. The Ground Nos. a to d in AY 2005-06, ground no. 1 for AY 2007-08 and 2008-09, ground no. (ii) in AY 2009-10 all revenue appeals are ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces is deleted. 6.4 With regard to the addition of sundry balances written back amounting to ₹ 59877/-, the appellant submitted that sundry balances written back is income from core activities and interest derived from such activity is taxable under the head Income from business and it can not be taxed separately. 6.5 the appellant relied on the Hon ble Mumbai Tribunal in the case of Shipping Corporation of India vs. ACIT 133 ITD 290 wherein similar addition of write back of sundry credit balances was deleted by Hon ble ITAT. Since the facts of the case remain same, addition of sundry balances written back of ₹ 59877/- to income from other sources is deleted. . 6.10 I have considered the above judgments submitted by the appellant and the contention by the appellant. The submission made by the appellant that these deposits were short term deposits made temporarily when funds were lying idle for a short tenure is found tenable. The appellant has substantial borrowing and has paid interest of over ₹ 20 cr. The interest has been earned on short term deposits only, in respect of funds which were to be used for business purpose by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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