9911796707
TMI Blog2019 (9) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Appellant's total income (i.e.,Rs. 25,39,55,9127- based on the provisions of Chapter X of the Income-tax Act, 1961 ('the Act') and Rs. 27,85,36,376 based on the other provisions of the Act) and the said addition being wholly unjustified is liable to be deleted. A) Ground No. 2 to 12 relate to Transfer Pricing adjustments of Rs. 25.39,55.912 based on the provisions of chapter - X of the Act. Adjustment relating to Interest _on loans granted to Associated Enterprises ('AE') - Rs. 24,45,05,5897- 2) On the facts and in the circumstances of the case and in law, the learned TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of TPO in making an addition of Rs. 24,45,05,589/- to the Appellant's total income on the alleged ground of charging interest at lower rate (i.e., at LIBOR) than the arm's length price/rate on loans granted by it to its associated enterprise (AE) Disregard of Use of controlled transaction barred by law 3) On the facts and in the circumstances of the case and in law, the learned TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of the TPO in making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant that the adjustment, if any, on account of guarantee fees to be charged to the AEs must be made based on the guarantee fee/rate obtained by the Appellant from its own bank. b) not providing the Appellant an opportunity of examining material on the basis of which rate of guarantee fee was applied. Disallowance of Sales promotion expenses of Rs. 87,83,9157- 8) On the facts and in the circumstances of the case and in law, the learned TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of TPO in making an addition of Rs. 87,83,915 to the total income of the Appellant on account of the sales promotion expenses paid by the Appellant to its AEs namely Apex Hotel Management Services i.e., AHMS (Rs. 70,32,174/-) and International Hotels Management Services i.e., IHMS (Rs. 17,51,741/-) in excess of the alleged arm's length price without considering the details submitted by the assessee. AHMS Requisite condition of issuing show cause notice u/s 92C(3)- not satisfied 9) On the facts and in the circumstances of the case and in law, the learned TPO erred in and the Hon'ble DRP further erred in confirming the adjustment to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and in law, the Learned AO erred in and the Hon'ble DRP further erred in confirming the action of the Learned AO in making interest disallowance of Rs. 25,52, 566/- in respect of advances given to group companies of the Appellant. Disallowance of interest on share application money allotment 15) On the facts and in the circumstances of the case and in law, the Learned AO erred in and the Hon'ble DRP further erred in confirming the action of the Learned AO in making interest disallowance of Rs. 112,600 in respect of share application of Rs. 20,00,0007-pending allotment. Expenditure on replacement of carpet treated as capital expenditure 1 6) On the facts and in the circumstances of the case and in law, the Learned AO erred in and the Hon'ble DRP further erred in confirming the action of the Learned AO in making disallowance of Rs. 1,51,75,9467- being expenditure on replacement of carpets on the alleged ground that the same is capital in nature. Expenditure on replacement of linen treated as capital expenditure 1 7) On the facts and in the circumstances of the case and in law, the Learned AO erred in and the Hon'ble DRP further erred in confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs. 859,34,837 being pro rata premium on redemption of foreign currency convertible bonds resulting into double taxation as the Appellant had already offered the same for taxation in its computation of Total Income. Notional interest on _deposits with Taj Karnataka Ltd 22) On the facts and in the circumstances of the case and in law, the Learned AO erred in and the Hon'ble DRP further erred in confirming the action of the Learned AO in making the addition of notional interest income of Rs. 37,45,000 in respect of the deposit placed with | Taj Karnataka Ltd. Levy of interest under section 234B nd 234D 23) On the facts and in the circumstances of the case and in law, the Learned AO erred in levying interest under section 234B and 234D of the Act and said levy of interest being wholly unjustified is liable to be deleted. Lack of adequate opportunity 24) On the facts and in the circumstances of the case and in law, the learned TPO, the learned AO and Hon'ble DRP erred in not granting reasonable and adequate opportunity to the Appellant before passing their orders/directions under sections 92CA(3), 144C(1) and 144C(5) of the Act and the said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT(A) for AYs 2003-04 to 2004-05 & 2005-06, which has been by the Tribunal in favour of assessee holding that the LIBOR is acceptable arm's length interest rate. 5. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. 6. We have considered the submissions of both the parties and have gone through the orders of authorities below. We have noted that the coordinate bench of Tribunal in assessee's own case for AY 2005-06 in ITA No.841/Mum/2010 dated 31-01-2018 passed the following order:- "20. Ground No. 7 of the revenue's appeal is against the action of Ld. CIT (A) in deleting the addition of Rs. 12,60,80,369/- being adjustment on account of interest charged on loan given by the assessee to its associate enterprise M/s Taj International Hongkong Ltd. The Ld. DR submitted that the assessee had granted loan to Taj Asia Ltd. to the tune of 1.5 million USD and to Taj International Hotels (UK) Ltd. to the tune of 2.362 million USD, 90 million USD and 32 million USD. The AO has rightly followed the order of TPO and held that the interest charged on loan given to TIHK is not at arm's length and has rightly confirmed the adjustment of Rs. 12,60,80,369 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide this issue in favour of the assessee and dismiss this ground of appeal of the revenue." 7. Considering the decision of Tribunal for AY 2005-06 wherein the Tribunal has followed the earlier order for AYs 2003-04 to 2004-05, these grounds of appeal are allowed in favour of the assessee. 8. Grounds 5 to 7 relate to non charging of fees from AE for providing letter of comfort. The Ld.AR of the assessee submits that these grounds of appeal are also covered by the decision of Tribunal for AY 2005-06 wherein the Tribunal followed the order for AYs 2003-04 and 2004-05. 9. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. 10. We have considered the submissions of both the parties and seen that on similar grounds of appeal, the co-ordinate bench of Tribunal in assessee's own case for AYs 2003-04 and 2004-05 has passed the following order:- "24. Ground No. 8 pertains to non charging guarantee fees from AEs by providing letter of comfort to the Bank for the loan granted to the AE. The Ld. Departmental Representative relying on the assessment order submitted that AO has rightly confirmed the order of TPO that the transaction of giving undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by the order of Tribunal in assessee's own case for AY 2003-04 and 2004-5 in ITA No.6712/M/2010 & 2678/M/2009. The Ld. Counsel of the assessee also placed reliance n the following decisions:- 1. Firmenich Aromatics India P Ltd vs DCIT ITA No.2590/Mum/2017 2. CIT vs Johnson & Johnson Ltd (ITA No.1030 of 2014)(Bom HC) 3. DCIT vs RAK Ceramics I.P. Ltd (ITA No.595 o 2016)(Bom HC) 4. Kosdak India P Ltd vs ACIT (ITA No.7349/Mum/2012 13. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. 14. We have considered the submissions of both the parties and seen that in assessee's own case for AY 2003-04 & 2004-05 in ITA No. 6712/M/2010 & 2678/M/2009 dated 09.04.2014 the Tribunal passed following order; " 29. As regards the international transaction involving availing services by assessee company from its AE in US for sales promotion services, it is observed that the same were benchmarked in the TP study report submitted by the assessee by following TNMM. The assessee company was taken as tested party and since its profit margin earned from the relevant transaction at 8.75% was higher than the average profit margin of 2.36% of the India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. During the year under consideration the assessee has advanced loan of Rs. 3,50,00,000/- to M/s KTC Hotel Ltd and Rs. 1,0336,844/- to Taida Trading Industries Ltd. We have noted that on identical ground of appeal is assessee's own case for AY 2005-06 in ITA No. 841/M/2010, by following the order in AY 2003-04 &2004-5 the Tribunal passed the following order: "5. We have heard the rival submissions and perused the material on record including the decision of coordinate bench. We noticed that the coordinate bench had set aside the finding of learned CIT(A) so far as the advances made to Tadia trading and industries Ltd is concerned. As regards the advances made to KTC Hotels Ltd, the tribunal has held that there is no justification in making disallowance is of interest attributable to assessee's own subsidiary company. During the assessment year under consideration, the assessee advanced Rs.4,79,630/- to Taida Trading and Industries Ltd and Rs. 18,42,036/- to KTC Hotels Ltd. Since, this issue has been dealt with by the coordinate bench in assessee's own case for AYs 2003-04 and 2004-5, we respectfully following the decision of the coordinate bench partly allowed this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Similar view has been taken by the tribunal in subsequent years i.e. assessment year 199697 to 2002-03. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years, we respectfully follow the order of the tribunal for the said years and uphold the impugned order of learned CIT(A) giving relief to the assessee on this issue. 24. Considering the decision of tribunal, which is consistently followed from the assessment year 1996-97 onwards, no variation of facts is brought to notice therefore respectfully following the decision of coordinate bench the ground of appeal raised by assessee is allowed. 25. Grounds 16 & 18 pertain to expenditure on replacement of carpet. The assessee also raised an alternative ground that without prejudice depreciation should be allowed @15% instead of 10% allowed by the AO for carpet. The Ld.AR of the assessee submitted that the issue is squarely covered by the decision of the Tribunal for AY 2005-06 in ITA No.841/Mum/2010 & which followed the order of Tribunal for AYs 2003-04 & 2004-05 in ITA No. 6712/Mum/2008 & 2678/Mum/2009.s 26. On the other hand, the Ld. DR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's own case report of the list hence, respectfully following the decision of coordinate benches aforesaid, we uphold the finding of learned CIT(A) and dismissed this ground of appeal of the revenue." 31. Considering the decision of the Tribunal, which is consistently followed in all years, thus, respectfully following the same these grounds of appeals are allowed. Since, we have allowed the main grounds therefore the discussion on alternative ground of appeal for allowing depriciation has become academic. 32. Ground 19 pertains to adjustment on account of difference on rate of foreign exchange on deposit placed with WOS (TIHK). The Ld.AR of the assessee submitted that that the issue is squarely covered in favour of the assessee by the decision of the Tribunal for AY 2005-06 in ITA No.841/Mum/2010. 32. On the other hand, the Ld.DR for the revenue supported the order of lower authorities. 33. We have considered the submissions of the parties and have noted that identical ground of appeal the Tribunal in assessee's own case in AY 2005-06 in ITA No.841/Mum/2010 dated 31.01.2018 on identical grounds passed the following order:- "18. We have noticed that the coordinate bench ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, thus, respectfully following the same these grounds of appeals are allowed. 35 Ground 20 pertains to disallowance u/s 14A. The Ld.AR of the assessee submitted that the issue is squarely favour of the assessee in assessee's own case by the decision of the Tribunal for AY 2005-06 in ITA No.841 /Mum / 2010 and for AY 2004-05. 35. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. 36. We have considered the submissions of the parties and have noted that identical ground of appeal the Tribunal in assessee's own case in AY 2005-06 in ITA No.841/Mum/2010 dated 31.01.2018 on identical grounds passed the following order:- "6. We have heard the rival submission and also produce the material on record including the cases relied upon by the parties. The only grievance of the assessee is that learned CIT(A) has wrongly upheld the disallowance is made by the AO under section 14A of the act. As contended by the learned counsel for the assessee, the suo-moto disallowance made by assessee is in accordance with the earlier year's orders, which was accepted by the Department. We noticed that the AO has accepted this promoter disallowance of Rs. 1,09,33, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to him, no evidence of interest waiver or copy of Board resolution was furnished and therefore, right to received interest was crystallised. Accordingly, he added an amount of Rs. 37,45,000/- to the total income. Relying on Accounting Standard 9, the Ld.AR of the assessee submitted that revenue to be recognised only when it becomes reasonably certain that the ultimate collection would be made. The ld AR submits that in past no such adjustment/addition was made on same facts, no funds was given in the year under consideration. For this proposition he relied upon the following judgements:- 1. UCO Bank Ltd and Tamil Nadu Industrial Investment Corporation Ltd (237 ITR 889)(SC) 2. Mercantile Bank Ltd vs CIT (283 ITR 84)(SC) 3. Godhra Electricity Company vs CIT (225 ITR 746 (SC) 4. CIT Vs Sridev Enterprises 192 ITR 165 (Kar) 39. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. 40. We have considered the submissions of the ld. representatives of the parties and have gone through the orders of the lower authorities. The AO while passing the draft assessment order made addition of Rs. 37,45,000/- by taking view that no evidence of 'waiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year was the amount that stood outstanding on the last day of the previous accounting year; therefore, its nature and status could not be different on the first day of the current accounting year, from its nature and status as on the last day of the previous accounting year. Regarding the past years, the assessee's claims for deductions were allowed in respect of the sums advanced during those years; this could be only on the assumption that those advances were not out of borrowed funds of the assessee. This finding during the previous years was the very basis of the deductions permitted during the past years, whether a specific finding was recorded or not. A departure from the finding in respect of the said amounts advanced during the previous year, would result in a contradictory finding; it would not be equitable to permit the revenue to take a different stand now, in respect of the amounts which were the subject-matter of previous years' assessments consistency and definiteness of approach by the revenue 'was necessary in the matter of recognising the nature of an account maintained by the assessee so that the basis of a concluded assessment would not be ignored with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
