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TMI Blog2021 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... . Corporate guarantee fee - international transaction or not? - HELD THAT:- We find that the A.Y. before us is 2011-12, i.e. prior to the amendment of Sec. 92B of the Act, while in the decisions relied upon by the DR, it has been held that even prior to the amendment, the Corporate Guarantee is an international transaction, in the decisions relied upon by the ld Counsel for the assessee, it has been held otherwise. We find that in the assessee s own case for the AY 2010-11, this Tribunal has held the issue in favour of the assessee. Therefore, following the principle of uniformity and consistency, we hold that corporate guarantee is not international transaction prior to amendment of S. 92B w.e.f. 1.4.2012. Therefore, grounds of appeal no. 4 and 5 are allowed. Disallowance u/s. 14A - HELD THAT:- We find that the issue of disallowance u/s. 14A where there is no exempt income earned during the relevant financial year, is covered in favour of the assessee by the decision of Hon ble Supreme Court in the case of CIT (Central)1 vs. Chettinad Logistics (P) Ltd. [ 2018 (7) TMI 567 - SC ORDER] wherein it was confirmed that where there is no exempt income earned by the assessee, no disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order, assessee is in appeal before us by raising various grounds of appeal. Since the grounds of appeal raised by the assessee are found to be argumentative, assessee was directed to file precise grounds of appeal. Accordingly, the assessee has filed following precise grounds of appeal: Each of the grounds of appeal is mutually exclusive of, independent and without prejudice to other. Based on the facts and the circumstances of the case and in law, the learned Assessing Officer (AO), learned Transfer Pricing Officer (TPO) and the Honourable Dispute Resolution Panel (DRP) - 1. Erred in passing the order u/s. 143(3) r.w.s. 144C(13) dated 29.01.2016, which is beyond one month from the end of the month in which such DRP directions are received. 2. The AO has erred in law in making the reference to the TPO without meeting the preconditions for such reference under section 92CA of the I.T. Act, 1961. 3. Erred in making the addition of ₹ 3,18,73,275/- towards interest on advances given towards investment in equity of AE to Vivimed Labs USA Inc., AE of ₹ 25,20,00,000/- and Vivimed Holding Ltd., Hong Kong., of ₹ 81,40,000/-. 4. Erred in making addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 to 9, the Ld. Counsel for the assessee submitted that they are legal grounds relating to issues arising out of assessment order and prayed that they be admitted and adjudicated. 3.1. Ld. DR, on the other hand, opposed the admission of additional grounds. 4. After hearing the rival contentions and material placed on record, we find that the AO has added the disallowance made u/s. 14A also to book profits calculated u/s. 115JB of the Act which is being challenged by the assessee in these additional grounds of appeal. Since all the facts are on record and the issue is a legal issue, we admit the same and proceed to adjudicate the same hereunder: 5. As regards ground no. 3, the brief facts are that during the transfer pricing proceedings, in the T.P. documentation of assessee, the AO found that the assessee had stated that it had provided working capital advance of ₹ 252.06 million to Vivimed Hong Kong and also of ₹ 8.41 millions to Vivimed, US i.e. total amount outstanding was ₹ 26,01,90,000/- and it was stated that the advance is for administrative convenience and there was no interest accrued during the year and hence determination of ALP is not warranted. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee filed any evidence in this context before the authorities below. The board resolutions and the evidence that assessee has been allotted equity shares in the subsequent year were never put before the authorities below. In view of these facts, we deem it fit and proper to set aside the issue to the file of AO/TPO with a direction to consider the evidence filed by assessee to the effect that assessee had invested money in equity shares of its subsidiaries and has not given working capital advances and if it is found that these transactions were in fact investments in equity shares of the subsidiaries, then no T.P. adjustment shall be made. However, if it is found that the funds transferred by the assessee to its subsidiaries during the year were working capital advances, which were later decided to be treated as investments, then the T.P. adjustment already made by the AO shall be revived and the assessment shall be completed accordingly. 5.5. Therefore, assessee's ground of appeal no. 3 is treated as allowed for statistical purposes. 6. As regards ground no. 4 regarding corporate guarantee fee, Ld. Counsel for the assessee submitted that the A.Y. before us is 2011-12 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 82 Taxmann.com 415. iii) Agila Specialities P Ltd. vs. ACIT in ITA No. 987/Hyd/2018 7.1. Ld. DR supported the orders of authorities below. 7.2. Having regard to rival contentions and material placed on record, we find that the issue of disallowance u/s. 14A where there is no exempt income earned during the relevant financial year, is covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of CIT (Central)1 vs. Chettinad Logistics (P) Ltd. (2018) 95 taxman.com 250 (SC) wherein it was confirmed that where there is no exempt income earned by the assessee, no disallowance u/s. 14A shall be made. 7.3. Further, with regard to computation of income u/s. 115JB of the Act and addition of disallowance u/s. 14A to the said income, we find that this issue also is covered in favour of the assessee by the decision of the Special Bench of the ITAT at Delhi in the case of Vireet Investments (cited Supra) which has been followed by us in our orders in other cases cited Supra. Respectfully following the same, we hold that no addition of the disallowance u/s. 14A is called for while computing the income u/s. 115JB of the Act. Accordingly, ground nos. 6, 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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