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TMI Blog2021 (1) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier Tribunal direction. TP Adjustment - interest charged on the share application money given by the assessee to the Associated Enterprise by the Transfer Pricing Officer (TPO) - HELD THAT:- As decided in own case , Tribunal had held that the undisputed position that emerges is the fact that assessee has advanced share application money to one of its Associated Enterprise to acquire further stake in that entity. That the Associated Enterprise has become whollyowned subsidiary of the assessee-company during the month of January, 2009. That the financial health of the Associated Enterprise was not good and the money was advanced in view to infuse further capital in the Associated Enterprise with a view to acquire controlling stake. The money was utilised by the Associated Enterprise for the purpose of business and to meet working capital requirement. The Tribunal further noted that ultimately the shares have been allotted to the assessee during December, 2015 after getting the desired regulatory approvals. The Tribunal accepted that the delay was genuine and was substantiated. In these facts, ITAT agreed with the view that the amount cannot be treated as loan transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act which is a special provision for computing the capital gains in the case of depreciable assets is not only restricted for the purposes of Section 48 or Section 49 of the Act as specifically stated therein and the said fiction created in sub-section (1) (2) of Section 50 has limited application only in the context of mode of computation of capital gains contained in Sections 48 and 49 and would have nothing to do with the exemption that is provided in a totally different provision i.e. Section 54E of the Act. Section 48 deals with the mode of computation and Section 49 relates to cost with reference to certain mode of acquisition As relying on M/S. MANALI INVESTMENT [ 2013 (12) TMI 333 - BOMBAY HIGH COURT] deeming fiction of section 50 is limited and cannot be extended beyond method of computation of the gain. That the distinction between short term and long term capital gain is not obliterated by this section. Hence, we respectfully follow the same and reject this submission of learned Departmental Representative. This additional ground is allowed and the Assessing Officer is directed to reexamine the detailed facts and allow as per the ratio of above said decisions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee having regard to assessee's accounts and explanations. The Tribunal had further noted that to maintain the consistency, the matter was being remitted to the file of Assessing Officer with same direction. The Tribunal also directed to take into account the order of Tribunal Special Bench in the case of ACIT vs. Vireet Investments (P) Ltd. Here we also make it clear that we are not acceding to the request of learned Counsel of the assessee to delete the entire disallowance for lack of satisfaction by the Assessing Officer. The Assessing Officer has dealt with the issue with reasonable details and only for the sake of consistency we are following the earlier Tribunal direction. 7. Accordingly, we find on the same issue, the Tribunal in assessee's own case, has remitted the matter to the file of Assessing Officer and also directed to take into account the decision of Special Bench of Tribunal as aforesaid. Following the aforesaid precedent, we also remand this issue to the file of Assessing Officer with same direction. 8. Another common issue raised in Revenue's appeal relates to correctness of learned CIT(A)'s order deleting interest charged o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the financial health of the Associated Enterprise was not good and the money was advanced in view to infuse further capital in the Associated Enterprise with a view to acquire controlling stake. The money was utilised by the Associated Enterprise for the purpose of business and to meet working capital requirement. The Tribunal further noted that ultimately the shares have been allotted to the assessee during December, 2015 after getting the desired regulatory approvals. The Tribunal accepted that the delay was genuine and was substantiated. In these facts, ITAT agreed with the view that the amount cannot be treated as loan transaction. In this regard, the Tribunal also referred to the decisions of Hon'ble Bombay High Court in the case of Pr. CIT vs Aegis Ltd. It also referred to the decision of Madras Bench of Tribunal in the case of Pane Biscuits Ltd. Accordingly, ITAT held that the transfer pricing adjustment in this regard, proposed by the TPO, was to be deleted. 11. We find that since on the same transaction during the current assessment year, TPO has made an adjustment as referred above. The learned CIT(A) has correctly deleted the same by noting that on the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntee fee even on corporate guarantees where no fee was charged was upheld. B. The ITAT MUMBAI BENCH 'K' in Deputy Commissioner of Income-tax, Central Circle- 1 (1), Mumbai vs Rolta India Ltd. in IT APPEAL NO. 882 (MUM.) OF 2017 [AY 2012-13] dated 07.09.2018 has rendered decision in identical circumstances. Extract of decision is as under: Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Comparables and adjustments/Adjustment - Corporate guarantee fee) -Assessment year 2012-13 - During relevant year, assesses furnished corporate guarantee in respect of loan availed by its foreign AE - Assessee did not charge any corporate guarantee fee - In transfer pricing proceedings, TPO opined that assesses should have charged guarantee commission of 2.25 per cent - Accordingly, certain addition was made to assessee's ALP - Commissioner (Appeals) following order passed by Jurisdictional High Court in case of CIT v. Everest Kento Cylinders Ltd. [2015] 58 taxmann.com 254/232 Taxman 307/378 ITR 57 (Bom), held that guarantee commission at rate of 0.5 per cent had to be charged - He thus deleted a part of addition made by TPO - Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed u/s. 36(1)(va) of the IT Act. Learned CIT(A) had deleted this addition holding that as the payments get covered u/s. 43B of the Act as they were deposited within stipulated time. 24. Against this order the Revenue is in appeal before us. 25. Upon hearing both the counsel and perusing the record, we find that this issue is covered in favour of the assessee by the following :- Decision of Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd. vide order dated 25.11.2009 in Civil Appeal No. 7771 of 2009 and Hon'ble Bombay High Court decision in the case of CIT Vs. Ghatge Patil Transports Ltd. vide order dated 14.10.2014 in Income Tax Appeal No. 1002 of 2012. Accordingly, we confirm the order of learned CIT(A) on this issue. Respectfully following the precedent we uphold the deletion of the disallowance. 26. The assessee has also filed additional ground. The ground relates to disallowance of education cess and secondary and higher education cess u/s. 40(a)(ii) of the I.T. Act. 27. We admit this additional ground on the touchstone of Hon'ble Supreme Court decision in the case of National Thermal Power Co. Ltd. vs Commissioner Of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e act clearly specifies that gain is to be treated as short term capital gain , there cannot be any dispute about the rate of tax applicable for short term capital gain. 33. In rejoinder learned Counsel of the assessee placed reliance upon the decision of Hon'ble Bombay High Court in the case of CIT Vs. V.S. Dempo Company Ltd. (387 ITR 354) and decision of Hon'ble Supreme Court in the case of CIT Vs. M/s. Manali Investment (ITA No. 1658 of 2012). He submitted that both Courts have considered this issue and have found that deeming provision of this section cannot be extended beyond the method of computation of cost of acquisition involved. 34. We have considered the submissions and we may gainfully referred to provisions of section 50 of the I.T. Act :- Special provision for computation of capital gains in case of depreciable assets. 50. Notwithstanding anything contained in clause ( 42A ) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as 'the Act'), it was admittedly a long-term capital asset. Further the Assessing Officer rejected the claim for exemption under Section 54E of the Act on the ground that the assessee had claimed depreciation on this asset and, therefore, provisions of Section 50 were applicable. Though this was upheld by the learned Commission of Income Tax (Aappeals), the Income Tax Appellate Tribunal allowed the appeal of the assessee herein holding that the assessee shall be entitled for exemption under Section 54E of the Act. The High Court has confirmed the view of the Commissioner of Income Tax (Appeals) and dismissed the appeal of the Revenue. While doing so the High Court has relied upon its own judgment in the case of The Commissioner of Income-tax, Mumbai City-II, Mumbai vs. ACE Builders Pvt. Ltd. [(2005) 3 Bom CR 598]. The High Court has observed that Section 50 of the Income Tax Act which is a special provision for computing the capital gains in the case of depreciable assets is not only restricted for the purposes of Section 48 or Section 49 of the Act as specifically stated therein and the said fiction created in sub-section (1) (2) of Section 50 has limited app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cifically provides that where capital gain arising on transfer of a long term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under Section 54E of the I.T. Act cannot be denied to the assessee on account of the fiction created in Section 50. We are in agreement with the aforesaid view taken by the High Court. We are informed that the Gujarat High Court as well as Guahati High Court have also taken the same view in the following cases: 1. Commissioner of Income tax V. vs. Polestar Industries [2013 SCC online Gu 5517] 2. Commissioner of Income Tax vs. Assam Petroleum Industries (P.) Ltd. [(2003) 262 ITR 587]. We are also informed that against the aforesaid judgments no appeal has been filed. In view of the foregoing, we do not find any merit in the instant appeal which is, accordingly, dismissed. 38. We may gainfully refer to the decision of Hon'ble Supreme Court in the case of CIT Vs. M/s. Manali Investment (ITA no. 1658 of 2012) in which Hon'ble Supreme Court has held as under :- 1. In this appeal by the Revenue for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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