9911796707
TMI Blog2022 (5) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... ertakings of the Appellant, while computing the deduction u/s 80IC/ 801E of the Act: > Miscellaneous Expenses > Conveyance and Travelling Expenses > Rent. Rates and Taxes > Advertisement and Publicity > Schemes and Promotions 3. The learned DRP erred in holding that the provisions of Section 14A of the Act were applicable in the case of the Appellant, since the dividend from shares/units of mutual funds is subjected to tax in the hands of the payer under section 115- O/115- R of the Act and as the Appellant receives an amount after the tax has been paid, it cannot be said that such dividend income is not chargeable to tax under the Act and, hence, the provisions of Section 14A are not attracted in the case of the Appellant. 4. The learned Dispute Resolution Panel erred in confirming the action of the Assessing Officer in making a disallowance under Section 14A of the Act in the absence of exempt income. 5. The learned Dispute Resolution Panel erred in holding that the interest expenditure on borrowings utilized for the purpose of the business activities of the Appellant was not allowable under Section 36(1)(iii) of the Act and in disallowing interest expenditure und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the credit rating of the AE is not equal to the credit rating of the Appellant Company and therefore a higher risk is involved while giving a guarantee on behalf of the AE's. 13. The teamed Dispute Resolution Panel erred in holding that the guarantee commission rate charged by a third party bank to the Appellant Company cannot constitute a comparable rate. 14. The learned Dispute Resolution Panel erred in holding without any basis that the arm's length rate of corporate guarantee commission in respect of the guarantees given by the Appellant Company in favour of its Associated Enterprises is at 2% per annum. 15. The learned Dispute Resolution Panel erred in confirming the action of the TPO in relying on the Bank Guarantee rates and information obtained from various banks a1s. 133(6) of the Act for the purpose of benchmarking the Corporate Guarantee given by the Appellant on behalf of the its Associated Enterprises, without considering the facts of the case. 16. Without prejudice to the above grounds 11 to 15, and in any event, the Appellant submits that the transfer pricing adjustment made in respect of corporate guarantee given by the Appellant Company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143(2) and 142(1) of the Act along with the questionnaire are issued. In compliance the Ld.AR of the assessee appeared from time to time and submitted the details. The A.O on perusal of the facts found that the assessee has international transactions with its associate enterprises (A.E.) exceeding Rs.15crores, therefore the matter was referred to the transfer pricing officer (TPO). The TPO upon the receipt of the information from the AO and form.no 3CEB has issued notice u/s 92CA(3) of the Act along with questionnaire to submit the details and documents in support of arm's length price (ALP). The T.P.O find that the assessee has provided corporate guarantees to the lenders that enabled its overseas subsidiaries to borrow the funds. The TPO has dealt on the methodology and the submissions of the assessee and benchmarked the rates applied and charged by the banks for giving corporate guarantee, the TPO has dealt on facts and the bank guarantee rates at page 8 to 10 of the order. Finally, the TPO has relied on the judicial decisions on the several approaches for determination of ALP in the corporate guarantee by the Indian companies and applying Rule 10B of the I T Rules, which lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U/sec115JB of the Act of Rs. 7,60,92,72,849/- and passed the order u/s 143(3) r.w.s 144C(1) of the Act dated 25.02.2016. 5. Against the draft assessment order the assessee has filed objections in Form-35A before the DRP. Whereas the DRP has dealt on the objections and issued specific directions and passed the order u/s 144C(5) of the Act on 31.10.2016.The AO has passed the order considering the transfer pricing adjustment, the DRP directions, reallocation of expenses and CBDT Circular and disallowance u/s 14A of the Act and determined the total income under the normal provisions of Income Tax of RS. 475,92,23,316/- and the book profits u/s 115JB of the Act of Rs. 760,76,22,849/- and passed the order u/s 143(3) r.w.s 144(C)(13) of the Act dated 25.01.2017. Aggrieved by the order, the assessee has filed an appeal before the Hon'ble Tribunal. 6. At the time of hearing the Ld. AR made elaborate submissions on the grounds of appeal pertaining to (i) the DRP/A.O. has erred in computing deduction u/sec80IC of the Act by excluding certain items forming part of operational income.(ii) the DRP/A.O. erred in reallocating 50% of administrative and selling expenses of non eligible units to el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's own case as referred to above, we restore the issue to the Assessing Officer for fresh adjudication with similar directions. The Assessing Officer must decide the issue after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purposes. We restore the disputed issues to the file of the assessing officer with the similar directions and allow the ground of appeal for statistical purpose. 8. Whereas on the second disputed issue, with respect to reallocating 50% of certain administrative and selling and marketing expenses of the non eligible units to the eligible units while computing the deduction u/s 80IC of the Act, the DRP has erred in confirming the action of the AO. We find the issue is covered in assessee's own case in ITA No. 1102/Mum/2015 for the A.Y 2010-11 dated 19.06.2019 at page 5 to 7, Para 2.4 to 4.1 read as under: 2.4 Proceeding further, the balance claim of deduction of Rs.14.74 Crores was also denied on the basis of re-allocation of certain expenses like miscellaneous expenses, conveyance & travelling, rates and taxes, advertising and publicity and schemes and promotions, as done in the earlier years. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the assessee's own case for the A.Y 2011-12 in ITA No. 1074 & 1003/Mum/2016 dated 25.02.2020 were the issue was restored to the file of the A.O. dealt at page 7 & 8 Para 13 read as under: 13. We have considered rival submissions in the light of the decisions relied upon and perused the material on record. As discussed earlier, it is the specific contention of the learned Sr. Counsel for the assessee before us that during the year under consideration, the assessee has not earned any exempt income whatsoever and the dividend income referred to by the Assessing Officer was earned from a foreign company and offered to tax in India. In our considered opinion, if in the year under consideration the assessee has not earned any exempt income, no disallowance under section 14A r/w rule 8D can be made. Therefore, the Assessing Officer is directed to delete the disallowance after verifying assessee's claim. Even otherwise also, it is now fairly well settled that while computing book profit, the Assessing Officer cannot make any adjustment by invoking the provisions of section 14A of the Act. The only adjustment which the Assessing Officer can make is as per Explanation-1(f) to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical issue in assessee's own case for the assessment year 2010-11 in appeal being IT(TP)A no.1899/Mum./ 2015, dated 5th September 2019. Facts being identical, respectfully following the aforesaid decisions of the Co-ordinate Bench in assessee's own case, though, we hold that the provision of corporate guarantee to the AEs is an international transaction within the meaning of section 92B of the Act, however, we are of the view that guarantee commission charged by the assessee @ 0.5% is at arm's length requiring no further adjustment. Therefore, we delete the adjustment made by the Transfer Pricing Officer and confirmed by learned DRP. Ground no.9, is dismissed and grounds no.10 to 15, are allowed. 12. We fallow the judicial precedence and direct the TPO/AO to restrict the corporate guarantee commission charged by the assessee as against the 2% of the actual barrowed amount considered for ALP by the TPO. 13. The Ld.AR made submissions on interest on delayed debtors/outstanding receivables from the AE. The Ld.AR emphasized that the export sales to AEs and non-AEs are similar and the assesssee does not charge any interest from the AEs as well from the Non-AEs, and receives the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
