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TMI Blog2025 (1) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee are allowed. Disallowance u/s. 14A r/w Rule 8D - assessee has made investment which is capable of earning income exempt from tax - AR has argued that the assessee does not have any exempt income and the A.O has made the disallowance without recording any reason - HELD THAT:- It has been consistently held by the court disallowances u/s 14A cannot exceed the exempt income. As decided in the case of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] that subsequent amendment made by Finance Act, 2022 for Section 14A of the Act by inserting non-obstante clause and explanation cannot be presumed to have a retrospective effects. Also in the case of M/s Maxivision Eye Hospital Pvt. Ltd. [ 2022 (7) TMI 1450 - ITAT CHENNAI] since the assessee has not earned any exempt income, no disallowance can be resorted by invoking the provisions of section 14A of the Act read with Rule 8D(2) of the Rules. Decided in favour of assessee. - Shri SS Viswanethra Ravi, Judicial Member And Shri Jagadish, Accountant Member For the Appellant : Shri T. Banusekar, Advocate And Shri Suraj Nahar, C.A For the Respondent : Shri A. Sasikumar, CIT ORDER PER JAGADISH, A.M : Aforesaid ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 8D in working out the disallowance u/s. 14A. 14. For that the Assessing Officer failed to appreciate that no exempt income was earned by the appellant in the impugned assessment year. 15. For that without prejudice to the above, the Assessing Officer failed to appreciate that disallowance u/s.14A read with rule 8D was not warranted as no expenditure was incurred by the appellant for earning exempt income. 16. For that without prejudice to the above, the Assessing Officer erred in applying Rule 8D on entire investments without considering the fact that all the investments did not yield any return in the form of dividend during the impugned assessment year. 17. For that without prejudice to the above, the Assessing Officer failed to appreciate that the disallowance cannot exceed the exempt income. 18. For that the appellant objects to the levy of interest u/s.234A and 234B. PRAYER For these grounds and such other grounds that may be urged before or during the hearing of the appeal it is most humbly prayed that the Hon'ble Tribunal may be pleased to: (a) Delete the downward adjustment of Rs. 5,42,65,839/- made by the Assessing Officer and / or (b) Delete the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises i.e., assessee and M/s. ASK Re Ltd., Hong Kong participate in the manner of control or capital of the other enterprises either directly or indirectly or through intermediary. Further, the provisions of Section 92A(2)(j) of the Act are not applicable to the instant case as, neither the assessee-company nor M/s. ASK Re Ltd., Hong Kong are controlled by any individual. The Ld. AR submitted that even if it is held that the provisions of Section 92A(2)(j) of the Act are applicable, the same does not operate unless the basic rule in section 92A(1) of the Act are fulfilled which has not been fulfilled in assessee s case. The Ld. AR has relied on the order of ACIT v. Veer Gems [2017] 49 CCH 0010 (Ahd-Trib.), which is subsequently confirmed by the Hon ble Supreme Court. The Ld. AR further relied on the decision of Hon ble Karnataka High Court in the case of PCIT v. M/s. Page Industries Ltd. [2021] 431 ITR 0409 (Kar.) and other case laws. 7. The Ld. Departmental Representative (DR), Mr. A. Sasikumar, CIT, on other hand, has supported the order of TPO and Ld. DRP and argued that the assessee itself in filled Form-3CEB has declared M/s. M/s. ASK Re Ltd., Hong Kong as AE and reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the order of ITAT, Mumbai in the case of Star India Pvt. Ltd. v. ACIT [2023] (6) TMI 348 (Mumbai-Trib.). 11. The Ld. DR, on the other hand, has relied on the orders of lower authorities. 12. We have heard the rival submissions, and perused the materials available on record. The assessee-company has adopted CUP method as MAM and taken M/s. ASK Re Ltd., Hong Kong as the tested party. The purchase price for M/s. ASK Re Ltd., Hong Kong from the third party and the corresponding sale price to assessee company are comparable as there is only transaction difference 1.09%, which is a mark up to AE for handling and advance payment. The TPO has rejected the CUP methods giving the reason that the assessee has neither used internal CUP nor external CUP and questioned the markup of 1.09%. We are not in agreement to TPO and Ld. DRP as the price at which assessee has purchased the goods from AE is comparable to price at which third party have sold goods and if price from independent party is available, CUP is the most appropriate method to bench mark the transaction. In view of the above, we hold that CUP method is the MAM and the adjustment made by the TPO/Ld. DRP is uncalled for. Thus, these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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