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2016 (12) TMI 1659 - ITAT MUMBAIClaim of deduction under section 80IA on electricity generation unit at Ankleshwar - Held that:- Keeping in view the provisions of section 80IA(8) electricity consumed by the other business of the assessee has to be construed as sales of electricity by eligible undertaking. As rightly observed by the learned Commissioner (Appeals), the Assessing Officer has not doubted that Ankleshwar plant is otherwise eligible for deduction under section 80IA. He has denied assessee’s claim of deduction under section 80IA only for the reason that electricity generated by the Ankleshwar Unit was used for captive consumption in other businesses of the assessee. Therefore, we uphold the order of the learned Commissioner (Appeals) on the issue thereby dismissing the ground raised by the Department. Quantum of deduction allowable u/s 80IA - assessee has computed the cost of electricity generated and consumed for captive used at ₹ 6.17 per unit, the rate at which it purchases electricity from GSEB - Held that:- Considering the fact that assessee has computed income from electricity generated and consumed on captive basis by applying the rate at which it purchases from GSEB. The deduction claimed under section 80IA, should be allowed. We order accordingly. Assessee’s grounds are allowed and Department’s ground is dismissed. Addition made on account of transfer pricing adjustment - applying a method of segregation - Held that:- As per definition of “transaction” under rule 10A(d) it includes a number of closely linked transaction. There is no doubt, all the products sold by the assessee to its A.E. are coming within the genus pesticides. Therefore, the international transactions relating to sale of all the products are closely linked hence, the overall margin of the international transaction with the A.E. has to be considered for the purpose of determining the arm's length price. The learned Commissioner (Appeals) is also convinced that over all margin shown by the assessee is at arm’s length. That being the case, the transfer pricing adjustment cannot be made in respect of one product sold by the assessee by applying a method of segregation. Disallowance made under section 14A r/w rule 8D - Held that:- The fact that assessee was having substantial interest free funds available with it to take care of the exempt income yielding investment has not been disputed by the Departmental Authorities. Therefore, applying ratio laid down by the Hon'ble Jurisdictional High Court in HDFC Bank Ltd. v/s DCIT, [2016 (3) TMI 755 - BOMBAY HIGH COURT] and CIT v/s HDFC Bank Ltd. v/s DCIT, [2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that no disallowance of interest expenditure under rule 8D(2)(ii) can be made. As far as disallowance of administrative expenditure under rule 8D(2)(iii) is concerned, it is the contention of the assessee that one of the employee is looking after the investment activity. Therefore, the salary cost of the employee has already been disallowed by the assessee. We have noted, in assessment year 2007-08, the Tribunal in assessee’s own case has held 2% of the dividend income earned by the assessee to be a reasonable disallowance under section 14A
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