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2018 (12) TMI 1725 - ITAT MUMBAIALP adjustment - international transactions of sale of polyester film products by the appellant to its associated enterprises ('AEs') applying Transactional Net Margin Method ("TNMM") - HELD THAT:- As carefully gone through the orders of the Tribunal, for the A.Y 2006-07 and 2007-08 in Assessee's own case and found that exactly similar additions so made by the TPO has been deleted by the Tribunal. The facts and circumstances during both the assessment yea₹ 2010-11 and 2011-12 under consideration are same, we therefore respectfully follow the same and do not find any reason to interfere with the order of the CIT(A) for deleting the addition made on account of transfer pricing adjustment. Disallowance made u/s 43B in respect of payment of interest by issue of equity shares - HELD THAT:- Respectfully following the order of the Tribunal in the case of sister concern as well as RATHI GRAPHICS TECHNOLOGIES LTD. [2015 (8) TMI 376 - DELHI HIGH COURT] we do not find merit for the disallowance of interest u/s 43B, which was paid by issue of equity shares. As per our considered view the conversion of interest liability into share capital would lead to extinguishment of the liability whereas its conversion into borrowings or loans would simply lead to change in the nature of the liability. Thus, Courts have conceded with the appellant‟s view that conversion of interest liability into share capital would indeed be treated as “actual payment‟ of interest for the purposes of Sec. 43B. Disallowance made u/s 14A while computing book profit u/s 115JB - HELD THAT:- The issue is covered in favour of the assessee by the order of Special Bench, ITAT Delhi in the case of Vireet Investment [2017 (6) TMI 1124 - ITAT DELHI] . Respectfully following the proposition laid down in the case of above said case, we do not find any merit for the addition of disallowance made u/s 14A of the Act, while computing book profit u/s 115JB of the Act. Disallowance u/s 14A r.w.r. 8D - assessee has argued for exclusion the investments made in the group concerns while computing the disallowance u/s 14A - HELD THAT:- We do not find any merit in this contention of the Ld. AR in so far as Hon‟ble Supreme Court recent decision in the case of Maxoup Investment [2018 (3) TMI 805 - SUPREME COURT] have held that even investments made in group concern as strategical investment is also liable for disallowance u/s 14A of the Act. We confirmed the action of the A.O with regard to inclusion of strategical investment / investment made in group concerns while working out average investment on which disallowance u/s 14A r.w.r. 8D of the IT Rules is warranted. We direct the A.O to restrict the disallowance u/s 14A in all the years to the amount of exempt income earned by the appellant during the year under consideration. We also find support for this contention in case of Daga Global Chemicals Vs. ACIT [2015 (1) TMI 1204 - ITAT MUMBAI] wherein he assessee had appealed against the excessive disallowance made u/s 14A - ITAT subsequently held that even if disallowance u/s 14A of the Act is made, the same shall not exceed the amount of exempt income earned. Depreciation on revalued assets in computing the book profit u/s 115JB - HELD THAT:- This plea was taken by the assessee first time before the A.O during the course of assessment without filing revised return, accordingly A.O declined same by following the decision of Hon‟ble Supreme Court in the case of Goetz (India) Pvt Ltd. [2006 (3) TMI 75 - SUPREME COURT] . Following the reasons given herein above with respect to disallowance on depreciation on revalued assets while computing book profit u/s 115JB of the Act which was also filed before the A.O during the course of assessment proceedings. We restore the matter back to the file of the A.O for deciding as per law we direct accordingly.
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