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2019 (5) TMI 1720 - AT - Income TaxTP Adjustment - issuance of corporate guarantees fees - whether it did not have any bearing on profits, incomes, losses or assets of the appellant and therefore it was not covered within the purview of 'international transactions' under Section 92B ? - HELD THAT:- We note that the assessee has extended this corporate guarantee as a shareholder activity hence the adjustment should not be made. The primary object of the assessee is to help the subsidiary company and protect its interest and there is no object of the assessee company to earn the interest income by furnishing the corporate guarantee to the associated enterprises. We note that in the judgment of the Co-ordinate Bench of ITAT Ahmadabad, in the case of Micro Ink Limited vs. ACIT [2015 (12) TMI 143 - ITAT AHMEDABAD] wherein has held that corporate guarantee does not constitute international transaction as per section 92B of the Act as amended by the Finance Act, 2012. We rely on the judgment of the Co-ordinate Bench of ITAT, Delhi in the case of Bharti Airtel Ltd. vs. ACIT [2014 (3) TMI 495 - ITAT DELHI] wherein the definition of international transaction in view of the amendments, vide Finance Act, 2012, had been discussed and it was held that the provision of corporate guarantee is not an international transaction. Thus provision of corporate guarantee is not an international transaction. - Decided in favour of assessee Addition u/s 14A read with Rule 8D - HELD THAT:- As relying on M/S. REI. AGRO LTD. [2014 (4) TMI 713 - CALCUTTA HIGH COURT] we direct the assessing officer to compute the disallowance under Rule 8D (2) (iii) of the Income Tax Rules, by taking into account dividend bearing securities. Ground raised by the assessee, are treated to be allowed for statistical purposes. MAT - Increasing the book profit u/s 115JB as computed by way of disallowance u/s 14A read with Rule 8D - HELD THAT:- Since there is no mention of Section 14A in the said Explanation 1 to Section 115JB, the same cannot be added to re-determine the quantum of "Book Profit". The provisions of section 115JB relating to computation of book profit are amply clear and unambiguous. These provisions do not leave any room for adjustment by the assessing officer other than those mentioned in Explanation 1 to section 115JB to the net profit reflected in the accounts of any assessee and adjustment by way of disallowance u/s 14A is not included in the said explanation. This tribunal’s discussion in VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] has already settled this issue in assessee’s favour. Therefore, such upward revision in the sum of ₹ 58,27,584/- to the book-profit by making disallowance section 14A read with rule 8D is not permitted, therefore we delete the addition Nature of receipt - incentive/subsidy received from the Government of Bihar and Orissa for setting up new industry in the respective states in the form of reimbursement of VAT - capital or revenue receipt - HELD THAT:- Subsidy has been provided by the Government of Bihar and Orissa to set up new project in specified area, to purchase the plant and machinery therefore the purpose and nature of subsidy should be considered.Considering the nature of the subsidy, we are of the view that it is on account of capital therefore, it should not be treated as revenue income of the assessee. See SHYAM STEEL INDUSTRIES LIMITED [2018 (5) TMI 702 - CALCUTTA HIGH COURT] wherein the "purpose test" has been defined in the most recent judgment of the Hon`ble Supreme Courtin CIT v. Chaphalkar Brothers [2017 (12) TMI 816 - SUPREME COURT] where the subsidy in the form of exemption from payment of entertainment duty by newly set-up multiplex theatres for a certain number of years was regarded as a capital receipt by virtue of the very nature and purpose of the subsidy. In the assessee`scase being available only to new units and units which have undergone an expansion, the real purpose of the incentive in this case has to be seen as a capital subsidy and has to be regarded, as such, as a capital receipt and not a revenue receipt. Therefore, we direct the AO to treat the subsidy as a capital receipt. Undisclosed receipts - mere appearance of information in ITS data of AIR - HELD THAT:-Issue in this ground is related to reconciliation exercise. We direct the assessee to file the reconciliation statement of AIR data versus data in the books of the assessee. We also direct the assessing officer to examine the reconciliation statement of AIR data versus data in the books of the assessee and adjudicate the issue in accordance with law. Statistical purposes, this ground of the assessee is treated to be allowed.
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