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2018 (11) TMI 1744 - AT - Income TaxTP Adjustment - interest rate charged by the appellant on the loans granted to AE - LIBOR (US) rate application - HELD THAT:- The assessee had indeed charged its associates enterprises the interest in question @ 6%. The lower authorities had made the impugned adjustment by computing ALP thereupon @ 8.73%. The assessee had adopted Comparable Uncontrolled Price (CUP) method for its above benchmark. The CIT DR fails to dispute the clinching fact that the impugned adjustment is well within the tolerable margin of +/.5% relevant to the impugned assessment year. The assessee has further proved the average US Dollar LIBOR (US) during the relevant financial year to be 1.13% only. The question as to whether foreign currency denominated loan are to be benchmarked as per LIBOR or not stands answered in assessee’s favour as per a catena of case laws (supra). We hold in these peculiar facts and circumstances that the CIT(A) has rightly deleted the impugned loan interest ALP adjustment in all these three years. Mr. Srihari submits at this stage that the CIT(A) ought to have remanded the case back to the TPO for appropriate adjudication of all the LIBOR (US) rate. We find no force in Revenue’s instant half-hearted argument in absence of any specific particulars challenging correctness of CIT(A)’s findings on the LIBOR rates in issue. - Decided against revenue ALP of corporate guarantee(s) - International transaction or not? - HELD THAT:- We find that this tribunal’s co-ordinate bench’s decision in EIH Ltd. [2018 (5) TMI 1853 - ITAT KOLKATA] holds that the said explanations applies from financial year 2012-13 only without having any retrospective effect. We are also informed that the department’s special leave petition on the very issue stands admitted its honble apex court. We find no merit in the instant plea as mere admission of a special leave petition does not amounted to change in law. We therefore conclude that CIT(A) has rightly treated the corporate guarantee in question to be not in the nature of international transactions in all three assessment year(s). The Revenue failed in its corresponding substantive ground in these three appeal(s) therefrom. Interest and administrative expenditure disallowance u/s 14A r.w.s. 8D - HELD THAT:- Assessee had successfully proved its non interest bearing funds to be much more than investments as per the relevant compilation in preceding paragraph. The Revenue fails to dispute all these clinching figure(s) during the course of hearing. Coupled with this, we find that the CIT(A) has followed this tribunal’s decision in REI Agro Ltd. vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] regarding administrative expenditure disallowance that only dividend income yielding investment are to be considered has been affirmed in hon'ble jurisdictional high court. We conclude in these facts and circumstances that the CIT(A) has rightly deleted the impugned 14A r.w.s 8D disallowance regarding proportionate interest and administrative expenses in both assessment year(s) of 2009-10 and 2010-11. Prior period expenses disallowance - HELD THAT:- Revenue's sole argument during the course of hearing is that the assessee follows mercantile system of accounting and therefore, it was supposed to claim the impugned expenditure in the year of accrual only. He fails to rebut the crucial findings of fact that the assessee had successfully proved during the course of lower appellate proceedings that the impugned liability crystallized during the relevant previous year only. This is further an instance of revenue’s neutral issue since assessee has been assessed at the maximum marginal rate in both in the year of accrual as well as in the impugned assessment year. We therefore decline the Revenue’s instant third substantive ground Characterization of income - compensation received from M/s Danone as a capital receipt not chargeable to tax - assessee is the owner of the relevant “Tiger” trademark and therefore the Assessing Officer had rightly taxed the impugned receipts as long term capital gains (LTCG) as deleted in CIT(A)’s - HELD THAT:- We find no merit in Revenue’s instant arguments since CIT(A)’s detailed discussion in light of the relevant agreement clause(s) has made it clear that the assessee had received the impugned settlement sum in lieu of surrendering its right to sue than former any transfer giving rise to capital receipt only as held in hon'ble Gujarat high court’s decision in Baroda Cement & Chemicals Ltd. [1985 (12) TMI 55 - GUJARAT HIGH COURT] followed by various tribunals’ decisions. We thus conclude that CIT(A) has rightly held the assessee to have received the impugned sum not in lieu of conceding its right to sue in foreign courts. We thus confirm the CIT(A)’s order under challenge holding the impugned receipt to be capital receipt. The Revenue fails in its instant last substantive ground as well Non deduction of TDS - payments made to the District Judge Alipore for and on behalf of Kolkata Port Trust (KTP) - HELD THAT:- Assessee’s payments made to “KPT” are on account of interlocutory directions passed in the ongoing litigation which is always subject to final outcome. The same is therefore in the nature of an interim measure to protect the interest of litigating parties. Chapter-XVII-B of the Act however prescribes TDS deduction on such amount of payments under various heads. We make it clear that there is no clarity as rightly held by the CIT(A) about the application of the TDS charging provision since the assessee has made payments in favour of district civil court registry only. We accordingly express our agreement with the CIT(A)’s findings deleting the impugned disallowance in this reason above Assessment had been erroneously framed in absence of any draft assessment order - HELD THAT:- We find no merit in assessee’s Rule 27 petition in hand at this stage since the CIT(A) has not decided the corresponding substantive ground. Rule 27’s clinching legislature expression “the respondent though he may not have appealed, may support the order appealed against on any of the grounds decided against him”. The CIT(A)’s decision on the said substantive ground forms sine qua non for filing of Rule 27 petition therefore. We accordingly reject assessee’s Rule 27 in assessment year 2010-11. Disallowance on account of short or less deduction of TDS - addition u/s 40(a)(ia) - HELD THAT:- In M/S SK. TEKRIWAL [2012 (12) TMI 873 - CALCUTTA HIGH COURT] rejecting sec. 40(a)(ia) application on account of short deduction of TDS. We conclude in these facts and circumstances that the CIT(A) has rightly granted relief to the assessee. The Revenue’s fails in its last appeal
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