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2016 (11) TMI 1671 - AT - Income TaxTP Adjustment - upward adjustment of notional guarantee fees made by AO u/s 92CA - HELD THAT:- We find that this issue is now covered, in favour of the assessee, by a decision of the coordinate bench in the case of Siro Clinpharm Pvt Ltd Vs DCIT and vice versa [2016 (5) TMI 633 - ITAT MUMBAI] . While holding that no arm’s length price adjustment can be made in the hands of the assessee, on respect of corporate guarantees issued without incurring any costs, As amendment in Section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1st April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of Section 92 B have no application in the matter. For this reason also, the impugned ALP adjustment must stand deleted. See ANSAL LAND MARK TOWNSHIP (P) LTD.[2015 (9) TMI 79 - DELHI HIGH COURT]- Decided in favour of assessee. Disallowance u/s 14A - as per assessee no expenditure was incurred to earn such exempt income - HELD THAT:- We are inclined to accept the plea of the assessee to the extent that no part of interest expenses can be disallowed under section 14A inasmuch as the assessee indeed had interest free funds much in excess of investments yielding tax exempt income. Because of an inherent flaw in the formulae set out in rule 8D(ii), as noted by a coordinate bench in the case of ACIT Vs Champion Commercial Co Ltd [2012 (10) TMI 24 - ITAT, KOLKATA] and as approved by Hon’ble Delhi High Court in the case of PCIT Vs Bharti Overseas Pvt Ltd [2015 (12) TMI 1423 - DELHI HIGH COURT] application of this formulae does give incongruous result inasmuch as when no part of interest bearing funds are employed in investments yielding tax exempt income, there cannot be any disallowance of interest expenses. When assessee an has interest bearing as also interest free funds available to him, as long as interest free funds are cover to such investments, it cannot be assumed that interest bearing funds are used for the purpose of tax exempt investments. The presumption thus is in favour of the assessee as a matter of routine, and unless it is proved to be incorrect. Accordingly, disallowance is to be deleted. - Decided in favour of assessee. Disallowing advances written off as bad debts in the books - HELD THAT:- AO has proceeded on the assumption that the deduction is claimed as bad debts, and it was for this reason that he disallowed the claim on the ground that the related income is not shown to have been included in income of the earlier years. These small amounts have stated to become unrecoverable in the course of carrying on of the business. Given the facts of this case, and clear position that deduction was claimed for the business loss, the objection taken by the Assessing Officer was clearly unwarranted. The impugned disallowance cannot, therefore, be sustained - bearing in mind smallness of the amounts written off, we deem it and proper to delete the impugned disallowance. - Decided in favour of assessee.
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