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2019 (2) TMI 278 - AT - Income TaxDisallowance u/s 14A - Held that:- It is legally accepted position that the provisions of rule 8D is not applicable to the impugned assessment year. Therefore, what is necessary to examine is, whether the disallowance made @ 5% of the exempt income earned during the year is reasonable. Notably, while deciding identical issue in assessee’s own case for assessment year 1999–2000 to 2002–03, [2017 (9) TMI 723 - ITAT MUMBAI] the Tribunal has restricted the disallowance under section 14A of the Act to 1% of the exempt income earned during the year. Thus we direct the Assessing Officer to compute the disallowance under section 14A of the Act @ 1% of the exempt income earned during the previous year. This ground is partly allowed. Disallowance of expenditure incurred for issue of Foreign Currency Convertible Notes (FCCN) - Nature of expenditure - AO has disallowed assessee’s claim on the reasoning that FCCNs issued by the assessee are in the nature of convertible debentures, hence, expenditure related to issue of such debenture is capital in nature - Held that:- As decided in assessee's own case irrespective of the fact whether the debenture issued is convertible or non–convertible, it is in the nature of loan. Therefore, any expenditure incurred in relation to issuance of such debenture is allowable as expenditure. There being no material difference in facts in the impugned assessment year, the aforesaid decision of the Co–ordinate Bench clearly applies to the facts of the present appeal. Therefore, respectfully following the decision of the Co–ordinate Bench referred to above, we delete the addition made by the Assessing Officer. Disallowance of provision for warranty expenses - Held that:- We have considered rival submissions and perused material on record. Notably, no specific disallowance has been made by the Assessing Officer on this account in the final assessment order. Therefore, the issue is of mere academic nature. In view of the aforesaid, we do not intend to delve further into the issue. Accordingly, this ground is dismissed. Disallowance of write back provisions for doubtful debt - AO disallowed assessee’s claim simply on the ground that it was not made by way of a revised return of income - Held that:- in course of assessment proceedings, the assessee did make the claim by placing relevant facts to indicate that write back of provision offered to tax was inadvertently made at a higher figure instead of actual amount accruing as income to the assessee. As per the settled principle of law, real income of the assessee has to be taxed. If by mistake or inadvertence the assessee has offered more than the actual income, assessee’s claim has to be considered on the basis of facts and material brought on record. Therefore, the departmental authorities, in our view, were not justified in rejecting assessee’s claim on technical ground. Accordingly, we restore this issue to the Assessing Officer for verifying assessee’s claim. Disallowance of interest on refund u/s 244A - Held that:- t is the claim of the assessee that on the basis of intimation issued under section 143(1) of the Act the assessee has offered the amount of ₹ 44,89,065, as income instead of ₹ 24,81,284 actually granted to the assessee. We direct the Assessing Officer to verify the facts relating to the claim of the assessee and decide the issue after due opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance of deduction of excise duty paid on vehicle held as stock–in–trade as on 31st March 2006 - specific claim of the assessee that since the assessee has actually paid the excise duty on vehicles lying in stock, it is allowable under section 43B - Held that:- AO has disallowed assessee’s claim simply on the reasoning that such claim was not allowed in the earlier assessment years. He has not discussed anything about the applicability of the ratio laid down in the decisions of Berger Paints (2004 (2) TMI 4 - SUPREME COURT) and Bharat Petroleum Corporation Ltd. [2001 (3) TMI 20 - BOMBAY HIGH COURT]. If as per the ratio laid down in the aforesaid decisions, assessee’s claim is allowable, it cannot be disallowed merely for the reason that such deduction was never allowed to the assessee earlier. Therefore, we direct the Assessing Officer to decide the issue following the ratio laid down in the decisions referred to above. Transfer pricing adjustment - rate at which the assessee should have charged interest on the loan advanced to its AE viz. TTUS - Held that:- Various workings furnished by the learned Authorised Representative in the written notes as well as the submissions made justifying the bench marking of the interest charged at LIBOR Plus 15 basis points requires re–consideration keeping in view the fact, whether the rate provided in the RBI Master Circular dated 1st July 2005 can at all be applicable as in case of the assessee it is a loan advanced and not loan availed. Since, the aforesaid aspects have not been properly examined and various workings furnished in the written notes have not been looked into by the departmental authorities, we are inclined to restore the issue to the Assessing Officer for fresh consideration. Adjustment made to book profit computed under section 115JB - Held that:- Any adjustment to the income of the assessee which is not in conformity with the directions of the DRP is invalid and not in strict compliance to the provisions of section 144C(13) of the Act. The very fact that section 144C(13) of the Act mandates the Assessing Officer to complete the assessment without affording any opportunity of being heard to the assessee indicates that while completing the final assessment the Assessing Officer has to implement the directions of the DRP only. If the Assessing Officer does not make any adjustment under section 115JB of the Act in the draft assessment order and only makes such adjustment in the final assessment order, the assessee is deprived of challenging such adjustment before the DRP. Therefore, the right to objection conferred on the assessee under the provisions of section 144C of the Act is taken away which cannot be the intention of the legislature. AO could not have made the adjustment to the book profit computed under section 115JB of the Act in the final assessment order. Adjustment made on account of provision of wealth tax and disallowance under section 14A of the Act could not have been made by the Assessing Officer while computing the book profit under section 115JB of the Act, since such adjustments are not permitted under Explanation–1 to section 115JB of the Act. Short grant of TDS credit - Held that:- We direct the Assessing Officer to verify the facts and grant actual credit for TDS.
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