Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 30 - AT - Income TaxUpward adjustment on account of corporate guarantee commission - HELD THAT:- As decided in own case [2019 (10) TMI 73 - ITAT MUMBAI] arm's length price of guarantee fee can reasonably be fixed @ 0.5%. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals). Arms Length Price adjustment to income from interest loan advances to subsidiaries - HELD THAT:- In case of average period of loan is more than five years, the rate is 6 month LIBOR plus 250 basis points may be adopted. The Hon’ble jurisdictional High Court in CIT Vs Tata Autocomp [2015 (4) TMI 681 - BOMBAY HIGH COURT] held that where the assessee advances loans to its associated enterprises (AE’s) situated in Germany, rate of interest was to be determined on the basis of rate prevailing in Germany where loan has been consumed. Considering the decision of jurisdictional High Court the AO/TPO is directed to recompute the interest on the basis of rate prevalent in the countries where loan was received. In the result the ground of appeal raised by the assessee is allowed and resultantly the ground of appeal raised by the revenue has become infructuous. Notional interest income on infusion of additional funds in wholly owned subsidiary - HELD THAT:- CIT(A) after considering the submissions of concluded that the delay in receipt of share is short and as per Circular of Reserve Bank of India, the interest would be LIBOR plus 150 and directed the TPO/AO to charge interest for 6 month at LIBOR plus 150 basis point for the period between the date of remittance and by adding 15 days and the date of allotment of shares. The coordinate bench of this Tribunal in ITO Vs Sterling Oil Resources (P) ltd [2016 (4) TMI 163 - ITAT MUMBAI] held that adjustment on account of notional interest on share application money, which had been recharacterised as loan, merely because there was delay in allotment of share, was not sustainable in law. Further, this Tribunal in Aditya Birla Minacs Worldwide Ltd [2016 (8) TMI 1417 - ITAT MUMBAI] also took the same view that share application money cannot be treated as loan amount; merely there is delay in issuance of shares by subsidiary. Considering the consistent view of the Tribunal, we are of the view that share application money cannot be treated as loan amount only because of delay in issuance of shares by its subsidiary. Allocation of R & D expenses to the 80IB and 80IC units - HELD THAT:- On show cause notice on the issue, the assessee contended that similar deduction is allowed in the earlier years by Tribunal and furnished the copy of the orders for earlier years. The assessing officer took his view that R&D expenditure to the industrial undertaking on which deductions under section 80IB & 80IC are claimed, on which the expenditure is not contributed to the earning of the income for which deduction is claimed. The assessing officer allocated interest cost to the units on turnover basis. The ld CIT(A) granted relief to the assessee by following the order of the Tribunal for various earlier years. Considering the consistent view of the Tribunal on identical set of facts and respectfully following the view of the Tribunal in the preceding assessment years in assessee's own case, we uphold the decision of ld. CIT(A). in the result the Ground of appeal is dismissed. Weighted deduction under section 35(2AB) - HELD THAT:- As decided in own case [2019 (10) TMI 73 - ITAT MUMBAI] restore the issue to the Assessing Officer for adjudication afresh. TDS u/s 195 - Disallowance u/s 40(a)(ia) for want of TDS for payments made to non-residents on account for pilot bio study, clinical research - HELD THAT:- AO after issuing show cause notice disallowed the expenditure by taking view that similar expenditure was disallowed in earlier years as the assessee is liable to deduct tax under section 195. The ld CIT(A) deleted the additions by following the order of Tribunal in AY 2007-08, wherein it was payment to non-resident for conducting bio equivalence study are not taxable in India and not subject to withholding tax under section 195 of the Act. We have seen that similar view was taken by Tribunal in AY 2006-07 by following the order of Tribunal in AY 2007-08. Therefore, we affirm the order of ld CIT(A). In the result we do not find any merit in the ground of appeal raised by the revenue and the same is dismissed. Addition of Marked to Market loss for calculation of book profit under section 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed that marked to market loss are on account of restatement of trading asset and liability and its ascertainment and computation is not disputed by assessing officer. CIT(A) also held that after the decision in CIT Vs Woodward Governor India (P) ltd. [2009 (4) TMI 4 - SUPREME COURT] marked to market loss is allowable deduction. And it cannot be termed as unascertained liability as has been provided in clause (c) of Explanation-1 to section 115JB(2). Accordingly cannot be added back to the book profit. No contrary fact or law is brought to our notice to arrive on other finding. Addition on account of provision of gratuity for calculation of book profit under section 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed provisions of gratuity is based on the actuarial valuation and therefore ascertained liability. The assessing officer has not disputed actuarial valuation and cannot be treated unascertained liability as has been provided in clause (c) of Explanation-1 to section 115JB(2). No contrary fact or law is brought to our notice to arrive on other finding. Therefore, we affirm the action of ld CIT(A) and dismiss the ground of appeal raised by the revenue. Disallowance of section 14A for computation u/s 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed the provision of section 14A cannot be imported to clause (f) of Explanation 1 to section 115JA. The Special bench of Delhi Tribunal recently in ACIT vs. Vireet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] held the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D. Thus, considering the recent decision of the Special Bench of Tribunal we uphold the order of the ld CIT(A). In the result this ground of appeal is dismissed. Disallowance u/s 14A - HELD THAT:- The Hon’ble Bombay High Court in Nirved Traders Pvt Ltd [2019 (4) TMI 1738 - BOMBAY HIGH COURT] held that the disallowance under section 14A be restrict to the exempt income.
|