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2022 (10) TMI 255 - AT - Income TaxValidity of order passed by the TPO - period of limitation - Whether order has been passed by the TPO within the limitation prescribed u/s 92CA(3) of the Act, i.e. 60 days prior to the limitation expiry date ? - HELD THAT:- Respectfully following the above decision of M/s Emerson Electric (Company) India Pvt. Ltd [2022 (5) TMI 1460 - ITAT MUMBAI] we hold that the order passed by the Transfer Pricing Officer on 30.01.2014 is barred by limitation and therefore, the transfer pricing adjustments made in the Final Assessment Order, dated 26.02.2015 are deleted. Additional Ground No. 1 raised by the Assessee is allowed and Ground No 2 to 6 pertaining to the transfer pricing issues raised in the appeal are disposed of as being infructuous. Disallowance u/s 14A r.w.r. 8D - suo-moto disallowance offered by the Assessee - HELD THAT:- We find merit in the submission advanced on behalf of the Assessee that the benefit of decision of the Special Bench of the Tribunal in the case of Vireet investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] should be granted to the Assessee. Accordingly, we direct the Assessing Officer to verify the investment which yielded exempt income during the year and re-compute disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules by taking into consideration only the investments which yielded exempt income during the previous year for the purpose of calculating Average Value of Investment. Ground raised by the Assessee is, therefore, partly allowed. Deduction for foreign exchange loss - Assessee had claimed deduction for Foreign Exchange Loss in the return of income for the Assessment Year 2009-10 even though the same was changed to Profit & Loss Account only in the Assessment Year 2010-11 which is under consideration - Assessee made an alternate claim during the assessment proceedings of the Assessment Year 2010-11 and claimed deduction for the aforesaid Foreign Exchange Loss - HELD THAT:- Rejection of the alterative claim resulted in double disallowance in the hands of the Assessee – first disallowance made by the Assessing Officer in assessment proceedings for Assessment Year 2009-10 and second the suo moto disallowance made in return for AY 2010-11 by the Assessee. However, in appeal preferred by the Assessee for the Assessment Year 2009-10, the assessment order for the AY 2009-10 has been quashed by the Tribunal on jurisdictional issue. As a consequence therefore, the return filed by the Assessee for the Assessment Year 2009-10 stands accepted. The alternative claim of the Assessee has, therefore, become infructuous. However, the Learned Authorised Representative for Assessee submitted that the Assessee wishes to reserves the right to contest the alternative plea in case the assessment for the Assessment Year 2009-10 is restored in appeal. Deduction for foreign exchange loss on revaluation of shareholders' deposit - HELD THAT:- While preparing return of income the Assessee has treated the exchange loss on revaluation of Shareholders” Deposits as capital in nature, during the assessment proceedings the Assessee has claimed the same to be Revenue in nature while retaining the stand that the exchange gain on revaluation of Shareholders” Deposits in earlier years is capital in nature. While there is no bar on taking any inconsistent or alternative pleas, mutually repugnant and contradictory pleas which are destructive of each other cannot be permitted to be urged simultaneously. Disallowance of interest u/s 36(1)(iii) - interest bearing funds were used by the Assessee for making the investments instead of using the same for the purposes of business of the Assessee - HELD THAT:- The Assessee has been able to demonstrate before the DRP as well as in the present appellate proceedings that the investments made by the Assessee in IHMS and TIHK were made on account of commercial expediency. The investments have been made for the purpose of business as per its main objects contained in the Memorandum of Association of the Assessee-Company. The said investments were made towards its objective of owning and operating hotels. Both the companies were primarily engaged in the business of owning equity interests in entities that own, operate and/or manage hotels and hospitality business and therefore, helped in furthering the business objectives of the Assessee. Following the above decision, in Assessee”s own case for Assessment Year 1994-95 & 1998-99 to 2002-03, the Tribunal had deleted the disallowance of proportionate interest attributable to the advances given by the Assessee to its subsidiary/group companies at concessional interest rate or interest free - Decided against revenue. Addition u/s 40(a)(ia) - Whether second proviso to Section 40(a)(ia) is retrospective? - HELD THAT:- Second proviso to Section 40(a)(ia) is retrospective in nature, we note that the Tribunal had, in the case of Rajiv Kumar Agarwal [2014 (6) TMI 79 - ITAT AGRA] had held that the Second Proviso to Section 40(a)(ia)of the Act was declaratory and curative in nature and therefore, applied retrospective with effect from 01.4.2005. The aforesaid decision of the Tribunal was approved by the Hon’ble Delhi High Court in the case of CIT-1 vs. Ansal Land Mark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT]. In the case of PCIT vs. Perfect Circle India Pvt. Ltd. [2019 (1) TMI 1532 - BOMBAY HIGH COURT] has also held that the second proviso to Section 40(a)(ia) of the Act being beneficial to the assessee and declaratory/curative in nature, must be given retrospective effect. - Decided against revenue.
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