TMI Blog2022 (5) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% - CIT(A) granted relief to the extent of commission recovered by the Assessee from the AE and upheld the adjustment made by the Ld.TPO to the extent of the balance amount that was not recovered by the assessee from its AE HELD THAT:- Respectfully following the above consistent view for assessment year 2014-15 [ 2020 (2) TMI 1708 - ITAT BANGALORE] and group concern, namely GMR Energy Ltd., for AY 2013-14. by coordinate bench of this Tribunal, we direct the Ld.AO to restrict the addition to the amount of commission not recovered by the assessee from its AE. We therefore do not find any infirmity in the view taken by the Ld.CIT(A). Adjustment towards Corporate Guarantee - Assessee in these years have advanced corporate guarantee in furtherance to its business of Infrastructure development in the field of Airports, Coal mining, Power projects abroad for which the assessee has set AEs abroad to facilitate in its expanding Infrastructure activities overseas - HELD THAT:- Primarily, we reject the argument of assessee that corporate guarantee is not an international transaction. A corporate guarantee is a legal agreement between a borrower, lender, and guarantor, whereby a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of A.Ys. 2012-13 and 2013-14, we direct the Ld.AO to restrict the disallowance to the extent of exempt income earned by assessee. In support of this view, we refer to the decision of Hon ble Delhi High Court in case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT ] and the decision of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] Disallowance u/s. 14A for computing book profits u/s. 115JB - HELD THAT:- This issue stands squarely covered by the decision of Vireet Investments (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] where in it was held that S.14A/Rule8D: (i) the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962, (ii) Only those investments to be considered for computing the average value of investment which yielded exempt income during the year . Also see Sobha Developers Ltd. [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT ] We accordingly direct the Ld.AO to compute the book profits under section 115JB without resorting to the computation u/s. 14A r.w. Rule 8D. Nature of expenses - Amortization of Upfront F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Yogesh A Thar, CA. For the Revenue : Dr. Manjunath Karkihalli, CIT-DR. ORDER PER BENCH Present cross appeals are filed by the assessee as well as the revenue for assessment years under consideration arising out of following orders passed by the Ld.CIT(A). Assessment Year Order passed by Ld.CIT(A) GMR Infrastructure Ltd. 2010-11 30.05.2017 2011-12 30.05.2017 2012-13 30.05.2017 2013-14 30.05.2017 GMR Highways Ltd. 2015-16 12.06.2019 2016-17 16.03.2020 2. From the above impugned orders, following are issues are raised vis-a-vis the grounds in the appeals filed by the assessee and revenue for relevant Assessment Years: For GMR Infrastructure Ltd.: Sl. No. Issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the above issues that are common are on identical facts for A.Ys. 2010-11 to 2013-14 in case of GMR Infrastructure Ltd. In case of GMR Highways Ltd. for A.Ys. 2015-16 and 2016-17 following are the common issues alleged by assessee. Issues Assessment Year Ground No. Disallowance u/s. 14A 2015-16 2 to 4 2016-17 3 to 5 Addition of difference between revenue as per books of A/c and 26AS 2015-16 1 2016-17 1 Accordingly these appeals are being disposed off by common order. 4. ISSUE Nos. 1 GROUND ON STANDBY LETTER OF CREDIT: Assessment Year 2010-11 4.1 The assessee as well as the revenue raised issue relating to the adjustment towards stand by letter of credit ( SBLC ). The assessee has also filed a cross objection in the appeal filed by revenue on this issue. Facts of this issue is as under: 4.2 The assessee provided SBLC for and on behalf of the AE being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justments, made disallowance under Section 14A of the act and unamortized amounts claimed and Finally Assessed the total income of Rs.1,67,87,08,248 and passed the order under Section 143(3) r.w.s. 144C of the Act dt.15.12.2017. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals). The CIT(Appeals) on the disputed issue considered the submissions of the assessee and observed that the TPO has made adjustments towards commission for utilization of non-fund based limits of the assessee by Associated Enterprises (AEs) and the Bank has issued SBLC and charged commission of Rs.35,56,787. Whereas the assessee has recovered an amount of Rs.11,07,050 charged by the Bank from its ISG AE, and balance amount of Rs.24,49,737 is nonrecoverable .Hence CIT(A) restricted the addition to the extent of Rs.24,49,737 and with other reliefs partly allowed the appeal. Aggrieved by the CIT (A) order, the assessee has filed an appeal with the Tribunal. 5. We heard the rival contentions and perused the material on record. The sole matrix of the disputed issue as envisaged by the learned Authorized Representative that there is no requirement of TP Adjustment, as the standby le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is restricted to the amount of commission not recovered by the assessee from its AE. 4.14 Accordingly, this ground raised by the Assessee and the revenue for assessment year 2011-12 to 2013-14 stands dismissed and accordingly the issue raised in C.O. by assessee becomes infructuous. 5. ISSUE No. 2 Adjustment towards Corporate Guarantee: 5.1 This issue has been raised by the revenue for A.Ys. 2010-11 to 2013-14 in case of GMR Infrastructure Ltd. Brief facts are as under: 5.2 Assessee in these years have advanced corporate guarantee in furtherance to its business of Infrastructure development in the field of Airports, Coal mining, Power projects abroad for which the assessee has set AEs abroad to facilitate in its expanding Infrastructure activities overseas. The assessee instead of borrowing money in India and investing by way of equity capital in its overseas AEs allowed foreign AEs to borrow funds overseas and in order to facilitate borrowing overseas for furtherance of its business it provided corporate guarantee. 5.3 The assessee only gives a guarantee to the bank of the AE that in case of a default by the AE, the loan taken by the AE would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered by the Assessee Rs. 1 2010-11 Nil Nil 2 2011-12 Nil Nil 3 2012-13 Nil Nil 4 2013-14 Nil Nil The FPB references with respect to the credit rating of the Assessee and its AEs are filed at Pg 6 of submission filed on March 02, 2022. The details of suo-moto adjustment considered by the Assessee, AO upon completion of assessment and by the Ld CIT(Appeals) for different AYs with respect to Corporate Guarantee is as under: Sr No AY Assessee TPO/ Assessing Officer Rs. CIT(Appeals) Rs. 1 2010-11 Nil 43,38,582 Nil 2 2011-12 Nil 98,99,209 Nil 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antee is a legal agreement between a borrower, lender, and guarantor, whereby a corporation takes responsibility for the debt repayment of the borrower provided it faced bankruptcy. A personal guarantee is a similar document to the corporate guarantee. 5.13 In the matter of guarantee commission, the adjustment made by the TPO is based on instances restricted to the commercial banks providing guarantees. When a commercial bank issues bank guarantees which being a part of their business activity, in the event of any default, a higher commission is charged. In the present case, it is assessee company that is issuing Corporate Guarantee to the effect that if the foreign AE does not repay loan availed by it, then in such event, the assessee would make good the amount and repay the loan. The considerations which applied for issuance of a Corporate guarantee are distinct and separate from that of bank guarantee and accordingly we are of the view that commission charged by the Ld.TPO under the facts of the case cannot be approved. In our view the comparison has not been drawn between like transactions but the comparisons are between guarantees issued by the commercial banks as against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial on record. At the outset we note that the assessee has raised the objection before the DRP as recorded in paras 6.1 and 6.2 as under : '6.1 Grounds 1, 2 and 3 are considered together for convenience. Briefly stated the assessee provides software development and information technology enabled services (ITES) to its AEs. During the FY 2005-06 the assessee provided a corporate guarantee to a third party bank on behalf of an AE but failed to charge a fee for the guarantee. The assessee conducted a TP study and concluded that this transaction was at arm's length however during audit proceedings the TPO rejected the analysis of the assessee and made adjustments to this transaction. The taxpayer cites the order of Four soft Ltd wherein the Hon'ble ITAT Hyderabad observed as under: We find that the TP legislation provides for computation of income from international transaction as per section 92B of the Act. The corporate guarantee provided by the assessee company does not fall within the definition of international transaction. The TP legislation does not stipulate any guidelines in respect to guarantee transactions. In the absence of any charging provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided bank guarantees on behalf of its Overseas subsidiary, Foursoft BV, Netherlands for an amount of Rs.69,81,16,000/- which is continuing for the year under consideration also. The TPO following the order passed for A.Y. 2006-07 treated the commission changed by ICICI Bank at 3.75% arms length price for the corporate guarantee provided by the assessee to its AE worked out the TP adjustment of Rs.2,61,79,350/-. The DRP also rejected assessee s objection on the issue. 25. We have heard the parties and perused the material on record. The sum and substance of the submissions made by the learned AR is, the corporate guarantee provided by the assessee cannot be equated to bank guarantee and resultantly the commission rate for bank guarantee cannot be applied to the corporate guarantee. It was submitted that the corporate guarantee is nothing but an additional guarantee provided by the parent company and it does not involve any cost or risk to the shareholders. It was submitted that since the corporate guarantee was given keeping in view paramount business interest of the parent company it has to be allowed as business expenditure. It is the further submissions of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar argument advanced on behalf of the assessee by placing reliance on the decision of the Four Soft Ltd.(supra), held as under: 15. 2 After hearing the rival submissions we feel that Assessing Officer will have to follow the decision of the ITAT Hyderabad or the amended provision of the Act in this regard. If the Finance Bill of 2012 is passed by the Parliament amending the provisions of section 92B, with effect from 1st April , 2002, he will have to ignore the decision of the ITAT Hyderabad. In case section 92B is not amended with retrospective effect, he should grant relief to the appellant. 25.4 In the aforesaid view of the matter, we agree with the TPO that ALP of the corporate guarantee has to be determined as it falls within the scope and ambit of an international transaction after the retrospective amendment to section 92B. However, it appears that the TPO has applied the rate of 3.75 %, which is applicable to bank guarantee issued by the bank. As the corporate guarantee is not in the nature of bank guarantee, the rate applicable to bank guarantee provided by the bank cannot be applied to corporate guarantee which is provided by a group company. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (supra) has restricted its finding only to the applicability of Explanation in the cases where the assessment was completed prior to the insertion of the said Explanation retrospectively. Even otherwise the earlier decisions of the Tribunal on this issue were not considered by the Delhi Bench of the Tribunal. In the case of M/s. Nimbus Communication Ltd. Vs. ACIT in ITA Nos.6816/Mum/2010 and 7105/Mum/2011, the Tribunal vide order dt.7.8.2013 has considered an identical issue in paras 4 5 as under : 4. As regards the issue raised in ground No. 2 relating to TP adjustment made on account of guarantee commission in respect of corporate guarantee given by the assessee to its Associated Enterprises (AEs) for obtaining bank loans, the ld. representatives of both the sides have agreed that a similar issue was involved in assessee's own case for the immediately preceding year i.e. A.Y. 2005- 06 and the Tribunal vide its order dated 12-06-2013 passed in ITA No. 3664 2359/Mum/2010 has already decided the same vide para No. 9 10 which read as under:- 9. We have considered the rival submissions and also perused the relevant material available on record. For the gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprise and this act thus involves performance or carrying out of service to cover the risk of default for which price has to be charged. Even the OECD Transfer Pricing Guidelines 2010 supports this view in para 7.13 where it is explained that where higher credit rating of Associated Enterprise is due to a guarantee by another group member, such association positively enhances the profit making potential of that Associated Enterprise. We, therefore, find ourselves in agreement with the contention of the ld. D.R. that there was a clear benefit accrued to the Associated Enterprises by the guarantee provided by the assessee and when such benefit was passed on by the assessee to the said Associated Enterprises, guarantee commission should have been charged at arm's length price. The commercial relationship between the assessee and its Associated Enterprises is distinct and separate from the transactions of giving guarantee and such transactions have to be considered and examined independently in order to determine the arm's length price. 10. As regards the rate of guarantee commission, it is noted that the arm's length price of guarantee commission was determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALP. 5.18 In the above decision, this Tribunal has considered the commission on guarantee fee at 0.5%. In view of the above, we direct the Ld.AO/TPO to recomputed the rate of commission attributable to the corporate guarantee in the present facts, in the light of the above. 5.19 Accordingly this ground raised by revenue for assessment years 2010-11 to 2013-14 stands partly allowed and the cross objection filed by the assessee stands dismissed. 6. ISSUE No. 3: 6.1 The next issue in assessee and revenue appeals relates to disallowance u/s. 14A under normal provisions. 6.2 We note that issue relating to 14A disallowance under normal provisions of the Act, is been challenged by both assessee as well as revenue. In case of GMR Infrastructure Ltd. Assessee s Ground No. Department s Ground No. A.Y. 2010-11 2 to 6 3-4 A.Y. 2011-12 2 to 6 -----do----- A.Y. 2012-13 2 to 5 -----do----- A.Y. 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order, rejected the submission and the Revised Computation of total income, declaring therein, disallowance u/s. 14A at Rs. Nil filed in course of assessment proceedings and thereby, rejected withdrawal of voluntary disallowance made by the assessee. The Ld. AO on the other hand, disallowed an amount of Rs. 53,72,22,595/- u/s. 14A r.w. Rule 8D, and thus, made addition to the returned income of the assessee of Rs.42,45,05,642/- (53,72,22,595 - 11,27,16,953). 6.8 Aggrieved by the order of the Ld.AO, the assessee preferred appeal before the Ld.CIT(A). 6.9 The Ld.CIT(A), considering the fact that, the own funds were more than tax free investments, and the fact that, the assessee did not earn any exempt income during the year, deleted the disallowance made by the Ld.AO, but upheld the suo-moto disallowance of Rs.11,27,16,953/- made by the assessee in its return of income, by relying on the CBDT Circular No. 549 dated 31.10.1989, wherein it is stated that, the assessed income cannot be less than the amount of returned income. 6.10 The Assessee is in appeal before this Tribunal for disallowance upheld by the Ld.CIT(A) to the extent of Rs.11,27,16,953/-. 6.11 The Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that, in the event where own funds are more than tax free investments, it is well settled in the following judicial pronouncements that, no disallowance of interest expenditure u/s. 14A could be made: Recent decision of Hon ble Bangalore ITAT in Assesseee s own case in ITA Nos.1704 1740/Bang/2017 CO No.110/Bang/2017 for AY 2008-09 [Page no.398-406 of LPB-2] Hon ble Bangalore ITAT in group concern, namely: GMR Energy Limited in ITA Nos.1638, 1661 to 1664/Bang/2017, 1733 to 1737/Bang/2017 CO Nos. 3,4,5,6 7/Bang/2017 for AY 2009- 10 to 2013-14 [Page no. 407-445 of LPB-2] PCIT v. Sintex Industries Limited (82 taxmann.com 171)(Guj HC) [Page no. 450-454 of LPB-2] PCIT v. Sintex Industries Limited(93 taxmann.com 24)(SC) [Page no.455 of LPB-2] CIT v. Microlabs Ltd (383 ITR 490) (Karnataka) [Page no. 456-460 of LPB-2] CIT v. HDFC Bank Ltd. (366 ITR 505) (Bom.) [Page no. 461-463 of LPB- 2] HDFC Bank Ltd v. DCIT (383 ITR 529)(Bom) [Page no. 464-476 of LPB- 2] Reliance Utilities Power Limited (313 ITR 340) (Bom.) [Page no.477-480 of LPB-2] PCIT v. Subramanya Constructions Development Co. Ltd (130 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the decision of the Coordinate Bench of this Tribunal in case of GMR Enterprises Pvt. Ltd. in IT(TP)A No. 2310/Bang/2019, wherein identical issue was considered whereby, the disallowance u/s. 14A is restricted to the exempt income earned by the assessee and not the suo moto disallowance made in the original return of income that was withdrawn during the course of assessment proceedings by filing revised computation of income. The revenue on the contrary supported the orders of authorities below. 6.18 The Ld. DR relied upon the order of the Coordinate Bench of this Tribunal in Assessee s own case for AY 2007-08 in ITA No.1895/Bang/16 by order dated 28.07.2017, wherein the Assessee raised a fresh claim to withdraw its suo-moto disallowance u/s. 14A of the Act in course of 153A proceedings (i.e. after completion of assessment u/s. 143(3) and acceptance of disallowance u/s. 14A in such completed assessment) and the Ld.AO and Ld.CIT(A) did not consider such fresh claim of the assessee to withdraw the suo moto disallowance in 153A proceedings, since the assessment u/s. 143(3) was completed. 6.19 On an appeal before this Tribunal, the action of the Ld.CIT(A) relying on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer nor the Assessing Officer is empowered to entertain such claim. Pursuant to the DRP s direction, final assessment order was passed on 14.10.2019. 3.2. Aggrieved, the assessee has raised this issue before the Tribunal. The learned AR reiterated the submissions made before the Income Tax Authorities and also placed reliance on the order of the Tribunal in assessee s own case for assessment years 2010-2011, 2011-2012 and 2013-2014 in ITA Nos.2145, 2146 2148/Bang/2016 (order dated 08.02.2019). 3.3 The learned Departmental Representative, on the other hand, submitted that the assessee had voluntarily made the disallowance u/s 14A of the I.T.Act amounting to Rs.145,02,09,668 and hence, was precluded from changing its stand and seeking the reduced of disallowance u/s 14A of the I.T.Act to Rs.27,37,47,187. 3.4 We have heard rival submissions and perused the material on record. It is settled position of law that disallowance cannot exceed the amount of dividend income earned during the relevant assessment year. In this context, the following judicial pronouncements support the stand of the assessee:- (i) Joint Investments Pvt. Ltd. v. CIT (59 Taxmann.com 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs.41,042/- and the Assessee himself computed disallowance under Rule 8D of the Rules to the extent of Rs.2,38,575/-, which was increased to Rs.98,16,104/- by the Assessing Authority. Similarly, for AY 2012-13, against Nil dividend income, the Assessee himself computed disallowance at Rs.8,50,000/-, which was increased to Rs.2,61,96,790/-. 21. We cannot approve even the larger disallowance proposed by the Assessee himself in the computation of disallowance under Rule 8D made by him. These facts are akin to the case of Pragati Krishna Gramin Bank(2018) 95 Taxman.com 41 (Kar.) decided by Karnataka High Court. The legal position, as interpreted above by various judgments and again reiterated by us in this judgment, remains that the disallowance of expenditure incurred to earn exempted income cannot exceed exempted income itself and neither the Assessee nor the Revenue are entitled to take a deviated view of the matter. Because as already noted by us, the negative figure of disallowance cannot amount to hypothetical taxable income in the hands of the Assessee. The disallowance of expenditure incurred to earn exempted income has to be a smaller part of such income and sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2022, in identical circumstances, permitted to withdraw the suo-moto disallowance during the course of assessment proceedings u/s. 143(3) r.w.s 153A of the Act. 6.25 There is no dispute in respect of the facts that assessee had not earned any exempt income during the assessment year 2010- 11 6.26 It is also not disputed that assessee had withdrawn the claim by filing a revised computation which the Ld.AO should have considered during the assessment proceedings that was pending. Further, it is not the case of the revenue that assessee do not have sufficient interest free funds to make investments that would yield exempt income. Therefore the decisions relied by the Ld.AR referred to hereinabove supports this contention. 6.27 Respectfully following the view taken by Coordinate Bench in assessee s sister concern case, we are of the view that the Ld.AO is directed to delete the suo moto disallowance made by assessee for A.Y. 2010-11 as the assessee filed revised computation during the original assessment proceedings. 6.28 We note that similar is the situation for appeals pertaining to A.Y. 2011-12. For Assessment Years 2015-16 and 2016-17 in case of GMR Highways Ltd. fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance u/s. 14A in the computation of Book Profit u/s. 115JB. 7.3 The Ld. AO at the time of passing the assessment order, added the disallowance made by him u/s. 14A r.w. Rule 8D while computing book profits u/s. 115JB of the Act. 7.4 The Ld. CIT(A) upheld the action of the Ld.AO by relying on the decision of coordinate bench of this Tribunal in the case of Sobha Developers Ltd. in ITA No. 1410/Bang/2013 by order dated 09.01.2015. 7.5 The Assessee is in appeal before this Tribunal against the view taken by the Ld.CIT(A). 7.6 The Ld.AR submitted at the outset that, in ACIT Vs. Vireet Investments (P.) Ltd. reported in (2017) 165 ITD 27 Hon ble Delhi Special Bench held that, computation of book profits u/s. 115JB is to be made without resorting to the computation, as contemplated under section 14A r.w. rule 8D. This view is also upheld by Hon ble Karnataka High Court in the case of Sobha Developers Ltd v. DCIT reported in (2021) 125 taxmann.com 72 and held that disallowance u/s. 14A is a notional disallowance and therefore, such amount could not be added to book profits of assessee u/s. 115JB. Similar is the view by Hon ble Karnataka High Court in the case of CIT vs. Goka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade, would benefit the assessee over the entire tenure. Aggrieved by the order of the Ld.AO, the assessee filed appeal before the Ld.CIT(A). 8.4 The Ld. CIT(A) relying on the decision of Hon ble Supreme Court in the case of Madras Industrial Investment reported in 225 ITR 802, upheld the disallowance made by the Ld.AO, and dismissed the appeal of the Assessee. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 8.5 The Ld.AR submitted that, the expenditure incurred for obtaining loan is revenue in nature. The Ld.AR submitted that Hon ble Supreme Court in the case of India Cements Ltd v. CIT reported in (1966) 60 ITR 52 held that, the nature of expenditure incurred in raising a loan does not depend on the nature and purpose of the loan. Thus, Hon ble Supreme Court held that, the expenditure incurred by the assessee therein on stamp duty, registration fees etc., for raising loan was in the nature of revenue expense to be allowed in the year of raising the loan. 8.6 The Ld.AR also relied on the decision of Hon ble Supreme Court in the case of Taparia Tools Ltd. V. JCIT reported in (2015) 55 taxmann.com 361, wherein, the assessee issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of 12 years. Ordinarily, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books over a period of years. However, the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Thus in the case of Hindustan Aluminium Corporation Ltd. vs. CIT, (1982) 30 CTR (Cal) 363: (1983) 144 ITR 474 (Cal) the Calcutta High Court upheld the claim of the assessee to spread out a lump sum payment to secure technical assistance and training over a number of years and allowed a proportionate deduction in the accounting year in question. 16. Issuing debentures at a discount is another such instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years. There is a continuing bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entures. 8.13 We note that Hon ble Supreme Court while considering the facts in case of Madras Industrial Investment Corporation Ltd. reported in 225 ITR 820, distinguished between, various situations and also observed that; Ordinarily, expenditure incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books over a period of years . 8.14 In present facts, the Ld.AO spread over the expenditure over the period of tenure. The Ld.AO treated the same as deferred expenditure, which is an accounting concept and alien to the Act. The provisions of the Act recognizes only capital or revenue expenditure. 8.15 In a subsequent decision by Hon ble Supreme Court in case of CIT vs. Secure Meters Ltd. reported in 2009 TIOL 93, it was held that an expenditure on loan was allowable as revenue expenditure. Similar is the view expressed in case of Taparia Tools (supra) by Hon ble Supreme Court. 8.16 Respectfully following the above views by Hon ble Supreme Court, we direct the Ld.AO to allow the claim of assessee in entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions advanced by both sides in the light of records placed before us. 9.8 We note that the Coordinate Bench of this Tribunal in assessee s group concern case (supra) observed as under: 22. Last ground argued by the ld. DR is with respect to levy of interest under Section 234B of the Act. We found the learned CIT (Appeals) has considered amendment and also dealt at page 36 37 paras 6.7.1 and 6.7.2 and relied on the judicial decision and allowed the ground of appeal with the observation on charging of interest under Section 234B from the date of passing the intimation under Section 143(1) of the Act as under : 6.7.1 In this regard the appellant in the written submissions has contended that the Appellant has filed the return of income on September 30, 2009. Subsequently it has filed the revised return of income on August 30,2010. In the return of income, the Appellant has not calculated any interest u/s. 234B since there was no shortfall in payment of advance tax. The revised return of income filed on August 30, 2010 was processed and Intimation u/s. 143(1) dated March 7, 2011 was passed accepting the income offered for tax. Further, in the said Intimation, no inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issue has been raised by the assessee (GMR Highways Ltd.). Ground No. I: 10.1 Addition of notional amount being difference in the revenue as per books of account and Form 26AS. It is submitted that facts on this issue are identical and similar for both the years, which are as under. Facts:- 10.2 The assessee is a company engaged in the business of providing management, operation and maintenance services in the highway sector relating to the development, operations and maintenance of various highway projects. The assessee enters into operation and maintenance agreements with Highway Special Purpose Vehicle (SPV) for the operation, repairs and maintenance of highways. 10.3 During the years under consideration, there is a difference between the gross receipts as per Form 26AS, and the gross receipts as per the returned income and books of account of the Assessee. 10.4 During the course of assessment proceedings, the Ld.AO added the difference as undeclared business receipts to the returned income of the assessee. 10.5 Against the order passed by the Ld.AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from the assessee. 10.12 He submitted that the assessee filed Additional Evidence Petition before this Tribunal vide letter dated 15.12.2020, with a note on the requirement and basis of provision of major maintenance works in the books of GTTEL along with relevant supporting documents. He thus requested the issues to be remanded for proper verification. The Ld. CIT. DR did not object for the issues to be remanded for verification. 10.13 Based on the above, we remand this issue to the Ld.AO for de novo verification. The Ld.AO is directed to verify the claim in the light of the evidences including the additional evidence. The Ld.AO is also directed to verify if in the subsequent years it is accounted as and when the work was carried out by the assessee, it cannot be taxed in this assessment year and TDS credit to be given in this assessment year. 11. In the result, Ground no. 1 raised for A.Y. 2015-16 2016- 17 stands partly allowed. 11.1 The appeals filed by the assessee for A.Ys. 2010-11 to 2013-14 stands partly allowed. 11.2 Departmental appeals for A.Ys. 2010-11 to 2013-14 stands partly allowed. 11.3 Cross objections by assessee stands dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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