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2015 (3) TMI 1103 - AT - Income TaxDisallowance under section 14A - Held that:- We note that the total investment comprising the investment in mutual fund and growth schemes / growth mutual funds as well as investment in foreign subsidiaries. The Assessing Officer itself has excluded the investment in foreign subsidiaries because the dividend from the foreign companies is taxable. However, the growth mutual fund does not yield any dividend/exempt income, therefore, the provisions of section 14A would not apply on the investment in growth mutual funds. As regards the disallowance of administrative expenses in respect of the investment yielding exempt income the computation made under Rule 8D cannot exceed the total allocable expenditure for earning the exempt income debited the P&L Account. Accordingly, the Assessing Officer is directed to reconsider the disallowance u/s 14A by excluding the investment in the Growth mutual funds scheme and further to earmark and identify the item of expenditure debited by the assessee in the P&L Account which can be allocated in relation to earning the exempt income. TP adjustment in respect of interest on loan given to AE - Held that:- We direct the AO/TPO to adopt LIBOR +2% as arm's length interest in respect of loan provided by the assessee to its AE. TP adjustment in respect of cost of guarantee given by the assesse to the bankers for obtaining loan by the wholly owned subsidiary/AE of the assessee - Held that:- We direct the AO/TPO to adopt the 0.5% as guarantee commission charges in respect of the guarantee provided by the assessee for obtaining the loan by the AE. Adjustment on account of guarantee commission charges - Held that:- Since the guarantee commission is charged for assuming the risk for providing the guarantee to the bank in respect of loan availed by the AE, therefore, we find merits in the additional plea raised by the assessee that the adjustment on account of guarantee commission charges has to be only in respect of the amount of actual loan availed by the AE during the year. Accordingly, we direct the AO/TPO to compute the adjustment by taking into account actual loan amount availed by the AE during the year in this respect. Benefit of tolerance range of +/- 5% of the arithmetic mean margin - Held that:- Since the arm's length price is adopted as CUP and single price and not as arithmetic mean, therefore, this additional ground of the assessee is devoid of any merit and hence rejected.
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