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2014 (7) TMI 1 - ITAT MUMBAIApplicability of rate of tax on foreign company – Held that:- Following M/s. Credit Lyonnais (through their successors : Calyon Bank) and Others Versus The Asstt. Director of Income-tax (International Taxation) - 1(2) And Others [2013 (5) TMI 639 - ITAT MUMBAI] as it has already been decided against the assessee thus, the ground of the appeal is dismissed – Decided against Assessee. Disallowance of loss on valuation of securities – Held that:- CIT(A) has decided the issue against the assessee and resultantly there was no occasion for the Revenue to challenge the same - it is simple and plain that when deduction has been allowed on account of loss arising on revaluation of investments in earlier years, the subsequent write back of the same amount cannot escape taxation - the amount is chargeable to tax - the loss on valuation of securities was held to be allowable in the earlier years, therefore, the subsequent write back of the amount cannot be allowed and is chargeable to tax – the AO is directed to ensure that the same amount is not tax twice. Transfer pricing adjustment - Fee or commission for the services performed towards foreign currency loans granted by the overseas branches – Held that:- The role of the assessee in the transactions of foreign currency loan under ECB was to provide financial analysis of the borrowers, general market conditions and regulatory environment - the role of the assessee is not merely facilitation of conclusion of loan agreement or signing thereof but the services provided by the assessee are the core-basis for taking the decision of granting the loan by the syndicate - The assessee provided the services regarding clients creditability analysis, its capacity so as to consider the capacity to repay the loan and risk involved in the loan transaction - the role of the assessee in providing such a crucial service is inevitable for taking the decision of providing loan and as such cannot be said to be a mere facilitation of conclusion of the loan agreement or signing. The TPO as well as CIT(A) has not brought out any comparable for determination of the arms length price but took the total income comprising interest as well as other fees charged by the foreign branches for allocation/attribution to the assessee - the ALP has not been determined by taking into consideration uncontrolled similar transaction - the interest cannot be taken into account for attribution of income towards service charges/fees - only the fee charged by the foreign branches can be taken into consideration for making adjustment under transfer pricing provisions - the AO/TPO is directed to make adjustment in respect of the services performed by the assessee for foreign currency loan arranged for its existing clients by taking into account only the fee and other charges received by the foreign branches from the borrowers - none of the parties have come out with the suitable comparables, the estimation made by the CIT(A) at the rate of 20% is just and proper – Decided partly in favour of Assessee. Expenditure attributable to tax exempt income – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been rightly held by the CIT(A) that the assessee had sufficient interest free funds available with its disposal for making investment in such tax free securities/shares from which dividend income was earned - the assessee has made investment in such securities/shares from which exempt income was earned, out of its own interest free funds, there can be no disallowance u/s 14A - the AO did not make any disallowance on account of other expenses in relation to exempt income, there cannot be any question of sustaining any such disallowance when the AO himself has not made it – Decided against Revenue.
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