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2015 (5) TMI 642 - AT - Income TaxDisallowance u/s 14A - Held that:- It is clear that during the year under consideration, the assessee has not made any fresh investment except a sum of ₹ 13 Lakh in the mutual fund scheme. Out of the total investment of ₹ 92.7 crores, the investment of ₹ 90.52 crores is in the subsidiary and further the investment made in the subsidiaries pertains to the foreign subsidiaries of the assessee to the extent of ₹ 90.43 crores. There is a reduction of overall investment during the year under consideration. Up to the A.Y. 2007-08, the Tribunal has given the finding that the assessee’s own fund was sufficient for making the investment and, therefore, no disallowance was called for on account of interest expenditure u/s 14A. There is net reduction in the investment during the year to the extent of ₹ 10 crores despite the fresh investment of ₹ 13 lakhs. Since there is no increase in investment during the year under consideration and even for the A.Y. 2008-09, therefore, in view of the earlier order of this Tribunal for the A.Y. 2006-07 and 2007-08, no disallowance is called for u/s 14A on account of interest expenditure. - Decided in favour of assessee. TP adjustment on guarantee commission - Held that:- Following the earlier order of this Tribunal and also considering the internal CUP being the guarantee commission paid by the assessee to the ICICI Bank for obtaining guarantee, we hold that the arm’s length guarantee commission in respect of all three transactions of guarantee to its AE at Dubai, China and USA shall be taken at 0.5%. Accordingly, the Assessing Officer is directed to compute the adjustment on account of guarantee commission by taking the arm’s length guarantee commission at 0.5%. - Decided partly in favour of assessee. TP adjustment in respect of loan advanced to EKC Dubai and EKC China - Held that:- Following the earlier order of this Tribunal in assessee’s own case, we hold that the arm’s length rate in respect of loan provided to the AE should be LIBOR + 2%. Accordingly, the Assessing Officer is directed to recomputed the arm’s length rate in respect of the loan transaction to each AE of the assessee by clubbing all the loan transactions of each AE and then compare the interest charged by the assessee with arm’s length rate at LIBOR +2%. It appears that as regards the transactions of loan to its AE at China, the said transaction is at arm’s length as the as has charged the interest at 7%, therefore, only with respect to the transaction of loan to AE at Dubai are required to be re-computed for the purpose of TP adjustment. - Decided partly in favour of assessee.
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