Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (10) TMI 1211 - AT - Income TaxAdjustment for the value of corporate guarantees received by the taxpayer form its AEs - Held that:- Corporate guarantee provided by the assessee gives the benefit to the AE and such benefit was passed on by the assessee to the said AE and therefore should have been charged at ALP. Accordingly, we set aside this issue to the record of the A.O./TPO to recomputed the ALP by considering the arm’s length guarantee fees at 0.5% and further by providing appropriate adjustment for corporate guarantee received by the assessee from its arm’s length. TP Adjustment in respect of the loan provided to AE - Held that:- The transaction of loan/advance is clearly defined in Section 92B(1) as international transaction being lending or borrowing money or any other transaction having bearing on the profits, income, loses or assets of enterprises. We find that the Tribunal has been taking a consistent view on this issue as far as the transaction of lending money to the AE being international transaction however, the arm’s length rate has been accepted by the Tribunal by considering LIBOR rate as the transaction is in foreign currency. Therefore interest rate prevailing in the economic geography of AE shall be taken into consideration. Accordingly, we direct the Assessing Officer / TPO to apply LIBOR + 2% as ALP. TP Adjustment in respect of outstanding receivable from the AE for abnormal period - Held that:- This issue has been considered and decided by this Tribunal in a series of decisions including the decision in the case of M/s. Dell International Services India Pvt. Ltd. Vs. JCIT [2016 (6) TMI 1275 - ITAT, BANGALORE] - we set aside this issue to the record of the A.O./TPO with the direction to redo the determination of ALP in respect of providing software development services by considering the proper working capital adjustment in comparable price. In case after giving the necessary adjustment the international transaction of the assessee is found at arm’s length then there is no question of separate adjustment on account of allowing credit period on receivable from the AE. Exclusion of expenses from export turnover while computing the deduction under Section 10A - Held that:- The Hon’ble Karnataka High Court in the case of CIT v M/s Tata Elxsi Ltd. & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] had held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator. Setting off unabsorbed depreciation against the profits of the eligible units - Held that:- Following the latest judgment of the Hon’ble High Court in case of M/s Yokogawa India Ltd [2011 (8) TMI 845 - KARNATAKA HIGH COURT]as well as Co-ordinate Bench decision in case of M/s Safran Aerospace India Pvt. Ltd. [2015 (1) TMI 773 - ITAT BANGALORE] we decide this issue in favour of assessee and direct the AO to allow the claim of deduction u/s 10A of the IT Act,, without setting off of brought forward losses/unabsorbed depreciation Disallowance of lease charges on the ground of unascertained liability as well as non-deduction of taxes at source under Section 40(a)(ia) - Assessing Officer found that this amount of ₹ 6,41,61,438 has been added back in the computation under regular provisions of Act as an uncertained liability but was not added back while computing book profit under Section 115JB - Held that:- . The concept of disclosure in notes to Accounts would amount to disclosure in the financial statement is applied if an item of income or expenditure is required to be part of profit and loss account as per Part II of Schedule VI of the Companies Act but the same was not disclosed in the profit and loss account and has been disclosed in thenotes forming part of financial accounts. Therefore the said disclosure in the notes to accounts would be treated as disclosure of particular income or expenditure as the case may be in the profit and loss account for the purpose of computation of book profit under Section 115JB of the Act. In the case on hand since this was not a permissible provision as per Accounting Standard therefore it was not required to be disclosed in the profit and loss account and accordingly the disclosure made in notes to accounts would not change the nature of provision as accrued expenditure. In view of the facts and circumstances as discussed above, we do not find any error or illegality in the orders of the authorities below on this issue. Brought forward losses or unabsorbed depreciation whichever is lessor has to be allowed as deduction - Held that:- Despite the directions of the DRP, the Assessing Officer while passing the final assessment order has not allowed this claim of the assessee which is a gross disrespect and derogation on the part of the Assessing Officer to the binding orders/directions of the DRP. Accordingly, we direct the Assessing Officer to recompute the book profit under Section 115JB as directed by the DRP. We make it clear such a conduct of the Assessing Officer is unwarranted and depreciable and goes even against the interest of revenue being a self inflecting injury. Even if the directions of the DRP are not acceptable to the Assessing Officer, the remedy is to file the appeal after passing the final order in terms of the directions of the DRP
|