2015 (10) TMI 2733 - AT - Income Tax

International transaction - advances given by the assessee to its AEs in UK and USA - Held that - ITAT Cochin Bench in assessee s own case for the assessment year 2008-09 is contrary to the assertions made by the assessee in support of the aforesaid ground. It has specifically dealt with the scope of expression international transaction as amended by Finance Act 2012 retrospectively. It was held that the advances given by the assessee to its AEs in UK and USA came within the ambit of international transaction as per the amendment made in the provisions of section 92B of the Act. We are bound by the decision rendered by the previous Bench in assessee s own case. There is no occasion for us to comment upon the correctness or otherwise of the judgments relied upon by the assessee as the case of the assessee is covered against the assessee by the Tribunal order dated 29/11/2013. Ground No. 1 raised by the assessee is dismissed. Erroneous imputing of interest on advances - Held that - We are not in agreement with the submissions made by the Ld. AR. The Ld. AR has failed to bring on record any distinguishing feature between the present case and case of the assessee for the assessment year 2008-09. In the assessment year 2008-09 an identical issue came up for consideration before the ITAT Cochin Bench in assessee s own case wherein the assessee had charged interest at the rate of 5% on the advances made to its AE Suntec Germany and charged no interest on the advances made to its AEs in USA and UK. The Bench in para 9.4 (extracted above) held that commercial expediency cannot be a ground for not charging interest on the advances given to Suntec US and Suntec UK and upheld the charge of interest at the rate of 5% on the advances made to its AEs in USA and UK. Non-allowance of tax credit in the case of the assessee by the Revenue - The assessee has submitted that it was given a tax credit of Rs. 8, 50, 979/- only instead of Rs. 35, 95, 891/-. - The assessee has further given details of Rs. 27, 44, 912/- for which the tax credit were not given - Held that - Assessing Officer is directed to grant tax credits due to the assessee in accordance with law as reflected in income tax records. Thus Ground No. 3 is allowed for statistical purposes.

Summary

Issues Involved:
1. Erroneous imputation of interest on transactions outside the purview of Transfer Pricing regulations in India.
2. Erroneous imputing of interest on advances.
3. Erroneous denial of credit in respect of prepaid taxes.
4. Erroneous levy of interest and initiation of penalty proceedings.

Issue-wise Detailed Analysis:

1. Erroneous Imputation of Interest on Transactions Outside the Purview of Transfer Pricing Regulations in India:
The assessee argued that the imputation of interest on international transactions was outside the purview of Transfer Pricing Regulations in India, asserting that the foreign branch and the Indian company should be treated as one legal entity. The Tribunal referenced its earlier decision in the assessee's own case for the assessment year 2008-09, where it was held that advances given to AEs in UK and USA came within the ambit of "international transaction" as per the amendment made in the provisions of section 92B of the Act. The Tribunal dismissed the ground, stating it was bound by the previous decision and cited the Hon'ble Supreme Court's judgment in P. Suseela & Ors. Vs. Univ. Grants Commn. & Ors. 8 SCC 129, emphasizing adherence to precedent.

2. Erroneous Imputing of Interest on Advances:
The assessee contended that the advances made to AEs in USA, UK, Singapore, and UAE were business-related and not loans, hence no interest was charged. The Tribunal referred to its earlier decision for the assessment year 2008-09, where it was held that commercial expediency could not be a ground for not charging interest on advances to Suntec US and Suntec UK. The Tribunal upheld the charge of interest at 5% on the advances, dismissing the ground as the issue was identical to the previous assessment year and no distinguishing feature was brought on record by the assessee.

3. Erroneous Denial of Credit in Respect of Prepaid Taxes:
The assessee submitted that it was given a tax credit of Rs. 8,50,979/- instead of Rs. 35,95,891/-, detailing an additional Rs. 27,44,912/- for which tax credit was not granted. The Tribunal directed the Assessing Officer to grant the due tax credits in accordance with the law as reflected in income tax records, thereby allowing this ground for statistical purposes.

4. Erroneous Levy of Interest and Initiation of Penalty Proceedings:
The assessee contested the levy of interest under sections 234A, 234B, 234C, and 234D, and the initiation of penalty proceedings under section 271(1)(c) of the Act. The Tribunal did not provide a separate detailed analysis for these grounds, implicitly dismissing them by not addressing them further in the order.

Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes, specifically regarding the tax credit issue, while the other grounds were dismissed based on the Tribunal's adherence to its previous decisions and legal precedents. The Tribunal pronounced the judgment in the open court on 13-10-2015.