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2017 (11) TMI 1874 - AT - Income TaxTP adjustment for recovery of management expenses - expenses are incurred by the assessee for his own investment purpose and not for or on behalf of the AE- TPO/AO making adjustment for mark up to be recovered from AE being the mark @13.71% - HELD THAT:- We find it is clear from the records that these transactions are independently undertaken with the professional bodies which are not connected in any fashion with the assessee. There is no evidence on record to suggest that M/s. J. Sagar Associates and M/s. S.S. Iyer and Company are related AEs of the assessee. In our view, the issue raised in Ground 4(b) is dependent on the Ground No.4(a) and the same is required to be remanded for want of facts, as argued by the Ld. Counsel for the assessee before us. Therefore, we direct the AO/TPO to consider the above and decide the issue afresh after granting reasonable opportunity of being heard to the assessee. Accordingly, Ground No.4(a) and (b) are allowed for statistical purposes. Benchmarking rate of interest @13.25% as against assessee charging interest @8% for the loan given to Autoline Industries Limited, USA and accordingly making a TP adjustment - HELD THAT:- In our view the benchmarking of the international transaction applying the flat rate of 13.25% of the bank rate is not proper. There is requirement for maintaining the “principle of consistency” from the Department side. Therefore, we remand this issue also to the file of the AO to verify the set principles of consistency and decide the issue afresh after granting reasonable opportunity of being heard to the assessee. Accordingly, Ground No.4(c) raised by the assessee is allowed for statistical purposes. TP adjustment for Foreign Exchange Loss - HELD THAT:- we perused the ledger extract connection to the foreign rate fluctuations and find the losses are mainly on account of balances linked to the accounts in Kotak Mahendra Bank C/A – ₹ 44,76,000/- and Forex Benefit of ECB loan ₹ 10,38,287/-. Prima-facie, we find these amounts does not seem to be the ones relating to the international transaction involving the Associated Enterprises of the assessee. Therefore, we find it relevant to remit this issue also to the file of the AO for fresh adjudication. Assessee is directed to file relevant documents in support of the claim of the assessee. Accordingly, Ground No.4(d) is allowed for statistical purposes. TP adjustment for recovery of Guarantee Fees when the transaction of money given to AE was on investment account - HELD THAT:- The impugned transactions of this year being outside the scope of international transaction, could not be said to be effected by the retrospective effect of the amendment The amendment to the Explanation to section 92B of the Act, though stated to be clarificatory has to be necessarily treated as effective from at best the A.Y. 2013-14 onwards and not to the A.Y. 2009-10 under consideration. In the current year, such guarantees does not constitute “international transactions”. Same is the ratio as held by the Delhi Bench of the Tribunal in the case of Bharti Airtel Ltd. [2014 (3) TMI 496 - ITAT DELHI] . While deciding the above, both the Benches have kept their reliance on the Delhi High Court judgment in the case of New Skies Satellite BV . [2016 (2) TMI 415 - DELHI HIGH COURT] - Therefore, we are of the opinion that the assessee is entitled to relief on this account. Accordingly, this part of ground is allowed. Disallowance u/s 14A r.w.r. 8D of expenses for earning exempt income - HELD THAT:- As demonstrated before us that the assessee’s investments appeared in the balance sheet under the heading ‘investments’ made by the assessee by the end of the order is much less than the assessee’s own funds - we find the issue needs to be remanded to the file of AO for fresh adjudication. AO is directed to examine the figures and apply the ratios laid down by the binding judgments of the jurisdictional High Court. We remit Ground No.4(f) to the file of the AO for fresh adjudication after granting reasonable opportunity of being heard to the assessee.
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