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2017 (12) TMI 1745 - AT - Income TaxTP Adjustment - addition on account of guarantee provided to Associated Enterprise - Whether Appellant was justified in not charging any guarantee fees since guarantee provided by the Appellant was in the capacity of parent company and out of commercial expediency of the Appellant - HELD THAT:- Guarantees in question are, to use the words of the CIT(A), “continuing guarantees’ from the immediately preceding year and that except for the figures, entire facts of the case are similar to that of the immediately preceding assessment year 2008-09”. Vide our order dated [2017 (4) TMI 1406 - ITAT AHMEDABAD] the Tribunal has allowed the appeal of the assessee, on the same point, and held that no such ALP adjustments are permissible in law. We see no reasons to take any other view of the matter that the view so taken, by the co-ordinate bench, for the immediately preceding assessment year. We, therefore, uphold the grievances of the assessee and delete the impugned ALP adjustments. As we have held that no such ALP adjustment is permissible, grievances raised by the Assessing Officer, with respect to quantification of ALP adjustment, are dismissed as infructuous. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- CIT(A) has merely remitted the matter to the file of the Assessing Officer for a factual verification. There cannot be any infirmity in this approach, and the grievance of the Assessing Officer is devoid of any rationale. It is difficult to understand that when the matter is remitted to the file of the Assessing Officer, how can the Assessing Officer be aggrieved of such a direction. We see no merits in the grievance raised by the Assessing Officer. We, therefore, uphold the order of the learned CIT(A) and decline to interfere in the matter. Notional loss on account of foreign exchange fluctuation loss amounting claimed on account of Mark to Market basis - HELD THAT:- As decided in own case [2017 (4) TMI 1406 - ITAT AHMEDABAD] the assessee is consistently following the mercantile method of accounting, the same accounting treatment for the foreign exchange losses and gains has been given by the assessee all along, the assessee is making entries in respect of such losses and gains, and the treatment is consistent with the Accounting Standards. As a matter of fact, the Assessing Officer has not even raised any issues with respect to the above. His case is confined to the loss being notional in nature and contrary to the CBDT guidelines. As for the CBDT instructions, it is only elementary that any instructions issued by the CBDT cannot bind the assessee even though the assessee is entitled to, and can legitimately ask for, any benefits granted to the assessee by such instructions or circulars. Nothing, therefore, turns on the CBDT instruction even if it is actually contrary to the claim of the assessee. As per the details filed by the assessee, the foreign exchange contracts have been entered into for genuinely restricting its bonafide risk exposure of the assessee in respect of its exports and imports transactions. These contracts cannot, therefore, be viewed on a standalone basis as speculative transactions. These transactions are integral part of the business transactions and any loss or gains arising from these transactions, for the detailed reasons set out above, are deductible in computation of profits and gains of business. We uphold the action of the CIT(A) so far as this relief in respect of deleting the disallowance on account of loss, at the end of the year, on foreign exchange contracts. Disallowance u/s.36(1)(va) r.w.s.2(24)(x) on account of employees contribution towards PF & ESI - HELD THAT:- This issue is to be decided against the assessee, in the light of Hon’ble jurisdictional High Court’s judgement in the case of CIT vs. Gujarat State Road Transport Corporation Limited [2014 (1) TMI 502 - GUJARAT HIGH COURT]. The relief granted by the learned CIT(A), on this issue, is thus vacated. Upward adjustment on account interest charged on the loans granted to the Associated Enterprises' at discounted rate to the prevailing Market rate - HELD THAT:- In the light of the above factual position, it is clear that once the Revenue authorities accept the stand of the CIT(A) on an issue and allow it to reach finality in one assessment year, it cannot be open to them to challenge the same in the subsequent assessment year. As noted by Hon’ble Supreme Court, in the case of CIT vs. Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] while “strictly speaking, res judicata does not apply to income tax proceedings”, “where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year”. In view of these discussions, grievance raised by the Assessing Officer is not maintainable, and is dismissed as such. Fresh claim of the Assessee in respect of Revenue expenditures for issue of debenture of LIC of India - HELD THAT:- We find that it is a well settled legal position that the bar on accepting a fresh claim in assessment proceedings, except by way of a revised return, is only on the Assessing Officer and not the appellate authorities. There is, thus, no infirmity in learned CIT(A)’s accepting the claim in principle and remitting the matter to the Assessing Officer for examination of claim on merits. Hon’ble jurisdictional High Court has also, in the case of PCIT vs. UTI Bank Ltd. [2016 (6) TMI 961 - GUJARAT HIGH COURT] approved this approach. We, therefore, see no merits in the grievance of the Assessing Officer and reject the same.
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