Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 1411 - AT - Income TaxTP Adjustment - corporate guarantee to its overseas Associate Enterprise - Commissioner (Appeals) reducing the corporate guarantee fee to 0.5% as against 1.5% determined by the Transfer Pricing Officer - HELD THAT:- No infirmity in the aforesaid decision of learned Commissioner (Appeals). The Hon’ble jurisdictional High Court in case of CIT vs Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] has upheld the decision of the Tribunal in charging guarantee commission on corporate guarantee at 0.5%. The same view was expressed by the Hon’ble jurisdictional High Court in case of CIT vs M/s GlennmarkPharmceuticals Ltd [2017 (2) TMI 1305 - BOMBAY HIGH COURT] The aforesaid decision of the jurisdictional High Court was upheld by the Hon’ble Supreme Court while deciding the appeal of the revenue [2018 (12) TMI 608 - SUPREME COURT]. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals) on this issue. Grounds are dismissed. Disallowance of deduction claimed on employee stock option (ESOP) expenditure - whether ESOP expenditure is allowable u/s 37(1) ? - HELD THAT:- We find, while deciding identical issue in assessee’s own case in Assessment Year 2012-13 learned Commissioner (Appeals), following the decision of ITAT, Bengaluru Special Bench in case of M/s Biocon Ltd [2013 (8) TMI 629 - ITAT BANGALORE] allowed assessee’s claim of deduction by holding that ESOP expenditure is not a contingent liability; hence, is an allowable deduction under section 37(1) of the Act. We have also noted, identical issue has been decided in favour of the assessee in Assessment Year 2008-09 - Thus we uphold the decision of learned Commissioner (Appeals) while dismissing the ground raised. Disallowance u/s 14A r.w.r. 8D - suo motu disallowance made by assessee - HELD THAT:- As could be seen from the summary of average value of exempt income yielding investments, interest free fund available and disallowance computed under section 14A filed before us by the learned Counsel for the assessee, the assessee had sufficient interest free fund available with it. Therefore, no disallowance of interest expenditure can be made. Further, we also agree with assessee that disallowance under rule 8D(2)(iii) can only be made on the average value of assets yielding exempt income during the year. It is the case of the assessee that if disallowance under rule 8D(2)(iii) is computed on the average value of exempt income yielding investments, it will work out to Rs.64,24,889/– only. Whereas, assessee, suo motu, has disallowed Rs.11,68,95,186. We find substantial force in the aforesaid submissions of the assessee. Further, the contention of the assessee that the shares of DEN Network has no cost to the assessee as it was received by gift/voluntary contribution is acceptable. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals). This ground is dismissed. Disallowance u/s 14A r.w.s. rule 8D while computing book profit u/s 115JB - HELD THAT:- We are in agreement with learned Commissioner (Appeals) that while computing books profit under section 115JB of the Act, the assessing officer cannot invoke the provisions of section 14A r.w.r. 8D for making adjustment to the book profit. This legal proposition has been laid down in case of ACIT vs Vireet Investments (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI].Though, the assessing officer is empowered to disallow expenditure incurred for earning exempt income in terms of Explanation 1(f) of section 115JB; however, such expenditure must have a direct nexus with the earning of exempt income and not something which is computed under rule 8D r.w.s. 14A of the Act. Therefore, we do not see any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. Ground is dismissed.
|