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2016 (10) TMI 1374 - AT - Income TaxTP Adjustment - interest on loans from its AEs - HELD THAT:- Sasken India earns mostly in foreign currency with 80% of its sales and some of the domestic sales being in foreign currency. As per the newly introduced Safe Harbour rules by the CBDT, the prescribed ALP rate is the base rate of SBI if the loan to Indian subsidiaries outside India is in Indian currency. All these facts are acknowledged by the TPO in his order. As pleaded that the impugned loan to its AEs were out of its own funds , not out of borrowed funds, the loans are given in US dollars, interest was received in Indian rupees and when such transactions between it and its AEs are in international transactions the ratio of the above cases ie the transaction would have to be looked upon by applying commercial principles in regard to international transaction and in such cases the domestic prime lending rate would not have applicability and the international rate fixed being LIBOR would come into play. On the facts and circumstances of the case, we are of the considered opinion that the issue requires to be examined by the TPO afresh in the light of the above materials and the ratios and accordingly remit the issue to the TPO. Disallowance u/s 14A - AR pleaded that the disallowance made u/s 14A read with rule 8D(2)(iii) has been made without demonstrating the incorrectness of the claim of the assessee that it has not incurred any expenditure towards earning exempt income. The said disallowance is therefore bad in law - HELD THAT:- We are of the considered opinion that the issue requires to be examined by the AO afresh in the light of the above amendments and accordingly remit the issue to the AO. Addition under the caption ‘Excess deduction' u/s.10A /10AA - HELD THAT:- On the facts and circumstances of the case, it is clear that neither the AO has examined these issues properly nor they received due attention at the hands of the DRP. We are of the considered view that the above issues are required to be adjudicated by the AO afresh in the light of the above ratio and if the facts are similar to apply the above ratios accordingly and hence these issues are also remitted to the AO. Short credit of TDS - assessee submitted that since the AO has not allowed TDS credit -TDS credit should be fully allowed as claimed in the return of income - HELD THAT:- We find that the DRP has directed the AO to verify the credit from the record, vis-à-vis, the claim made by the assessee and give credit to it accordingly. We direct the AO to give credit to the amount claimed by the assessee. Deduction u/s.10A - HELD THAT:- DRP had followed the judgment of Hon’ble jurisdictional High Court in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] in directing exclusion of items deducted from export turnover from total turnover also for working out the deduction u/s.10A - Just for the reason that appeal has been filed by the Revenue against the judgment of jurisdictional High Court would not be a reason not to follow the jurisdictional High Court’s judgment. We do not find any lacunae in the order of the DRP - In the result, appeal of the Revenue stands dismissed.
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