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2020 (1) TMI 1647 - AT - Income TaxDisallowance u/s 14A - expenditure incurred on earning exempt income - HELD THAT:- As disallowance u/s 14A on the basis of the settled position of law cannot exceed the amount of the exempt income, therefore, without prejudice to the fact that the assessee had voluntarily offered the disallowance under the aforesaid statutory provision at a higher amount in its return of income, the consequential relief to the assessee by restricting the disallowance u/s 14A up to the extent of its exempt income cannot be denied. To sum up, we herein direct the A.O to restrict the disallowance u/s 14A upto the extent of the exempt dividend income of the assessee. Disallowance u/s 14A r.w Rule 8D, for the purpose of computing the "book profit" u/s 115JB - HELD THAT:- This issue is clearly covered by the order of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] as held that the computation under clause (f) of Explanation 1 to Sec.115JB(2) is to be made without resorting to the computation contemplated under Sec.14A r.w. Rule 8D. Accordingly, we are of the considered view that the lower authorities had erred in concluding that the disallowance computed under Sec.14A r.w. Rule 8D was to be added for the purpose of working out the "book profit‟ under Sec.115JB - we restore the issue to the file of the A.O who is directed to rework out the "book profit‟ of the assessee u/s 115JB in terms of our aforesaid observations. The additional "Ground of appeal‟ is allowed in terms of our aforesaid observations. TP adjustment in respect of corporate guarantee as provided by the assessee as a co-guarantor alongwith its holding company - HELD THAT:- ALP of the corporate guarantee commission in the case of the assessee before us can safely be taken at 0.5%. As the assessee is a co-guarantor, therefore, the TP adjustment as regards its share of guarantee commission would work out at 0.25% [½ of 0.5%]. TP adjustment on account of Ship management income - HELD THAT:- As regards the ship management services provided by the assessee to ESLL, we find, that the same falls within the realm of the definition of the “Incidental activities” as envisaged in sub-section (5) of Sec. 115V-I r.w Rule 11R, which encompasses within its sweep viz. (i). maritime consultancy charges; (ii). income from loading or unloading of cargo; (iii). ship management fees or remuneration received for managed vessels; and (iv). maritime education or recruitment fees. As the ship management services provided by the assessee to its AE, viz. ESLL forms part of its presumptive income determined as per the provisions of tonnage tax scheme contemplated in Chapter XII-G, therefore, no addition by way of any adjustment to the value of the said transaction could have been carried out by the A.O/TPO by resorting to the transfer pricing provisions contemplated in Chapter X of the Act. TP adjustment on account of interest on ship acquisition on BBCD basis (hire purchase basis) - HELD THAT:- Now when under the tonnage tax scheme, the actual receipts/revenues earned and expenses incurred are not taken into consideration for the purpose of determining the tonnage income of the eligible company, therefore, the applicability of the transfer pricing provisions as envisaged in Chapter X of the Act would clearly stand excluded. we are of the considered view that the transfer pricing adjustment of the interest expenditure made by the A.O/TPO in respect of the cost of the aforesaid ships viz. “MV Malathi” and “MV Malavika” cannot be sustained. Accordingly, we direct the A.O to vacate the TP adjustment. Levy of interest u/sss. 234A, 234B and 234C - As the levy of interest is mandatory as per the judgment of Anjum M.H Ghaswala & Ors. [2001 (10) TMI 4 - SUPREME COURT]
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