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2016 (5) TMI 166 - AT - Income TaxTransfer pricing adjustment on account of notional interest on the loans and advances given to the associated enterprises - Held that:- We find that this issue had come for consideration before the Tribunal in the assessment years 2007-08 and 2008-09. The Tribunal had taken note of the fact that the assessee had also received loans/advances on which the assessee did not pay interest. For verification the matter was set aside to the Assessing Officer. Following the same reasoning, we also set aside the matter to the file of the Assessing Officer with a direction to decide this issue on similar lines Transfer pricing adjustment towards notional guarantee commission chargeable for the guarantee extended to its associated enterprises - Held that:- We find that this issue is permeating through in all the years. This fact has been noted by the Tribunal in its order for the assessment year 2008- 09, vide paragraphs 28 to 31, wherein after referring the Tribunal order in the assessee's own case right from the assessment years 2005-06 to 2007- 08, held that commission chargeable for guarantee commission by the assessee to its associated enterprises should be taken at 0.5 per cent. as the arm's length price. Thus, respectfully following the judicial precedence which is based on the same facts applicable in this year also, we direct the Assessing Officer to take 0.5 per cent. as guarantee commission to be chargeable from associated enterprise in computing the arm's length price. Disallowance under section 40(a)(ia) - Held that:- The payee has furnished the return of income under section 139 and has taken into account such sum for computing the income in such return of income and has paid taxes then, the assessee cannot be treated as assessee-in-default within the meaning of section 201(1) and, accordingly, the assessee shall be deemed to have deducted the tax and, accordingly, no disallowance under section 40(a)(ia) can be made. Such a provision has been brought in the statute to curb the mischief and, therefore, it has to be reckoned as curative in nature and should be given retrospective effect. Accordingly, the Assessing Officer is directed to clarify this issue and grant the relief to the assessee. On the second contention also, we agree with the learned counsel that if the assessee has not claimed any such as an expenditure, then there is no question of disallowance under section 40(a)(ia), the Assessing Officer shall also verify this contention and if it is found that no such expenditure has been debited then there is no question of any disallowance under this section. Disallowance under section 14A read with rule 8D - Held that:- There is no dispute that all the investments have been made in the subsidiary company as the strategic investment so as to get controlling interest in such subsidiaries. The investment was not made for earning of any dividend income. Besides this, the dividend income itself is ₹ 7,24,508, therefore, disallowance under section 14A cannot be more than the exempt income especially in view of the decision of the hon'ble Delhi High Court in the case of Cheminvest Ltd. v. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] wherein, the hon'ble High Court has held that, if there is no dividend income, then there cannot be any corresponding disallowance. On the same principle, if the dividend income is ₹ 7.24 lakhs, then the disallowance cannot be more than that. Accordingly, we hold that such a huge disallowance of ₹ 2,21,51,600 is uncalled for and therefore, we direct the Assessing Officer to restrict the disallowance to ₹ 7,24,508. - Decided partly in favour of assessee in part
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