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2018 (4) TMI 862 - AT - Income TaxTransfer pricing adjustment - loans advanced to AE - applicability of rate - Held that:- Hon’ble High Court of Bombay in CIT Vs. the Great Eastern Shipping Co. Ltd. [2017 (6) TMI 1207 - BOMBAY HIGH COURT]has upheld the action of the Tribunal wherein it was held that arm’s length price in the case of loans advanced to AE would be determined on the basis of rate of interest being charged in the country where the loan is received/consumed. The action of the assessee in adopting the bank rate prevailing in Australia is correct and the AO erred in adopting the Indian bank rate. The loan amount was given in Australian currency and as per the promissory note the AE has to return the amount in Australian Dollar. Therefore, applying the ratio laid by the Hon’ble High Courts discussed above, we hold that there was no necessity of any arm’s length adjustment in this case. - Decided in favour of assessee Addition u/s. 14A read with Rule 8D - Held that:- Coming to the discussion u/s. 14A read with Rule 8D(2)(iii) the settled position as on date is that only while computing Rule 8D(2)(iii) investments which have yielded dividend should only be taken into account while making the computation under Rule 8D(2)(iii) i.e. investment in dividend bearing scrips only to be taken into for consideration. Therefore, we remand the matter back to the file of AO to decide this issue afresh keeping in mind the aforesaid observation of ours and in accordance to law. The assessee is at liberty to file evidence to substantiate its case as regards the additional ground of strategic investment is concerned. Long Term Capital Gain/loss carry forward against the amount computed by the AO as per the provisions of sections 46, 48 and 49 of the Act - assets incurred or borne by the “previous owner” - Held that:- CIT(A) relying on the Tribunal’s decision in the case of Smt. Mina Deogun Vs. ITO reported in (2007 (8) TMI 375 - ITAT CALCUTTA-E ) as well as DCIT Vs. Manjula J Shah [2009 (10) TMI 646 - ITAT MUMBAI] which was later upheld by the Hon’ble Bombay High Court [2011 (10) TMI 406 - BOMBAY HIGH COURT] has decided in favour of the assessee and directed the AO to adopt the figure of long term capital loss to be carried forward to the next year at ₹ 4,56,14,076/- instead of ₹ 3,75,80,707/-. We note that sec. 49 of the Act deals with the manner of computation of the cost of acquisition of capital asset. Sec. 49(1)(iii)(e) of the Act specifically states that where the capital asset has become the property of the assessee by virtue of transfer referred to in clause (vi) of sec. 47 of the Act, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it (and increased by the cost of any improvement of the assets incurred or borne by the “previous owner” or the assessee, as the case may be) - the indexation of cost has to be done from the original date when the shares were first acquired by the first previous owner - CIT(A) has rightly adjudicated the issue and has given relief to the assessee - Decided against revenue.
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