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2019 (2) TMI 628 - AT - Income TaxTP adjustment on account of guarantee commission in respect of corporate guarantee provided by the assessee to its Associated Enterprises [AEs] - Held that:- Since this issue has already been decided by the various Co-ordinate Benches in favour of the assessee in the earlier years, we therefore ,respectfully following the same, direct the AO/TPO to apply the guarantee commission of 1%. TP adjustment in respect of subscription and redemption of preference share capital - Held that:- The subscription and redemption of shares cannot be re- characterized as loan and therefore no interest should be charged on the said re-characterized loan. AR also submitted that the Co-ordinate Benches have held that the commercial expediency of transactions entered into by the assessee with its AE, cannot be questioned by the TPO, unless there are evidences and circumstances to doubt and it cannot be given different colours so as to expand the scope of TP adjustment by re-characterizing it as interest free loan. The rival contentions and perused the decisions relied upon. Since this issue has already been decided by the various Co-ordinate Benches in favour of the assessee in the earlier years, we, therefore, respectfully following the same direct the AO/TPO to do it accordingly. Disallowance of interest expenses u/s. 36(1)(iii) - Held that:- Where the assessee has substantial own funds, then presumption is that assessee has given advances to its sister concerns from its own funds. Thus, following the ratio laid down in the cases of CIT Vs. Reliance Utilities Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], the issue has been decided in favour of assessee. Disallowance u/s. 14A computed @ 0.5% of average value of investments on account of administrative expenses - Held that:- In this case, the assessee has not made any suo motu disallowance towards exempt income, which was to the tune of ₹ 16.01 Crores during the year so there is no reasons to go into the satisfaction by the AO before invoking provisions of 14A rule 8D. Undisputedly, no investment was made during the year in the subsidiary companies. DRP deleted the disallowance u/s. 14A r.w. rule 8D(2)(ii) by recording a finding on facts that assessee’s own funds were more than the investment in the subsidiary companies. No disallowance u/s. 14A r.w. Rule 8D(2)(ii) is required to be made by following the decision in the case of Godrej & Boyce Manufacturing Company Ltd., [2017 (5) TMI 403 - SUPREME COURT OF INDIA]. DRP sustained the addition under Rule 8D(2)(iii) towards administrative expenses. In our view, the ratio laid down in the decision of Hon'ble Supreme Court in the case of Maxopp Investment Limited [2017 (5) TMI 403 - SUPREME COURT OF INDIA] is that no satisfaction is required to be recorded, where no disallowance is made by assessee towards exempt income. We therefore of the view that the provisions of Section 14A r.w. Rule 8D(2)(iii) are applicable in this case and DRP was right in sustaining the disallowance. Non- grant of foreign tax credit - Held that:- After hearing both the parties and perusing the facts of the case, we observe that the assessee filed rectification application dt. 24-11-2017, this is pending for disposal. So we feel it fit and proper to direct the AO to dispose the same. Accordingly the AO is hereby directed to decide the rectification application filed by the assessee.
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