2019 (6) TMI 1373 - AT - Income Tax

TP Adjustment - adjustment made on the basis of Share Purchase Agreement ('SPA'/'Agreement') - HELD THAT:- As decided in assessee’s own case for AY 2010-11 [2018 (8) TMI 1708 - ITAT MUMBAI] same are not applicable to the facts of the present case and we are of the view that since chapter 10 pre-supposes the existence of "income" and lays down machinery provison to compute ALP of such income, if it arises from an "International transaction". Section 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under the Act. Accordingly, since no income had accrued to or received by the assessee u/s 5, no notional income can be brought to tax u/s 92 - direct for deletion of impugned TP adjustment. Ground No. 1 stands allowed.

Disallowance u/s 14A - assessee earned exempt dividend income of ₹ 9.16 Lacs during the impugned AY and held investment of ₹ 668.69 Lacs - HELD THAT:- Since no disallowance was offered by the assessee against the same, AO compute expense disallowance of ₹ 3.21 Lacs, being 0.5% of average investments, in terms of Rule 8D(2)(iii). The same upon, confirmation by Ld. first appellate authority is under appeal before us. CIT(A) has directed AO to exclude those investments which may not be capable of yielding exempt income to the assessee.

AR, briefly submitted that keeping in view the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] AO may be directed to take into consideration only those investments which have actually yielded any exempt income during the year. Concurring with the same, we direct AO to take into consideration only those investments which have actually yielded any exempt income during the year. The assessee is directed to provide requisite information, in this regard. This ground stand partly allowed.