Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 269 - AT - Income TaxTP Adjustment - addition on account of corporate guarantee fee - HELD THAT:- As decided in own case [2016 (9) TMI 1456 - ITAT KOLKATA] the assessee`s expectation from provision of loan and guarantee are not that of a lender or guarantor i.e. to earn a market rate of interest or guarantee fee, rather, the expectation was of a shareholder- to protect its investment interest, help it to achieve acquisition of Tega Beruc for furtherance of its own business and get return in terms of appreciation in value and dividends. It can be verified from the fact that no third party would have agreed to grant loans, on an independent basis, to the tune of ₹ 5 Crores to Tega Bahamas given its skewed debt-equity ratio reflected in the balance sheet, as equity funding is mere ₹ 23 Lakhs, therefore in the present case the guarantee is a shareholder activity hence no TP adjustment on account of corporate guarantee should be required. Accordingly, we direct the Ld.DRP/AO to delete the addition Transfer Pricing Adjustment on account of interest on loan given to subsidiary company - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessee’s own case wherein the Division Bench of this Tribunal noticed in the additional evidences that the assessee has computed credit rating of Taga Australia at “BBB” and Tega US at “AA” by applying scientific and logical method, and submitted before this Tribunal additional evidences and directed ld. TPO/A.O for fresh examination. Accordingly, we also direct the ld. TPO/Assessing Officer to examine credit rating of Taga Australia at “BBB” and Tega US at “AA” which was computed by assessee by applying scientific and logical method. Therefore we restore this issue to the file of the TPO/AO with the direction to ascertain the arm`s length price of the loan. Therefore grounds raised by Revenue are dismissed. Disallowance u/s 14A r.w.r 8D - HELD THAT:- We note that Coordinate Bench of ITAT, Kolkata in the case of REI Agro vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yielded dividend during the previous year that has to be considered while adjudicating the average value of investment for the purpose of Rule 8D(2)(ii) and (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by the Hon’ble Calcutta High Court [2014 (4) TMI 713 - CALCUTTA HIGH COURT] in the appeal against the order of the Tribunal in the case of REI Agro Ltd. (supra). We note that in assessee’s case, the assessee has not disallowed any expenditure under Rule 8D(2)(i), as there was no direct expense incurred by the assessee. No disallowance is attracted under Rule 8D(2)(ii) as the assessee’s own funds are more than investments. Now coming to the third limb, namely Rule 8D(2)(iii), wherein we note that the disallowance can be made with reference to the dividend bearing securities. We note that the disallowance as per Rule 8D(2)(iii) by taking into account only dividend bearing securities, as per assessee`s computation comes to ₹ 86,863/-, whereas the assessee has suo moto disallowed ₹ 3,50,000/- which is more than ₹ 86,863/- therefore, no further disallowance is required. Addition regarding loss from option contracts in foreign currency with banks held as “Speculative loss” - HELD THAT:- AR has supported the order of ld. CIT(A). On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. We note that the currency option contracts were executed by the assessee with the sole purpose of hedging the export receivables & import payables. Therefore, the ld CIT(A) has rightly held that the loss of ₹ 4,74,97,275/- incurred in such option currency contracts was non-speculative in nature and allowable as deduction from the profits of the business. That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Education cess is allowable for deduction u/s 37(1) - HELD THAT:- Respectfully following the judgment of this Coordinate Bench in the case of ITC Limited [2019 (4) TMI 1574 - ITAT KOLKATA] we allow the claim of the assessee.
|