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2020 (2) TMI 72 - AT - Income TaxDisallowance u/s 36(1)(iii) - HELD THAT:- Assessee’s own fund consisting of share capital and reserve and surplus was ₹ 175.11 Crore. The assessee has given loans and advance to is subsidiaries i.e. Dee Greaves of ₹ 2,13,55,159/- only. The Hon’ble Bombay High Court in Reliance Utility & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that if the assessee have funds available both, interest-free and overdraft and/or loans are taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds are sufficient to meet the investments. Therefore, in view of the decision of jurisdiction High Court as referred above, we are of the view that the assessee has sufficient interest free fund available with the assessee and therefore, no interest disallowance under section 36(1)(iii) was justified. Disallowance under section 14A - HELD THAT:- Assessee has made investment from its own interest free funds for the earning exempt income or the investment made are from the income generated from the business of assessee, therefore, no interest disallowance under Rule 8D(2)(ii) is warranted against the assessee. So far as disallowance under section Rule 8D(2)(iii) is concerned, the Assessing Officer have made disallowance @ .5% of average value of investment. In our view, the Assessing Officer has correctly made the disallowance of indirect expenses by applying the formula of Rule 8D. Therefore, we upheld the disallowance of .5% of average value of investment. The assessing officer is directed to allow the setoff of suo moto disallowance offered by the assessee. Thus, the assessee gets part relief on this ground of appeal Addition of Pooja Expenses - HELD THAT:- In assessee’s own case for preceding year when no variance is brought to our notice. Thus, respectfully following the same, we direct the Assessing Officer to delete the disallowance of Pooja Expenses. Addition of Club Expenses - HELD THAT:- Considering the decision of Tribunal on similar ground of appeal in assessee’s own case for preceding year when no variance is brought to our notice. Thus, respectfully following the same, we direct the Assessing Officer to delete the disallowance of Club Expenses. Transfer Pricing Adjustment for corporate guarantee - HELD THAT:- Provision of guarantee is not international transaction is not acceptable to us. In our view after introduction of Explanation 1(c) to section 92B with retrospective effect from 01.04.2002, the provision of guarantee has to be considered as international transaction. However, following the decision of Hon’ble Bombay High Court in Everest Canto Cylinder Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] , we direct the Assessing Officer to charge/add guarantee commission @ 0.5% p.a. for the period of guarantee. In the result, this ground of appeal is partly allowed. Treatment of receipt received on transfer of TDR - capital receipt or revenue receipt - Admission of additional claim - HELD THAT:- Assessing Officer is not entitled to accept revised claim without filing of revised return of income, however, we are in agreement with the contention of ld. AR of the assessee that the appellate authority have jurisdiction to consider revised claim as held by jurisdictional High Court in Pruthvi Brokers & Shareholder Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] - We are also in agreement with the submission of ld. AR of the assessee that acquiescence cannot take away the right of the parties for the relief that he is entitled, where tax is levied or collected without authority of law. Therefore, considering the facts of the case, we admit the additional ground/claim raised by assessee about the receipt of income received on transfer of capital asset/TDR. We have admits the additional ground/claim of assessee, therefore, we deem it appropriate to restore the issue to the file of Assessing Officer to decide this issue afresh in accordance with law. Interest u/s 244A and 234D - HELD THAT:- Appeal are restored the file of Assessing Officer to recompute the interest under section 244A and 234D in accordance with law. Disallowance under section 14A to book profit under section 115JB - HELD THAT:- Issue decided in favour of assessee by the decision of Special Bench in Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein Special Bench of Delhi Tribunal that the computation under clause (f) of Explanation 1 to section 115JB (2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D.
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