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2023 (3) TMI 458 - AT - Income TaxTP Adjustment of AE Receivable - Assessee had outstanding receivable from its Associated Enterprises (AE) - TPO held that excessive outstanding receivables have to comply with TP provisions - only relief granted was on account of applicable rate and TPO was directed to benchmark the same on the basis of interest rates on short term fixed deposits prevailing at relevant point of time - HELD THAT - It emerges that the assessee has not charged any interest on outstanding receivables from AEs and non-AEs. The loans advanced to AEs have been benchmarked separately. It also emerges that the assessee is a zero-debt entity and do not incur significant interest expenditure. Therefore to allege that the assessee accommodated its AEs in the guise of receivables would not be a correct proposition. Therefore this addition is not sustainable. We order so. The corresponding grounds raised by the assessee stand allowed. Disallowance u/s 40(a)(i) - payment made to foreign entities - HELD THAT - It emerges that the assessee could not file any documentary evidences in support of the payment so made to foreign entities. The claim of the assessee has to cross the hurdles of Sec.37(1) as well as the provisions of Sec.40(a)(i). We find that similar payments were made by the assessee in AY 2011-12 and adjudication of this issue was done by Tribunal 2019 (12) TMI 441 - ITAT CHENNAI it was held that the services were not technical in nature - this issue stand restored back to the file of Ld. AO for fresh consideration with a direction to the assessee to file requisite evidences in support of the claim. The decision of this Tribunal as rendered for 2011-12 shall be duly considered by Ld. AO. The corresponding grounds stands allowed for statistical purposes. Foreign Exchange Loss on forward contracts - HELD THAT - AR explained that the assessee was exposed to foreign exchange risk which was sought to be covered by forex derivatives. Accordingly these transactions could not be termed as speculative or notional loss in nature. AR submitted that the quantum of transactions is commensurate with the forex exposure of the assessee and represented by underlying assets. Considering the same we restore this issue back to the file of Ld. AO for fresh consideration with a direction to the assessee to substantiate its claim. MAT computation on Disallowance u/s 14A - only plea of Ld. AR is that this disallowance is not to be added while computing Book Profits u/s 115JB - HELD THAT - We direct AO to exclude the same while computing Book Profits u/s 115JB.
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