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2023 (11) TMI 326 - AT - Income TaxTP Adjustment - interest imputation on share application money paid to the associated enterprises - as per DRP assessee has issued loan to its associated concerns in the garb of share application money and therefore, it is a capital financing transaction that should have been benchmarked for the interest imputation - HELD THAT:- As the issue is squarely covered in favour of the assessee, in earlier years 2015-16 [2022 (4) TMI 543 - ITAT MUMBAI] on identical facts and circumstances, respectfully following the decision of the coordinate bench we direct the learned AO to delete the adjustment on account of interest imputed on share application money. Accordingly, ground of the appeal of the assessee is allowed. TP Adjustment on advance recoverable from associated enterprises - HELD THAT:- We find that coordinate bench has dealt with this issue in ITA number 2015-16 [2022 (4) TMI 543 - ITAT MUMBAI] following the decision of the coordinate bench in assessee’s own case for assessment year 2014-15 as held we direct the AO/TPO to consider LIBOR +300 basis point to benchmark interest on receivables from Associated Enterprises. Further, while computing credit period, the credit period allowed by AE's to be considered and only on net credit period interest needs to be charges.' D.R. could not show us any reason to deviate from the aforesaid order and no change in facts and law were alleged in the relevant assessment year. Thus, respectfully following the order passed by the Co- ordinate Bench of the Tribunal in assessee's own case cited supra, we direct the Assessing Officer/TPO to consider LIBOR plus 300 basis point to compute the interest on advances recoverable from the A.Es. We further direct that while computing the interest, the credit period allowed by the A.Es to be considered and only on net credit period interest needs to be charged. Disallowance u/s 14A - HELD THAT:- As only those investments which yield exempt income needs to be considered for computation of average value of investments. In this case, we notice that the Assessee has himself disallowed an amount which has not been found to be accepted by the AO or the DRP. Facts with regard to total investments and investments which yield exempt income is not readily available before us. We, therefore, are of the considered view that ends of justice would be met if the disallowance is made after re-computing average value of investment by considering only those investments which yield exempt income. Hence, the matter is restored to the AO to re-work the disallowance. Disallowance u/s 36 (1) (iii) - disallowance of interest and other expenditure holding that same has not been incurred by the assessee for the purposes of the business - HELD THAT:- We find that when the assessee is having higher non-interest-bearing funds available with the assessee in the form of share capital and interest free reserves, then the amount of investment made in the non-interest-bearing investments, no disallowance u/s 14A under section 36 (1) (iii) can be made. As the issue of disallowance under section 14 A of the act has been restored back to the file of the learned assessing officer with certain directions, the learned AO should also consider the above directions relevant for deciding this ground also. As this ground is a joint with the ground number 4 of the appeal of the assessee which has been set-aside to the file of the learned assessing officer in the interest of justice we have set-aside ground number 5 of the appeal back to the file of the learned assessing officer to decide it a fresh in accordance with the above observations. Increase of the book profit under section 115JB of the act by the disallowance under section 14 A is to be deleted. See JSW energy Limited. [2015 (5) TMI 823 - BOMBAY HIGH COURT] Disallowance of deduction u/s 35 (2AB) - assessee has made the higher claim as compared to expenses approved by the DSIR in form number 3CL - whether assessee is entitled to weighted deduction at the rate of 200% expenditure incurred for the research and development facilities? - HELD THAT:- As identical issue arose in the case of the assessee in [2023 (5) TMI 1101 - ITAT MUMBAI] which was decided by the coordinate bench wherein the disallowance of weighted deduction under section 35 (2AB) of the act has been considered and as categorically held that the requirement of form number 3CL has been introduced with effect from 1/7/2016 and prior to that there was no such requirement. Thus direct the learned assessing officer to grant the deduction under section 35 (2AB). Short credit of TDS not been granted by AO despite making a rectification application - HELD THAT:- We direct the learned assessing officer to dispose of the application of rectification in accordance with the law. This is also the request of the assessee. Accordingly, ground number eight of the appeal is allowed with above direction.
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