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2015 (5) TMI 639 - AT - Income TaxTransfer pricing adjustment in respect of corporate guarantee - Held that:- Following the earlier decisions of this Tribunal in assessee’s own case, we direct the AO/TPO to adopt 0.5% as arm’s length guarantee commission charges in respect of the guarantee provided by the assessee for obtaining the loan by the AE. TP adjustment in respect of interest on loan given to AE - Held that:- The rate to be used for undertaking an adjustment should be LlBOR and not the average yield rates considered by the learned TPO. The LlBOR rate for March 2008 was 2.6798%. However the assessee has charged 7% from its AE as per the internal CUP available. Thus, the assessee has charged interest to EKC Dubai and EKC China at the rate higher than existing LlBOR rates. Accordingly, the said transaction of providing loan is at arm's length. Additions made by the AO are accordingly set aside - Decided in favour of assessee. TP adjustment on account of interest on re-characterization of share application money as loan advanced to AE - Held that:- Subject to verification of the share certificate by the AO, the share application money cannot be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assesse, which was duly explained by the assesse. Accordingly, this ground of the assesse’s appeal is allowed in above terms. Expenditure on loan taken for Investment of USD 15.4 Million for the acquisition of Minacs Canada - whether is capital in nature hence not allowable? - Held that:- As it is clear from the additional ground raised by the assesse that the same pertains to subsequent assessment years when the assesse earned some foreign exchange gain, therefore, for the year under consideration, no such gain has arisen to the assesse on account of the said investment and, therefore, no adjudication of this ground is required for the year under consideration. Accordingly, we reject the additional ground raised by the assesse being not arisen from the impugned orders of authorities below for the A.Y. under consideration - Decided against assessee. Allowance of deduction u/s 10A - whether the deduction u/s 10Aof the Act, should be restricted to the profit of the unit eligible for deduction? - CIT(A) has allowed the claim of loss of the assesse - Held that:- As decided in Commissioner of Income-tax Vs. Black & Veatch Consulting (P.) Ltd [2012 (4) TMI 450 - BOMBAY HIGH COURT ] wherein held Section 10A is a provision which is in the nature of a deduction and not an exemption - the deduction under Section 10A has to be given effect to at the stage of computing the profits and gains of business - Section 80B(5) defines for the purposes of Chapter VI-A “gross total income” to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter – Decided against revenue.
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