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2018 (6) TMI 273 - AT - Income TaxTP adjustment in respect of counter guarantee given - corporate guarantee given on overdraft facility - Held that:- In respect of corporate guarantee given on overdraft facility, following the order passed by Tribunal in AY 2008- 09, we direct the Assessing Officer to restrict TP adjustment to 0.5% of average amount of loan outstanding during the year. In respect of counter guarantee given by the assessee for the guarantee given by IDBI Bank on behalf of Taj TV, we agree with the contentions of learned AR that non-fund based facility cannot be treated at par with the the fund based facility. We notice that in the case of Asian Paints (India) Ltd [2016 (11) TMI 258 - BOMBAY HIGH COURT] @0.20% has been held to be appropriate by the Tribunal. Accordingly, we direct the Assessing Officer to compute TP adjustment in respect of counter guarantee given at 0.20% of the amount of counter guarantee. Disallowance made u/s. 14A - Held that:- The own funds available with the assessee as at the beginning and end of the year, were more than the value of investment during those dates. Hence, as per the decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], no disallowance out of interest expenditure is called for as per Rule 8D(2)(ii) of the I.T Rules. Disallowance to be made under rule 8D(2)(iii) out of administrative expenses, only those investments which have yielded exempt income have to be considered for working out the average value of investments, as per decision rendered by Delhi Special Bench of the Tribunal in the case of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. As stated earlier that the assessee has furnished a statement of working of disallowance under Rule 8D(2)(iii) by considering only those investments which have yielded exempt income, as per which the disallowance worked out to ₹ 32.71 lakhs, i.e. more than the amount disallowed by the assessee. Hence for the limited purpose of verifying the above said statement, we restore this issue to the file of the Assessing Officer. If the is satisfied with the workings given by the assessee, the disallowance u/s. 14A of the Act should be restricted to ₹ 41.33 lakhs, i.e. the voluntary disallowance made by the assessee should be accepted. Otherwise, the AO may take appropriate decision in accordance with the law.
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