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2020 (5) TMI 531 - AT - Income TaxTP Adjustment - determining ALP of royalty paid - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case for AY 2007-08 [2018 (3) TMI 423 - ITAT DELHI] we are of the considered view that CIT (A) has rightly deleted the adjustment made by the ld. TPO while determining the ALP and royalty paymen for its Tajola plant as nil because when it is not in dispute that the expenditure or payment of royalty has been paid / incurred for the purpose of business, it cannot be disallowed on the ground that it has failed to generate any economic value for the taxpayer’s business - it is not the duty of the ld. TPO to advise the taxpayer company as to how the business affairs are to be run. So, when the taxpayer has successfully proved that it has received patented technology and support for the manufacturing of float glass from AGC Japan in lieu of royalty payment, the same cannot be disallowed on the basis of conjectures and surmises. So, ld. CIT (A) has rightly deleted the addition. MAT Computation - Addition on account of provision for gratuity to book profit u/s 115JB - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in taxpayer’s own case [2018 (3) TMI 423 - ITAT DELHI] we are of the considered view that by now, it is settled proposition of law that when provision for gratuity is being made on the basis of actuarial valuation, it cannot be said to be an unascertained liability and added in terms of clause (c) of section 115JB of the Act and as such, the said amount would not be added to the net profit. So, we find no illegality or perversity in the deletion made by the ld. CIT (A), hence ground no.2 of Revenue’s appeal is deleted. Addition u/s 14A read with Rule 8D - disallowance under the normal provisions of the Act as well as u/s 115JB - CIT (A) contended that since the taxpayer has suo motu disallowed u/s 14A of the Act on account of expenses incurred to earn the dividend income of ₹ 7,47,820/-, no further disallowance can be made as the AO has not recorded any satisfaction if the working given by the taxpayer is not correct - HELD THAT:- This issue is also required to be restored to AO to decide afresh in view of the decision relied upon by the ld. AR for the taxpayer referred in the preceding paras. So, this ground is allowed for statistical purposes. Disallowance of gross MTM loss - addition relying upon Instruction No.3/2010 dated 23.03.2010 by treating MTM loss as a notional loss being contingent in nature - HELD THAT:- As relying on BANK OF BAHRAIN & KUWAIT [2010 (8) TMI 578 - ITAT, MUMBAI] when MTM gain is being taxed by the department in respect of such unmatured forward foreign exchange contracts then there was no ground to disallow the loss as claimed by the taxpayer in respect of the same contracts on the same footing. The entire detail is there on record. Even otherwise, the obligation accrued against the taxpayer the minute it entered into forward foreign exchange contracts. So, the forward foreign exchange contracts debited to the profit & loss account are allowable one being the liability having been crystallized when a pending obligation on the date of balance sheet is determinable with reasonable certainty. Foreign currency gain - disallowance on the ground that taxpayer did not furnish any supporting document in respect of its claim to prove that the gain of reinstatement of liability of Foreign Currency Loan – External Commercial Borrowing taken for acquiring capital goods by applying the provisions contained u/s 43A - HELD THAT:- The coordinate Bench of the Tribunal in the case of Vodafone East Ltd. & Ors. vs. ACIT . [2009 (4) TMI 4 - SUPREME COURT] by relying upon the decision rendered by Hon’ble Supreme Court in case of CIT vs. Woodward Governor of India Pvt. Ltd.. [2009 (4) TMI 4 - SUPREME COURT]decided the identical issue in favour of the taxpayer. Disallowance on account of provision for gratuity under the normal provisions - gratuity has been added to the taxable income under the normal provisions of the Act - HELD THAT:- When provisions of gratuity has been made on accrual basis it is not an unascertained liability rather an ascertained liability which aspect has not been examined by the ld. CIT (A), so the issue is remanded back to the ld. CIT (A) to decide afresh accordingly after providing an opportunity of being heard to the taxpayer, in view of the order passed by the Tribunal in taxpayer’s own case for AY 2007-08 [2018 (3) TMI 423 - ITAT DELHI]. So, ground no.4 is determined in favour of the taxpayer for statistical purposes.
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