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2021 (3) TMI 472 - AT - Income TaxDepreciation on goodwill - main reason for disallowance of depreciation is that the assessee has not shown or established any such intangible assets or intellectual assets re-cognised in the books of accounts of the transferor - assessee has failed to establish its claim of the parameters - HELD THAT:- At the very outset, we have to state that this is not the initial year of claim of depreciation. In our considered opinion, unless the claim is disturbed in the initial year of claim, subsequent years cannot be disturbed. Disallowance made u/s 14A r.w.r 8D of the Rules - HELD THAT:- A perusal of the assessment order shows that no satisfaction was recorded by the Assessing Officer with respect to the examination of the books of account. While making disallowance, the Assessing Officer observed that “It is unbelievable that for earning income of ₹ 3.70 crores, no expenditure was made by the assessee”. AO has failed to record any satisfaction with regard to the correctness of the claim of the assessee that it has not incurred any expenditure. The learned assessing officer did not cite any of the expenditure in the profit and loss account of the assessee, which is incurred by the assessee for earning of the exempt income. There is not even a whisper of examination of books of account of the assessee to verify the correctness of the claim of the assessee that no expenditure was incurred for earning exempt income. Therefore, in absence of any satisfaction recorded by the learned AO with respect to the examination of the books of account of the assessee to verify the correctness of the claim of the assessee, the disallowance u/s 14A cannot be sustained. Since we have already deleted the disallowance u/s 14A of the Act in normal computation of total income, we direct the Assessing Officer to delete the above addition while calculating the book profit u/s 115JB of the Act. This common grievance in all the appeals is allowed. Levy of interest u/s 234C - HELD THAT:- In so far as levy of interest u/s 234C is concerned, we direct the Assessing Officer to levy interest on the returned income of the assessee. Deductibility of education cess - HELD THAT:- As relying on CHAMBAL FERTILISERS AND CHEMICALS LTD [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] we direct the Assessing Officer to allow claim of deductibility of cess from the income in the captioned A.Ys. Additional ground in all the appeals is allowed. TP Adjustment - enhancement of income of the assessee holding that the international transaction pertaining to the provision of corporate guaranteed to the bank on behalf of the AE does not satisfy the Arm’s length principle - HELD THAT:- The said guarantee was issued by HDFC for and on behalf of the AE and no corporate guarantee was issued by the assessee company. The said guarantee was issued by HDFC on the basis of Fixed Deposits of the assessee company on which the assessee continued to receive interest from the bank and hence there was no cost/expenses incurred by the assessee company. Cost charged by the bank at the time of issuing the guarantee in F.Y. 2009–10 was charged by the assessee from its AE with mark up of 14%. Most importantly, as mentioned elsewhere, the said guarantee was issued by HDFC bank to the Income Tax department against the tax liability of the AE only. Therefore, in case if any demand is raised upon conclusion of MAP proceedings, liability to pay the said tax demand will only be on AE of the assessee and not on the assessee company. Considering the facts in totality, we are of the considered view that the TPO/DRP erred in imputing notional income equivalent to commission charged by banks. We, accordingly, direct the Assessing Officer to delete the addition - Decided in favour of assessee.
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