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2017 (5) TMI 208

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..... n towards excise duty on closing stock - Held that:- We are of the opinion that the A.O has not followed the directions of the DRP stating that the contentions of the Assessee appears to be correct and if such contentions are correct there is no double deduction of Excise duty in view of the above submission of the Assess, the A.O is directed to verify the claim. Thus A.O is directed to examine the details furnished by Assessee and if the contentions are found correct as stated by the DRP the amount has to be deleted. Interest on loan to AE - Held that:- As the loan was given in foreign currency outside India and accordingly the LIBOR rate should be the basis for calculation of interest rate. Since Assessee has charged more than of the LIBOR rate at 8%, we are of the opinion that no adjustment is required to be made and accordingly the amount confirmed by the DRP stands deleted. Addition on Reimbursement of Expenditure - Held that:- No ALP adjustments can be made to the reimbursement expenditure, which is only reimbursement of traveling and other miscellaneous expenditures and is not charged to profit and loss account. Accordingly grounds of the Assessee on this issue are al .....

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..... 38,29,500 was proposed as an adjustment u/s 92CA of the IT Act. Assessee has objected before the DRP stating that the Corporate guarantee does not come within the international transaction and further there is no fees paid to anybody, therefore no adjustment is required to be made. The DRP however, after noticing that in A.Y 2009-10 the bank has given loan to A.E @ 12%, although the provisional interest rate in Afghanistan was around 18%, noted that 6% can be considered as fee for Corporate guarantee. Accordingly same was directed to be restricted to 6% of the loan amount outstanding as on 01-04-2009. 3.1 Assessee is aggrieved and raised the grounds that the Corporate guarantee does not fall under the Transfer Pricing Provisions and the transaction is entered out of shareholders obligation. It relied on the following case law with reference to the Corporate guarantee: 1. IT AT Chennai in the case of Redington (India) Limited Vs JC IT , 513/Mds/2014. 2. IT AT Delhi in the case of Bharti Airtel Limited vs AC IT , 5816/Del/2012. 3. IT AT Hyderabad in the case of Four Sof t Limited vs DCIT, 1495/Hyd/2010. 4. IT AT Mumbai in the case of Asian Paints Limited vs .....

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..... he sales of finished goods. But Assessee was also debiting the Excise duty on finished goods to the Profit and Loss account under the head administrative expenses. The A.O was not convinced with the explanation of Assessee that the Excise duty on finished goods debited separately to Profit and Loss account is provision for unfinished goods, as the management prepares monthly MIS report. It was submitted before the DRP that when the sales are accounted clear of Excise duty as per Accounting Standard-9, which is consistently followed by Assessee company, the Excise duty debited to Profit Loss account under the head administrative expenses represents the difference between the Excise duty collected and paid, the payment being more than the receipt, the Excise duty which was paid during the year was an allowable deduction. It was submitted that there is no claim of double deduction of Excise duty on finished goods. The DRP has considered the contentions and allowed as under: 13. We have gone through the submissions of the Assessee and the order of the A.O, the contentions of the Assessee appears to be correct and if such contentions are correct there is no double deduction of Ex .....

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..... 0/- by charging the interest at 12.25% and difference being considered as adjustment under the TP provisions. The DRP has restricted the interest to 8.25% and the addition was restricted to ₹ 2,09,500. It was the submission that the loan was taken in foreign currency outside India and LIBOR rate should be taken as the basis for calculating the interest. Assessee has already charged 8% on the loan, which is higher than the LIBOR rate and accordingly no ALP adjustment is required to be made. On verification of the facts on record and the orders of DRP, we are of the opinion that the loan was given in foreign currency outside India and accordingly the LIBOR rate should be the basis for calculation of interest rate. Since Assessee has charged more than of the LIBOR rate at 8%, we are of the opinion that no adjustment is required to be made and accordingly the amount of ₹ 2,09,500/- confirmed by the DRP stands deleted. The grounds on this issue are accordingly allowed. Addition on Reimbursement of Expenditure: 14. Assessee has received reimbursement of expenditure to the tune of 6.35 crores on cost to cost basis, which was not part of profit and loss account nor ope .....

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..... sessment proceedings @ 10% of expenses on sales promotion, off ice maintenance and out of pocket and 5% on site maintenance. The AO has mentioned in the order that the same was agreed to by the AR before the AO. Hence filing additional grounds is not in order. The Hon ble jurisdictional IT AT Hyderabad had held in several decisions that an appeal cannot be filed against an agreed addition. Still in the interest of justice the AR during the course of present proceedings on 17.11.2015 was directed to produce all evidence in support of its cl aim and grounds that no such disallowance can be made and time was granted till 07- 12-2015. On the said date the AR failed to furnish any information to substantiate the cl aims made in the additional grounds. This clearly proves the assessee had no evidence whatsoever to substantiate the grounds taken, hence, the order of the AO is upheld and the objection is rejected. 15.1 It was the submission of Ld. Counsel that agreement made by the AR is not binding on Assessee and relied on the decision of the Coordinate Bench in the case of Sri R.T Bala Subramanyam Vs ITD 50 ITD 513 and CIV Vs Indian Express Madhurai Pvt Ltd 13 taxmann 441 Madras. .....

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