TMI Blog2018 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... re with the corresponding opening figure at ₹ 3.84 crore as against the amount of shareholders’ fund at ₹ 399.71 crore at the close of the year and ₹ 161.91 crore at the beginning of the year. This proves that the amount of investment in the Units etc., yielding exempt income, is much less than the amount of shareholders’ funds. We uphold the impugned order in deleting the disallowance of interest u/s 14A at ₹ 45,86,464/-, against which the Revenue has preferred this grievance before the Tribunal. This ground is not allowed. Disallowance of claim of depreciation @ 60% on UPS as against 15% - Held that:- We find that the issue of allowing depreciation at higher rate on computer peripherals is no more res integra in view of the judgment of the Hon'ble Delhi High Court in CIT vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] wherein the entitlement to the higher rate of depreciation on computer peripherals has been laid down by deciding the issue in favour of the assessee. - ITA No.444/Del/2015 - - - Dated:- 2-5-2018 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI LALIET KUMAR, JUDICIAL MEMBER For The Assessee : None For The Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacing before the ld. CIT(A), a copy of the Agreement with the AE, it was argued that as per the terms of the Agreement, the AE was to create market for the assessee in the United States, for which it was to be paid commission @ 2% of the FOB value of the sales made to the customers in the US. If the AE did not succeed in its efforts, the assessee was to pay US $31,500 per month, being, the estimated expenditure incurred by the AE in performance of the services performed. The assessee also furnished before the ld. first appellate authority the details of expenditure incurred by the AE; and copy of bills of expenditure incurred by the AE. It was argued that its AE hired three marketing professionals, i.e., Mr. Dhananjay Maslekar, Mr. Richard Cramb and Mr. Navjot Singh exclusively for the assessee s operations. Copies of appointment letters of these professionals were also filed. The ld. CIT(A), after noting all the relevant facts, held that 75% of the payment made to the AE for intra-group services should be allowed as deduction. As a result of that, disallowance on account of intra-group services was restricted to ₹ 27,93,184/-, thereby allowing relief of ₹ 83,79,551/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CUP method for determining the ALP of the international transaction. While applying the CUP method, it was obligatory upon him to bring on record some comparable uncontrolled instance as per the mandate of rule 10B(1)(a)(i). Not even a single comparable instance has been brought on record to facilitate a comparison between the price for the services by the assessee vis- -vis that paid by other comparables in similar uncontrolled circumstances. It is further found that the assessee has also not substantiated the ALP under the PSM as claimed by it, as has been recorded by the authorities below. We, therefore, also disapprove the benchmarking by the assessee of the international transaction of payment of Commission. 9. That apart, it is noticed that the action of the TPO in determining Nil ALP of the international transaction on the ground that no benefit accrued to the assessee and then the AO making addition simply on the basis of recommendation of the TPO, is not in accordance with the judgment of the Hon ble jurisdictional High Court in CIT v. Cushman Wakefield (India) (P.) Ltd. (2014) 367 ITR 730 (Del ), in which it has been held that the authority of the TPO is limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/TPO for deciding it in conformity with the above discussion and the law laid down by the Hon'ble jurisdictional High Court in the aforenoted case. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such proceedings. 11. The next ground raised by the Revenue in its appeal is against restricting the disallowance u/s 14A to ₹ 5,60,984/-. 12. The facts apropos this issue are that the assessee earned exempt dividend income of ₹ 20,11,752/-. No disallowance was offered u/s 14A. On being called upon to explain the reasons, the assessee submitted that the dividend income was earned from mutual funds. A request was made that ₹ 20,000/- may be disallowed u/s 14A. After recording satisfaction, the Assessing Officer invoked the provisions of Rule 8D to make disallowance of ₹ 51,47,448/-, comprising of interest component under Rule 8D(2)(ii) at ₹ 45,86,464/- and % of the average value of investments as per Rule 8D(2)(iii) at ₹ 5,60,984/-. The ld. CIT(A) sustained the addition of ₹ 5,60,984/- and deleted the remaining amount of ₹ 45,86,464/-. The Revenue is aggrieved against the relief allowed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were enough interest free funds at its disposal for making investment. The ld. CIT(A) got convinced with the assessee s submissions and deleted the addition. Before the Tribunal, it was contended on behalf of the Revenue that the shareholders fund was utilized for the purchase of its assets and hence the assessee was left with no reserve or own funds for making investment in the sister concern. Thus, it was argued that the borrowed funds had been utilized for the purpose of making investment in the sister concern and the disallowance of interest was rightly called for. The Tribunal, on appreciation of facts, recorded a finding that the assessee had sufficient funds of its own for making investment without using the interest bearing funds. Accordingly, the order of CIT(A) was upheld. When the matter came up before the Hon ble High Court, it was contended by the Department that the shareholders funds stood utilized in the purchase of fixed assets and hence could not be construed as available for investment in sister concern. Repelling this contention, the Hon ble High Court observed that : In our opinion, the very basis on which the Revenue had sought to contend or argue their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 ITR 515 (Bom) . It is further observed that this issue is no more res integra in view of the recent judgment delivered by the Hon'ble Supreme Court in Godrej Boyce Manufacturing Company Ltd. vs. DCIT (2017) 394 ITR 449 (SC), in which it has been held that when interest free funds in the form of share capital and reserves are more than investment, then no disallowance of interest can be made u/s 14A. 17. When we turn to the facts of the instant case, we find that investments in the Units at the end of the year stood at ₹ 18.59 crore with the corresponding opening figure at ₹ 3.84 crore as against the amount of shareholders fund at ₹ 399.71 crore at the close of the year and ₹ 161.91 crore at the beginning of the year. This proves that the amount of investment in the Units etc., yielding exempt income, is much less than the amount of shareholders funds. Respectfully following the above precedent, we uphold the impugned order in deleting the disallowance of interest u/s 14A at ₹ 45,86,464/-, against which the Revenue has preferred this grievance before the Tribunal. This ground is not allowed. 18. The only other issue raised in this ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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