TMI Blog2019 (3) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... application of TNMM. For that we rely on the judgment of the Hon`ble High court of Mumbai in the case of Pr. CIT v. Watson Pharma (P.) Ltd. [2018 (8) TMI 199 - BOMBAY HIGH COURT] wherein it was held that TNMM requires only broad functional comparability between the tested party and comparable companies. Hence, we do not accept the contention of the ld DR for the revenue and we accept the nine comparable companies selected by the ld CIT(A). Selection of 'Cash Profit Margin' as net profit indicator (PLI) under the TNMM - HELD THAT:- We approve the use of cash profit margin by the assessee for placing the tested party and the comparable companies on equal footing. The assessee has demonstrated that the cash profit margin of the assessee was 8% (approximately), whereas the arithmetic mean of the cash profit margins of the aforesaid nine comparable companies stands at 12.41%. It is noted that the net profit margin of the tested party was (-)6.70%, whereas the cash profit margin of the tested party stood 8% thereby indicating that the loss was caused by a considerable increase in provision for depreciation. We are of the considered view that the assessee was justified in appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not being repeated again since it has already been incorporated in the submissions of Ld. A.R. and have been duly considered to arrive at our conclusion. The Ld. DR could not bring to our notice any case laws to contradict the findings of the Ld. CIT (A), therefore, his order on these covered issues noted above are hereby upheld and grounds raised by the Revenue are dismissed TDS u/s 195 - payments made to non-resident associated enterprise on the ground that payments were made without deduction of tax at source - HELD THAT:- We note that during the course of hearing, both, that is, ld Counsel for the assessee as well as ld DR for the revenue have fairly agreed that this issue should be sent back to the file of the assessing officer for verification of TDS certificates with the challans indicating deposit of the amount to the government exchequer. Therefore, we set aside the order of the ld CIT(A), so far this issue is concerned, and remit the matter back to the file of the assessing officer for his examination. Statistical purposes, this ground of the Revenue is treated to be allowed. Addition of payment of interest on term loan under section 43B - payment details in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Revenue. With this background, we summarize and concise the grounds raised by the Revenue as follows: Transfer Pricing Grounds ( i).Ld.CIT (A) erred in deleting following additions made on account of Transfer Pricing adjustments by ignoring analysis done by Transfer Pricing Officer (TPO): ( a).Arm`s Length Price adjustment for A.Y.200203 at ₹ 5,19,77,000/- ( b).Arm`s Length Price adjustment for A.Y.200304 at ₹ 10,02,37,000/- Other Grounds ( i).Ld CIT(A) erred in deleting provision for payment of gratuity under section 40A(7) of the Act and addition made on account of contribution to superannuation fund U/s 40A(9) of The Act. ( a). Provision for gratuity u/s 40A(7), for A.Y.200203 ₹ 8,28,600/- ( b). Provision for gratuity u/s 40A(7), for A.Y.200304 ₹ 20,71,870/- ( c ).Contribution to Superannuation Fund U/s 40A (9), for A.Y. 200203 ₹ 14,75,778/- ( d).Contribution to Superannuation Fund U/s 40A (9), for A.Y. 200304 ₹ 5,47,224/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sale of electronic component, namely, soft ferrites components. The soft ferrite components are widely used in entertainment electronics, telecommunication and industrial electronics industries.The assessee company filed its return of income for the assessment year 200304 on 28112003 declaring a loss to the tune of ₹ 15,35,09,431/. The determination of arm's length price of the international transactions was referred to the Ld. Transfer Pricing Officer (hereinafter referred to as the 'TPO') under section 92CA of the Act. The TPO directed following arm's length price (ALP) adjustments, under the Transactional Net Margin Method (TNMM') at the entity level, as under: (a).Arm`s Length Price adjustment for A.Y.200203 at ₹ 5,19,77,000/- (b).Arm`s Length Price adjustment for A.Y.200304 at ₹ 10,02,37,000/- 6. The assessee company entered into the following international transactions with its associated enterprises during the financial year ended 31st March, 2003: A.Import of raw materials, INR 5.65 Crores. B.Import of tools and capital equipment, INR 3.84 Crore. C.Payment, for service chargefor IT services, sales support, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween Associated Enterprises. According to the OECD guidelines where it is possible to locate comparable uncontrolled transaction, CUP method is the most direct and reliable way to apply the arm's length principle. As a result,in such cases the CUP method is preferable over all other methods. Accordingly, the assessee applied the CUP method for determining the arm's length price of export of finished goods to its associated enterprises. However, the TPO rejected CUP as the most appropriate method to determine the arm's length price of export of finished goods to associated enterprises.The Ld.TPOalso rejected the RBI approval as benchmark to determine the ALP for payment of knowhew fees and considering TNMM as the most appropriate method for determining the ALP for technical knowhow fees/royalties. 7. Selection of comparable companies by assessee :The assessee carried outobjective search process in the Prowess database to identify independent comparablecompanies, whose functional profile was broadly comparable to that of the assesseecompany. The search wascarried out under the heading electronics in such database since the assesseeis engagedin manufacture of electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, difference between dealings may reflect differencein circumstances, not the effect of nonarm's length dealings. This approach of usingmultiple year data is consistent with the OECD guidelines on transfer price. According to the Para 3.44 of OECD guidelines, multiple year data should be considered in the TNMM for both the enterprise under examination and independent enterprises to the extent their net margin are being compared to take into account the effects on profits of products life cycles and shortterm economic condition.This also evident from the facts in the case of the assessee company. The Assesseecompanyincurred operating losses during the financial year ended 31 March 2003, due to change in economic and market conditions. There was a fall in the market of telecom business. As a result, the ferrite manufacturers shiftedtheir capacities from telecom sectors the electronic and lighting sectors.Assessee caters to the electronics and lighting sector. As a fall out, within a short period the activities for ferrites cores catering the lighting and electronic sector shot up significantly causing a price war, which adversely affected the profitability of assesseeduring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) For item No. G above, Interest paid on corporate loan, the RBI's approval has been considered as appropriate benchmark for determination of arm's length price. However, the ld TPO rejected the most appropriate method (MAM) adopted by the assessee and held as follows: (a) Application of comparable uncontrolled price method (CUP) in respect of export of soft ferrites to Associated enterprises (AE) is not acceptable in absence of any verifiable data. Even auditors of the assessee who prepared the transfer pricing report have not verified any data in this regard. Even during the proceedings, U/s 92CA (2) of the Act, the assessee did not provide evidence to support their claim that the goods sold by the assessee to its AE were then sold at the same price to the third party without any mark-up. Therefore, Ld TPO held that it is imperative to consider the transactions of export of soft ferrites under the last resort method of TNMM. (b) For payment of royalty, the ld TPO noted that mere approval of RBI is not an acceptable method therefore, TNMM method is suitable for determination of ALP of Royalty transaction. (c) For Inter-corporate loan, the TPO noted that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elating to a period not being more than two years prior to such financial year may also be considered, if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared. It is evident that for determination of Arm's Length Price u/s 92C, the data to be used in analysing the comparability of an uncontrolled transaction with the International transaction, in general, has to be the data relating to the FY in which the International transaction was entered Into. A distinction needs to be drawn between data to be used for computation of arm's length price (Section 92C/Rule 10B) and the data used for supporting documentation maintained by the assessee (Section 92D/Rule 10D). For the purpose of documentation, assessee can use data which is existing latest by the specified date referred to in Clause IV of Section 92F i.e. by due date of filing the return for that year i.e. by 31st October 2002. However, for the purpose of computing the arm's length price u/s 92C, as clearly laid down in Rule 10B (4), same year's data to be used. Under the law, there is a responsibility cast upon the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the OECD and US Transfer Pricing Regulations would be erroneous. 11. The ld TPO then examined the contention of assessee in respect of 14 companies selected as comparable in the TP report. These comparable companies were analyzed by TPO as follows:- (1) Sanmar Micropak Ltd This company's turnover is less than one tenth of assessee's turnover. It manufactures printed circuit boards at a very small scale level. Neither the product mix nor the size of this company can be compared with the assessee company. (2) Karnataka Hybrid Devices Ltd This company manufactures electrical equipment and the assessee company manufactures raw material for the electronics Industry. The activities performed by both are completely different. Moreover, the turnover of this company at 7 crores is significantly less than the assessee company. It cannot be compared with the assessee company. (3) SPEL Semiconductors Ltd. This company is in the business of manufacture of computer and related hardware. This is once again a consumer of ferrite based electronic components whereas the assessee is a producer/manufacturer of ferrite components. It cannot be compared with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company. Thus, TPO noted that out of 14 companies which were considered in the transfer pricing report by the assessee, only two can be taken as valid comparison for the assessee company. Other companies differ either because of incomplete turnover or in some cases the product mix is completely different. And also incomparable turnover and incomparable product mix signify incomparable economic circumstance in which the enterprises operate. 12. The ld TPO noted that the size of an enterprise is an important factor in determining comparability. Size as reflected by turnover, determines 'relative competitive positions by buyers and sellers' and is thus a significant economic condition which could affect prices or profitability. Similarly, the TPO noted that the product comparability also play no less a significant part in determining whether an enterprise can be considered for comparison. The ld TPO, based on the above observations noted that the closest comparable Companies are M/s Continental Devices India Ltd. and M/s Cosmo Ferrite Ltd. Therefore, the results of these two companies only can be compared with the results of the assessee company. For the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as an unrelated party transaction requiring no adjustment. Accordingly, following transactions were considered for transfer pricing adjustments:- Rs. Cost side of Profit Loss A/c Import of raw material 5,65,64,184 15,35,31,089 Import of spares, tools and capital equipment 3,84,57,470 Payment of service charges- for IT services, sales support, marketing advertisement and sorting services 5,05,74,785 Payment for technical know-how (Royalty) 79,34,650 Income side of Profit Loss A/c Sale of tools 13,04,115 Export of finished goods 45,83,01,658 45,96,05,773 The Associated Enterprise related transactions on debit side are only 15.35 crores out of total costs of 61.99 crores (i.e 24%) whereas those on the credit side amount to 45.96 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Costs shown on debit side TP Report page 29 6,04,060 O Value of AE transactions as claimed (Excluding capital costs and interest) 3CEB report 1,17,041 P Third party transactions on costs side N-O 4,87,019 4,87,019 Q Adjusted value of AE transaction on costs side M-P 91,612 R 105 % of Adjusted value of AE transaction on costs side Q x 105% 96,192 S Adjustment on account of exports to AE I-F 79,388 T Adjustment on account of costs incurred on transactions with AE O-R 20,849 U Total adjustment S+T 1,00,237 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld CIT(A). The ld DR also objected the profit level indicator (PLI) taken by the assessee based on net profit. Ld DR further pointed out that for determination of Arm's Length Price u/s 92C, the data to be used in analysing the comparability of an uncontrolled transaction with the International transaction, in general, has to be the data relating to the FY in which the International transaction was entered Into. A distinction needs to be drawn between data to be used for computation of arm's length price (Section 92C/Rule 10B) and the data used for supporting documentation maintained by the assessee (Section 92D/Rule 10D). For the purpose of documentation, assessee can use data which is existing latest by the specified date referred to in Clause IV of Section 92F i.e. by due date of filing the return for that year i.e. by 31st October 2002. However, for the purpose of computing the arm's length price u/s 92C, as clearly laid down in Rule 10B (4), same year's data to be used. The ld TPO rightly noted that the size of an enterprise is an important factor in determining comparability. Size as reflected by turnover, determines 'relative competitive positions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company. The turnover of the assessee company dropped by a sum of INR 16.80 crore over last two financial years. * It is pertinent to note that the assessee company was a price-taker in the international market in respect of sale of finished goods to its associated enterprises. The EPCOS group entities imported finished goods from the assessee company for further sale to unrelated customers in the international market at the same prices. Hence, the selling prices of finished goods were entirely governed by the demand and supply forces in the international market and the same were not within the control of the assessee company. During the course of hearing under section 92CA (3) of the of the Income-tax Act, 1961, the TPO had examined the TPSR and the functional profiles of the fourteen comparable companies selected by the assessee company. He retained only two comparable companies named Cosmo Ferrites Ltd and Continental Devices India Ltd. The TPO rejected the remaining twelve comparable companies primarily based on product comparability. As per the computation of the TPO, the net profit indicator (OP/sales) for the assessee company was (-)6.70%, whereas the arithmetic me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the turnover of the respondent company (one-tenth of INR 53,13,00,000/- i.e. INR 5,31,30,000/-)] 9 SPEL Semiconductor Ltd (rejected by TPO) Integrated circuits It is pertinent to note that the TPO rejected seven companies i.e. serial no. (1) and serial no. (4) to (9)] mentioned in table no. (1) hereinabove, primarily based on product comparison. The TPO accepted Cosmo Ferrites Ltd as comparable as the company manufactured the same product as that manufactured by the assessee company. However, the product mix of Continental Devices India Ltd was broadly comparable to that of the assessee company. In the assessee`s case, the comparable companies demonstrated in table No. (1) manufactured and sold electronic components and hence, the said companies were functionally comparable to the assessee company. Unlike the CUP Method, the TNMM does not require that the comparable company has to manufacture exactly the same product as that manufactured by the tested party. Hence, the TPO, while adopting the TNMM, erroneously rejected the aforesaid seven companies mentioned in table no. (1) based on product comparison betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by TPO) Aluminium electrolytic capacitors 7 PAN Electronics India Ltd (rejected by TPO) Electronic capacitor grade metalised polypropylene film, plastic film capacitor elements/capacitor, electronic capacitor grade metalised polyester film 8 Ruttonsha International Rectifier Ltd (rejected by TPO) Semi-conductor- diodes, silicon-controlled rectifiers, power rectifiers [Turnover of INR 6.41 crore being more than one-tenth of the turnover of the respondent company (one-tenth of INR 53,13,00,000/- i.e. INR 5,31,30,000/-)] 9 SPEL Semiconductor Ltd (rejected by TPO) Integrated circuits We note that the TPO rejected seven companies i.e. serial no. (1) and serial no. (4) to (9)] mentioned in table no. (1) hereinabove, primarily based on product comparison. The TPO accepted Cosmo Ferrites Ltd as comparable as the company manufactured the same product as that manufactured by the assessee company. However, the product mix of Continental Devices India Ltd was broadly comparable to that of the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore tax earned by the assessee company stood at INR 1.72 crore in the FY 2001-02. The company suffered Substantial loss of INR 11 crore in the FY 2002-03. We note that in view of the above facts, the assessee company had critical financial condition during the FY 2002-03.The Ld. CIT(A) accepted the cash profit margin as appropriate net profit indicator (PLI) after considering the facts and circumstances of the case as mentioned hereinabove so that the tested party (i. e, assessee company) and the comparable companies are placed on the same foothold after eliminating the impact on profitability of the differences in respect of technology, age of assets used in production, capacity utilization and depreciation expenses and interest expenses. For that we rely of the judgment of the Coordinate Bench of Kolkata in the case Dy. CIT v. AT S India (P.) Ltd. [2015] 154 ITD 150 wherein it was held that application of 'cash profit margin', under TNMM, in manufacturing industry is appropriate for the reason that the same eliminated the impact on profitability of the differences in respect of technology, age of assets used in production, capacity utilization and depreciation expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16] 69 taxmann.com 187/239 Taxman 428 wherein the Hon'ble High Court confirmed the application of the cash profit margin for the purpose of computation of net profit indicator (PLI) under the TNMM. Keeping in view the aforesaid judicial precedents, we approve the use of cash profit margin by the assessee for placing the tested party and the comparable companies on equal footing. The assessee has demonstrated that the cash profit margin of the assessee was 8% (approximately), whereas the arithmetic mean of the cash profit margins of the aforesaid nine comparable companies stands at 12.41%. It is noted that the net profit margin of the tested party was (-)6.70%, whereas the cash profit margin of the tested party stood 8% thereby indicating that the loss was caused by a considerable increase in provision for depreciation. We are of the considered view that the assessee was justified in applying cash profit margin as more appropriate financial indicator than net profit margin. 20. We note that so far computation of arm's length range of 5% based on OP/TC ratio (AY 2002-03) is concerned, the Ld. CIT(A), in paragraph no. 18, page no. 26 of his order for AY 2002-03, mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rake pad, roll lining, brake block etc. 5 India Pistons Ltd. Piston, piston ring, cylinder liners, ring carriers, valves, camshafts and crankshafts. 6 J S L Industries Ltd HT Indoor and outdoor instrument transformers, full and reduced voltage motor starters etc. 7 Jem Industries Ltd L.T. motors and 3-phase mono-block pump sets, starting and safety couplings for motor cars. 8 Lakshmi Electricals Control Systems Ltd Control panels, engineering plastic components, wind power generation etc. 9 Rajendra Electrical Industries Ltd Electric motors and engines 10 Sazler Electronics Ltd. CAM operated rotary switches, selector switches, wiring ducts, voltmeter switches, and allied products. 11 Kaycee Industries Ltd Rotary switches, rotary cam switches etc. 12 Reed Relays Electronics India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crompton Greaves Ltd Consumer electrical products 3 J S L Industries Ltd HT Indoor and outdoor instrument transformers, full and reduced voltage motor starters etc. 4 Lakshmi Electricals Control Systems Ltd Control panels, engineering plastic components, wind power generation etc. . 5 Rajendra Electrical Industries Ltd Electric motors and engines 6 Sazler Electronics Ltd. CAM operated rotary switches, selector switches, wiring ducts, voltmeter switches, and allied products. 7 Kaycee Industries Ltd Rotary switches, rotary cam switches etc. 8 Reed Relays Electronics India Ltd Reed switch, reed sensors, proximity sensors, thermal switch, float switch etc. 9 Bhartia Industries Ltd Electrical switchgear/control gear products, factory automation products. 10 Elpro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Dy. CIT v. PMC - Sierra India (P.) Ltd. [2016] 74 taxmann.com 110 wherein it was held that since the turnover of the assessee was ₹ 45.85 crore, the permissible range of turnover of companies stood at ₹ 4.58 crores, that is, one-tenth of the assessee`s turnover to ₹ 458.50 crores (ten times of the assessee`s turnover). The ld CIT(A) rightly noted that turnover for the relevant financial year of the following comparable companies fall within the permissible range as aforesaid: Sl. No. Name of companies Turnover (FY 2002-03) Rs. in Crore) Tested party 53.13 Comparable Companies Akasaka Electronics Ltd Data not available Anand Electronics Ltd Data not available 1 CTR Manufacturing Inds Ltd 27.73 2 Continental Device India Ltd 97.12 3 Cosmo Ferrites Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the matter of Maersk Global Centres (India) (P.) Ltd. v. Asstt. CIT /147 ITD 83 (SB) and the decision of the Bangalore Tribunal in the matter of GE India Technology Centre (P.) Ltd. v. Dy. DIT [2013] 141 ITD 245 and the decision of the Mumbai Tribunal in the matter of Rolls Royce Marine India (P.) Ltd. (supra). Based on the above precedents, we are of the considered view that under the TNMM, the focus should be on the functional comparability between controlled and uncontrolled transactions. 23. We note that FAR (Function, Asset, Risk) analysis of the aforesaid nine comparable companies selected by CIT(A)(i.e. CTR Manufacturing Inds Ltd, Deltron Ltd, Fine-line circuits Ltd, Incap Ltd, Pan Electronics (India) Ltd, Ruttonsha International Rectifier Ltd, SPEL Semiconductor Ltd, Continental Device India Ltd and Cosmo Ferrites Ltd). are comparable with the FAR of the assessee company for the relevant financial year. Therefore, considering the entirety of facts and circumstances of the case and the material on record, and relying on the precedents cited above we uphold the nine comparable companies selected by the ld CIT(A) and use of cash profit margin ratio in TNMM, we uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delete the above mentioned additions. That being so we decline to interfere in the order passed by the ld CIT(A), his order on this issue is hereby upheld and grounds raised by the Revenue are dismissed. 27. (ii) Ld CIT(A) erred in deleting the addition made on account of provision for tax at ₹ 7,50,000/-. This ground is raised by Revenue in A.Y. 2002-03. 28. We have heard both the parties and perused the material available on record. The ld Counsel submitted before us that the AO has failed to appreciate the fact that the assessee company had computed its total income chargeable to tax by taking net profit before tax amounting to ₹ 1,72,46,000/-. A copy of the relevant extract of 'Profit and Loss account' for the year ended as on 31-03-2002 evidencing the same is submitted. Moreover, in the assessment order under section 143(3) of the Act the AO has also computed the total assessed income taking profit before tax amounting to ₹ 1,72,46,000/- as starting point. Therefore, the provision for tax amounting to ₹ 7,50,000/- was actually not claimed by the assessee company. We note that since the assessee had computed its total income chargeable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover should also be added to the export turnover as well. 2. In view of the above, I direct the Ld. AO to add back the gains on foreign exchange while computing 'export turnover' for the purpose of computing deduction u/s 80HHC of the Act. 3. The assessee has further stated that the AO has erroneously excluded the entire income received on account of DEPB licence amounting to ₹ 2,00,71,000/- instead of deducting the 90% of the same . 4. I have carefully considered the submission and the computation of deduction u/s 80HHC for the assessment year 2001-02 wherein the Ld. AO had correctly excluded 90% of the export incentive (i.e. DEPB credit) instead of deducting the entire DEPB credit as in the instant case i.e. assessment year 2002-03. 5. For the relevant assessment year, since the Ld. AO has not excluded 90% of the export incentive (i.e. DEPB credit), I direct the Ld. AO to exclude only the extent of 90% of DEPB credit as stated in the provision of clause (baa) of Explanation to section 80HHC for the purpose of computing deduction u/s 80HHC. 6. The assessee has further stated that the AO has erroneously deducted 90% of earnings from cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the submission filed by the assessee and the case laws relied on by the ld.AR in respect of deduction u/s. 80 HHC at 100% of export profit in the computation of Book Profit, being the same was the profit eligible for deduction under the said section in computing Book Profit, as against 70% of export profit allowed by the AO as contended by the assessee. 15. I have also considered the decision of the Hon'ble Apex Court in the case of Ajanta Pharma Ltd. (supra) wherein it has been stated that while computing deduction under section 80HHC of the Act in computing Book Profit though the amount of 'eligible profit' should be allowed and not the 'extent of deduction' as prescribed in section 80HHC(IB) of the Act. The Hon'ble Apex Court thus held that deduction u/s. 80HHC of the Act would be allowable at 100% for assessment year 2002-03 while computing Book Profit though the same could be restricted to 70% while computing deduction under normal provisions of the Act. 16. Since the assessee would be entitled to avail the benefit u/s 80HHC at 100% of export profit in computing Book Profit for the relevant year, in my view, the same cannot be restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed in respect of interest on any loan in the previous year in which such sum is actually paid by assessee. The proviso to the said section states that nothing contained in section 43B of the Act shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. We note that the assessee in the course of the appellate hearing submitted the payment details in respect of payment on interest on term loan after the due date of the filing of the return for the assessment year 2002-03 and disallowed by the Ld. AO in the assessment year 2002-03. We note that since the assessee had paid the interest on term loan amounting to ₹ 14,69,315/- as on 01-11-2002 i.e. after the due date of filing the return of income under section 139(1) of the Act for the assessment year 2002-03 therefore, the assessee would be entitled to avail the deduction amounting to ₹ 14,69,315/- in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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