TMI Blog2019 (4) TMI 1761X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT] . Lower authorities had erred in disallowing part of the assesses claim of deduction under Sec.10AA by wrongly aggregating the income and loss of various units while quantifying its entitlement towards deduction under Sec.10AA of the I.T Act. In terms of our aforesaid observations, we vacate the disallowance under Sec.10AA Rectification of mistake - short credit of TDS - HELD THAT:- We find that the assessee is stated to have also filed a rectification application dated 14.02.2017 with the A.O, requesting him to rectify the error apparent on record as regards allowing of short credit of TDS. We are of the considered view that the said claim of the assessee as regards the failure on the part of the A.O to allow credit of TDS of ₹ 21,13,229/- would require verification on facts. Be that as it may, in all fairness we direct the A.O to look into the said claim of the assessee, and in case if the same is found to be in order, then allow the credit for the deficit amount TDS. We thus in terms of our aforesaid observations restore the issue as regards allowing of short credit of TDS to the file of the A.O. The Ground of Appeal raised by the assessee is allowed for statis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1961: 1:1 The Assessing Of f icer the Dispute Resolut ion Panel has er red in making a disallowance u/s. 14A of the Income-tax Act, 1961. 1: 2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject no disallowance u/s. 14A of the Income-tax Act, 1961 was called for and the stand taken by the Assessing Officer/the Dispute Resolution Panel in this connection is misconceived, incorrect, erroneous and illegal. 1:3 The Appel lant submi ts that the Assessing Of f icer be di rec ted to delete the disal lowance u/s. 14A made by him and to re-compute i ts total income and tax thereon accordingly. 1:4 Without prejudice to the foregoing and in the alternative, the Appellant submi ts that in case it be held that a disallowance u/s. 14A is warranted then the disallowance should be restricted to ₹ 1,22,050/- suo-moto made by the Appellant. 2:0 Re.: Computation of deduction u/s. 10AA of the Income-tax Act, 1961: 2:1 The Assessing Of f icer/the Dispute Resolut ion Panel has er red in comput ing the deduction u/s. 10AA by setting off the losses of STP/ non-STP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s u/s. 115JB of the Income-tax Act, 1961 5:1 The Assessing Officer/the Dispute Resolution Panel has erred in increasing the 'Book Prof its' for the purposes of section 115JB of the Income-tax Act, 1961 by an amount of ₹ 20,51,901/- being the disal lowance u/s. 14A of the Income- tax Act, 1961 r.w.r. 8D of the Income-tax Rules, 1962. 5:2 The Appellant submits that considering the facts and circumstances of its case and the law prevail ing on the subject no disallowance u/s. 14A of the Income-tax Act, 1961 was cal led for and the stand taken by the Assessing Of f icer/the Dispute Resolution Panel in this connection is misconceived, incorrect, erroneous and illegal. 5:3 The Appel lant submi ts that the Assessing Of f icer be di rec ted to delete the disallowance u/s. 14A made to the Book Prof its and to re-compute its total income and tax thereon accordingly. C. Re.: Transfer Pricing Grounds: 6:0 Re.: General Ground: 6:1 On the facts and circumstances of the case, the learned Transfer Pricing Of f icer ('TPO') and the learned Assessing Officer ('AO') under the directions of the Hon'ble Dispute Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate guarantee rates charged by the banks for providing guarantee to its domestic customers for loans taken in India. Also the rate of corporate guarantee of 1.5% which has been taken as the arm's length rate by the learned TPO by way of estimation and has been decided in an arbitrary manner without giving a reason for choosing the above rate and the Hon'ble DRP erred in confirming the same. 7:7 Without prejudice to the above, the TPO had wrongly imputed 1.5% as the rate of guarantee commission to be charged by the Appellant as against the 1.25% show- caused by him in the order sheet noting dated 25 January 2016. 7:8 On facts and circumstances of the case and in law, the learned TPO/AO erred and the Hon'ble DRP further erred in conf irming the adjustment without considering the economic and commercial benefit accruing to the Indian entity for determination of arm's length price. 7:9 On the facts and circumstances of the case and in law, the learned TPO/AO erred and the Hon'ble DRP further erred in disregarding the fact that the provision of guarantee is a shareholders activity by the Appellant with a view to protect the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit‟ of the assessee company under Sec.115JB. Further, the claim of the assessee for credit of TDS of ₹ 21,13,229/- was also declined by the A.O. On the basis of his aforesaid deliberations the A.O worked out the income of the assessee under the normal provisions at ₹ 5,54,70,650/- and its books profit‟ under Sec.115JB at ₹ 62,44,41,581/-. 4. Aggrieved, the assessee has assailed the assessment framed by the A.O under Sec.143(3) r.w.s 144C(13) in appeal before us. The ld. Authorized Representative (for short A.R‟) for the assessee at the very outset of the hearing of the appeal assailed the disallowance made by the A.O u/s 14A of the I.T Act. It was submitted by the ld. A.R that as the assessee during the year under consideration had not earned any exempt income, thus no disallowance could have been made under Sec.14A. In support of his aforesaid contention the ld. A.R relied on the recent orders of the Hon‟ble Supreme Court in the case of CIT (Central)-1 Vs. Chettinad Logistics (P) Ltd. (2018) 257 taxman 2 (SC) and PCIT-18 Vs. M/s Oil Industry Development Board. [SLP (Civil) Diary No. 2755/2019] (arising out of impugned final j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e increasing of the book profit‟ by the amount of disallowance u/s 14A by the A.O/DRP for the purpose of computing the tax liability u/s 115JB was concerned, it was submitted by the ld. A.R that the said issue was squarely covered in favour of the assessee by the decision of the Special Bench‟ of the ITAT, Delhi in the case of ACIT Vs. Vireet Investment Pvt. ltd. (2017) 188 TTJ 1 (Del) (SB). As regards the Transfer Pricing Adjustments made by the A.O/TPO under the directions of the DRP on account of guarantee commission‟ as had been assailed by the assessee in the present appeal, it was submitted by the ld. A.R that as the assessee had gone for an Advance Pricing Agreement (for short APA‟) which had been finalised on 08.01.2019, as per which the guarantee commission had been settled @ 0.73% and the assessee had already offered the incremental amount to tax in terms of the modified return of income filed pursuant to signing of the APA, hence the ground of appeal No. 6 would be rendered as infructuous. 5. Per contra, the ld. Departmental Representative (for short D.R‟) relied on the orders of the lower authorities. 6. We have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention advanced by the ld. A.R that as the assessee had not earned any exempt dividend income during the year under consideration, thus no disallowance under Sec.14A could have been made in its hands. We thus in terms of our aforesaid observations delete the disallowance made by the A.O under Sec.14A of the I.T Act. The Ground of appeal No. 1 is allowed. 7. We shall now advert to the part disallowance by the A.O of the assesses claim of deduction under Sec.10AA of the I.T Act. As per the facts discernible from the orders of the lower authorities, it stands revealed that the assessee had claimed deduction under Sec.10AA in respect of the eligible units at ₹ 48,13,86,995/-, as against its business income of ₹ 32,52,00,938/-. Insofar the difference of ₹ 15,61,86,050/- i.e excess of the claim of deduction under Sec.10AA as against the total business income was concerned, the same was partly set off‟ by the assessee against the Short Term Capital Gain (for short STCG‟) of ₹ 9,42,03,318/-, while for the balance loss of ₹ 6,19,82,738/- was carried forward to the subsequent assessment year. The A.O after deliberating on the claim of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-STP units, had after relying on the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Black Beatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom) and that of the Hon‟ble Supreme Court in the case of CIT Vs. Yokogawa India Ltd. (2017) 391 ITR 274(SC) had directed the A.O to allow the deduction under Sec.10A of the I.T Act without setting off of loss from non-STP units. In our considered view as the provisions of Sec.10AA are pari materia to those envisaged in Sec.10A, therefore, the view taken by Tribunal in the assesses own case for the aforementioned preceding years i.e A.Y. 2004-05 and A.Y. 2005-06 squarely covers the issue under consideration in favour of the assessee. Apart there from, we find that the contention advanced by the assessee before us that the profits of STP units are not liable for adjustment against the loss of non-STP units for the purpose of quantifying the claim of deduction under Sec.10AA is also supported by the view taken by the Hon‟ble High Court of Bombay in the case of CIT Vs. Black Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom). We thus in terms of our aforesaid observations are of the considered view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue under consideration. The Ground of appeal No. 5 is allowed. 11. We shall now advert to the transfer pricing adjustment of ₹ 5,34,18,750/-made by the A.O/TPO on account of guarantee commission . As observed by us hereinabove, the assessee had gone for an Advance Pricing Agreement (for short APA‟) which had been finalised on 08.01.2019. As per the APA the guarantee commission‟ had been settled @ 0.73% and the assessee is stated to have already offered the incremental amount to tax in terms of the modified return of income filed pursuant to signing of the APA. As submitted by the ld. A.R, in the backdrop of the aforesaid facts the grounds of appeal no. 6 and 7 raised by the assessee before us in context of the TP adjustment on account of guarantee commission‟ would no more survive and would resultantly be rendered as infructuous. The Grounds of appeal No. 6 and 7 raised by the assessee before us are dismissed as having been rendered as infructuous. 12. Insofar the levy of interest under Sec. 234D of the I.T Act is concerned, we find that the same as stated by the ld. A.R is consequential to our aforesaid adjudication on the substa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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