TMI Blog2019 (6) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... on ground No.5 is dismissed. Transaction of giving of guarantee by the assessee to its AE - assessee has contended that corporate guarantee is not an international transaction and that the Tribunal overlooked certain judicial pronouncements and that details of corporate guarantee and credit rating were also filed bore the Tribunal as well as before the revenue authorities - HELD THAT:- We are of the view that all these aspects can be canvassed in the set aside proceedings before the TPO. The ground on which the Tribunal remanded the matter back to the TPO was that sufficient economic and business factors were not considered by the TPO before determining the ALP. We are, therefore, of the view that there is no mistake apparent on the fact of record in the order of Tribunal calling for interference u/s. 254(2) of the Act. Accordingly, the MP on ground No.6 is also dismissed. Disallowance u/s. 14A - HELD THAT:- We find that the stand taken by the assessee is correct and therefore the conclusion of the Tribunal that assessee did not raise the issue of excluding investments which did not yield any dividend income while computing the average value of investments is incorrect a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r certain apparent errors in the order of Tribunal dated 16.11.2018 passed in the aforesaid appeal. 2. The first mistake pointed out in the order of Tribunal is with regard to adjudication of ground No.5 raised by the assessee in its appeal. As far as ground No.5 is concerned, the question before the Tribunal was with regard to determination of arm s length price (ALP) in respect of an international transaction of giving up loan b the assessee to its Associated Enterprise (AE) and interest income that the assessee ought to have received on such loan. It was the plea of the assessee that since the loan in question was in US Dollars, LIBOR rate of exchange + 200 points should be applied and interest income should have been determined accordingly. The Tribunal, however, remanded the issue to the AO for consideration afresh, by observing that no material was brought on record indicating the terms of loan, security offered, terms of repayment, currency in which the loan was to be repaid, RBI Policy governing advancing of loans by Indian holding company to its foreign subsidiary companies, credit rating, etc. The Tribunal remanded the issue to the TPO and directed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling for interference u/s. 254(2) of the Act. Accordingly, the MP on ground No.6 is also dismissed. 6. The next grievance projected in this MP is with regard to disallowance u/s. 14A of the Act. The Tribunal in para 14.4 while deciding the issue u/s. 14A has observed as follows:- 14.4. We heard rival submissions and perused material on record. There is no dispute about applicability of rule 14A as the assessee had earned exempt income. The Assessee also not denying applicability of rule 8D of IT Rules. However, only contention advanced is while computing average value of investments for the purpose of computing disallowance under subclause (3) of rule 8D, it is contended that investments which yielded exempt income should be taken into consideration and the value of investments in equity of overseas/subsidiaries, debentures, share application money should not be taken into consideration. From the perusal of orders of the lower authorities, it is clear that the assessee had not raised this contention before the lower authorities. We find that the assessee had neither filed any application for admission of this additional ground of appeal nor had the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generated, were IPRs developed by industrial undertaking which claimed deduction u/s. 10A of the Act. In the MP, the assessee has pointed out that even the AO in the order of assessment has treated the royalty income as business income and not income from other sources. It was also submitted that neither the AO nor the DRP disputed this position. It was the only case of revenue that royalty income was not directly derived from export business of STPI/SEZ unit and hence it was excluded from the business income while computing deduction u/s. 10A/10AA of the Act. In the light of such undisputed position, the Tribunal ought not to have rejected the plea of assessee in this regard. 10. We have considered the submission of the ld. counsel for the assessee, who reiterated the stand of the assessee as contained in the MP. As rightly submitted by the ld. counsel for the assessee, the Tribunal has proceeded on an erroneous assumption that royalty income was not in respect of IPRs generated by industrial undertaking, whereas the revenue authorities did not dispute this position; nor was this the basis of their refusing to treat royalty income forming part of business income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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