TMI Blog2020 (5) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... allowances made towards provision of expenses and stamp duty paid for registration the lease deed - HELD THAT:- Disallowance has resulted in enhancing the claim of deduction under section 80 IB (8A) - The disallowance has been made because of the statutory provisions under section 37 and as a consequence of such disallowance there is an increase in the income in the hands of assessee. We are therefore unable to accept the contentions of authorities below that in computing deduction under section 80 IB (8A) of the act in the hands of assessee the disallowance so made ought to be ignored. We direct the Ld.AO to compute the deduction under section 80 IB (8A) of the act in the hands of assessee in accordance with law having regard to ratio laid down by Hon ble Bombay High Court in case of CIT vs Gem Plus Jewellery [ 2010 (6) TMI 65 - BOMBAY HIGH COURT]. Provision for expenses for computation of MAT under section 115JB - HELD THAT:- AO has not verified the claim and has denied it to assessee. We direct Ld.AO to verify the claim of assessee and if found eligible the same should be granted to assessee in accordance with law. TDS credit - HELD THAT:- Direct Ld.AO to verify and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r delay in receivables from AE is warranted as it is already factored in the margins earned from AEs. 6. Without prejudice to the above, the Assessee wishes to submit that the Hon'ble bench in Appellant's own case has adjudicated the above matter for AY 2010-11, AY 2011-12 AY 2012-13, and considered the outstanding dues from AEs as closely linked to the main transaction and restored the issue to the file of AO/ TPO for re-determination of ALP by clubbing and aggregating both the transactions. 7. The Hon'ble DRP erred, in law and on facts in upholding transfer pricing adjustment made by learned TPO/ AO, by disregarding the commercial agreements produced during the course of proceedings and by disregarding the judicial precedents set out in Appellant's own case. 8. The learned TPO and the learned AO have erred, in law and in facts, in determining a transfer pricing adjustment without appreciating the fact that the Appellant has not charged interest on outstanding dues in both AE and Non-AE case. 9. Without prejudice to the above, the learned TPO and the learned AO have erred, in law and in facts, in not objectively selecting the interest rate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder mercantile system of accounting; c. The Appellant was mandatorily required to create provisions on estimate basis for all known liabilities as per Accounting Standard prescribed under the section 145(2) of the Act as well as Companies Act, 1956. Provision for expenses for computation of MAT under section 115JB of the Act 14. The learned AO/ Hon'ble DRP has erred, in law and on facts, in adding back the provision for expenses of ₹ 10,11,320 created by the Appellant to the book profits as per section 115JB of the Act on the basis that such provision is for unascertained liability and contingent in nature, without appreciating the fact that: a. The Appellant has actually incurred such expenditure during the AY 2013-14; b.The Appellant has recorded such expenditure in the books of accounts maintained under mercantile system of accounting; c. The financial statement for subject AY has been prepared by the Appellant in accordance with the Companies Act, 1956 and such provision has been verified and accepted by the Statutory Auditor. 15.The learned AO/ Hon'ble DRP has erred, in law and on facts, in adding back the provision for exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... international transaction. 6. However, Ld.TPO from the trans-apprising study observed that assessee had a realised amounts of ₹ 61,14,96,507/- out of which ₹ 22,94,57,383/- was outstanding for more than 6 months. Ld. TPO thus held it to be an international transaction in terms of section 90 2B (2) (c) (i) of the Act. Ld.TPO characterised it as a loan transaction as outstanding receivables was exceeding more than 6 months. After calling for various details from assessee, Ld.TPO computed arm s length price of this transaction at 14.18% per an amount outstanding receivables exceeding 6 months. He thus proposed an adjustment of ₹ 3,25,37,057/-. 7. Ld.AO subsequently while passing the draft assessment order, observed that assessee has claimed expenses towards provision of legal and professional charges amounting to ₹ 10,11,320/-. It was observed that assessee booked the provision towards expenses mentioned during the year although invoices for the same were not received. Ld.AO rejected submissions of assessee and disallowed provision of ₹ 10,11,320/-. 8. It was also observed by Ld.AO that, assessee claimed expenditure of ₹ 5,13,960/- towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een charged as it cannot be considered as international transaction. He also placed reliance upon decision of Delhi Tribunal in case of Bechtel India vs DCIT reported in (2016) 66 taxman.com 6 which subsequently upheld by Hon able Delhi High Court vide order dated 21/07/16 in ITA No. 379/2016, also upheld by Hon ble Supreme Court vide order dated 21/07/17, in CC No. 4956/2017. 3.5.3. It has been submitted by Ld.AR that outstanding receivables are closely linked to main transaction and so the same cannot be considered as separate international transaction. He also submitted that into company agreements provides for extending credit period with mutual consent and it does not provide any interest clause in case of delay. He also argued that the working capital adjustment takes into account the factors related to delayed receivables and no separate adjustment is required in such circumstances. 3.5.4. On the contrary Ld.CIT.DR submitted that interest on receivables is an international transaction and Ld.TPO rightly determined its ALP. In support of her contentions, she placed reliance on decision of Delhi Tribunal order in Ameriprise India Pvt. Ltd. vs. ACIT (2015- TII-347-ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court referred to amendment to section 92B by Finance Act, 2012 with retrospective effect from 1.4.2002. Setting aside view taken by Tribunal, Hon ble Bombay High Court restored the issue to file of Tribunal for fresh decision in light of legislative amendment. It was thus argued that non/undercharging of interest on excess period of credit allowed to AEs for realization of invoices, amounts to an international transaction and ALP of such international transaction has to be determined by Ld.TPO. In so far as charging of rate of interest is concerned, he relied on decision of the Hon ble Delhi High Court in CIT vs. Cotton Naturals (I) Pvt. Ltd (2015) 276 CTR 445 (Del) holding that currency in which such amount is to be re-paid, determines rate of interest. He, therefore, concluded by summing up that interest on outstanding trade receivables is an international transaction and its ALP has been correctly determined. 3.5.7. We have perused the submissions advanced by both the sides in the light of the records placed before us. This Bench referred to decision of Special Bench of this Tribunal in case of Special Bench of ITAT in case of Instrumentation Corpn. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O for deciding it in conformity with the above referred judgment. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such fresh proceedings. Accordingly these ground raised by assessee stands allowed for statistical purposes. Respectfully following the same we direct Ld.AO to decide the issue in confirming the with the decisions referred to herein above.. Accordingly these grounds raised by assessee stands allowed for statistical purposes. 12. Ground No. 10-11 is in respect of disallowances made by Ld. AO towards provision of expenses and stamp duty paid for registration the lease deed. 12.1. Ld.AR submitted that identical issue was considered by this Tribunal in assessee s own case for assessment year 2009-10. It was submitted that Ld.AO disallowed these expenses however deduction claimed under section 80 IB (8A) of the act was not enhanced but limited to the actual claim in the return. 12.2. Ld.DR also submitted that whatever was duly claimed by assessee was granted by Ld.AO and supported the orders of authorities below. 12.3. We have perused submissions advanced by both sides in light of records placed before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. We are therefore unable to accept the contentions of authorities below that in computing deduction under section 80 IB (8A) of the act in the hands of assessee the disallowance so made ought to be ignored. We direct the Ld.AO to compute the deduction under section 80 IB (8A) of the act in the hands of assessee in accordance with law having regard to ratio laid down by Hon ble Bombay High Court in case of CIT vs Gem Plus Jewellery (supra). Accordingly this ground stands allowed. 13. Ground 12-13 is consequential to ground 10-11. As we have directed Ld. AO to recompute deduction under section 80 IB (8A) of the act considering the disallowances made this grounds become infructuous. Accordingly these grounds stands dismissed. 14. Ground 14-15 Ld.AR submitted that assessee had actually incurred the expenses during assessment year 2013-14 and has placed on record the details of accounts maintained under Mercantile system of accounting. It has been submitted that the authorities below has not verified these expenses and has some really rejected the provision for expenses amounting to ₹ 10, 11, 320/-created by assessee in the books of account as per sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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