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TMI Blog2019 (12) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... owance to be made u/s 14A of the Act and the third issue is on the computation of deduction u/s 80IC of the Act vis-avis sales tax subsidy and write back of expenses which was earlier allowed as a deduction. 3. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 4. The first issue is as to whether the corporate guarantee extended by the assessee company to its AE is an international transaction as per the definition to Section 92B of the Act for the Assessment Year 2012-13. This Bench of the Tribunal in the case of M/s. Tega Industries Ltd. vs. ACIT in ITA No. 404 & 2527/Kol/2017, order dt. 23/08/2019, held as follows:- "4. There is further no dispute that the legislature has introduced Explanation to section 92B of the Act vide Finance Act, 2012 w.e.f 1-4-2002. This tribunal's yet another decision in DCIT v. Manaksia Ltd. [IT Appeal No. 208-209 (Kol.) of 2018, dated 30-11-2018] concludes that the above stated explanation inserted in the statutory provision is made clarificatory in nature. Relevant discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible property (explained by clauses (a) and (b) of the Explanation), or provision of services, (explained by clause (d) of the Explanation), or lending or ITA No. 980/Kol/2017 Assessment Year: 2012-13 M/s. Manaksia Limited borrowing money (explained by Clause (c) of Explanation). The plain reading of provisions of sec. 92B(1) of the Act indicate that the various transactions mentioned in section 92B(1) of the Act, (i.e. purchases, sales, provision for services, lending or borrowing or any other transaction) should have bearing on the profits, incomes, losses or assets of such enterprises. In our opinion, the condition precedent of a transaction having a bearing on profits, incomes, losses, or assets would apply to each of the aforesaid transactions namely purchase, sale, or lease of tangible or intangible property or provision of services, or lending or borrowing money or any such transaction. This understanding of ours gets further clarified by way of insertion of Explanation in section 92B(1)by the Finance Act 2012 with retrospective effect from 01.04.2002 vide clause (a) to (d). We find that in the said explanation, clause (e) alone has been carved out as an exception wherein, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the issuance of corporate guarantee is inherently within the ambit of definition of 'international transaction' irrespective of whether or not such transactions have any "bearing on profits, income, lossess or assets of such enterprises" u/s. 92 B of the Act. We also note that the Ahmedabad Bench of this Tribunal supra after considering the decision of the Hon'ble Bombay High Court in Everest Kanto Cylinder Ltd. (supra) observed as under: "We are unable to see, in the judgment of Hon'ble Bombay High Court, any support to the proposition that issuance of corporate guarantee is inherently within the ambit of definition of 'international transaction' under section 92B irrespective of whether or not such transactions have any 'bearing on profits' incomes, losses, or assets of such enterprises'. Revenue, therefore, does not derive any help from the said decision." ITA No. 980/Kol/2017 Assessment Year: 2012-13 M/s. Manaksia Limited 12.14. The ld CIT DR would have had a case where a fee has been charged for the intra service which has been rendered (in the context of corporate guarantee), and, therefore, the assessee or the Court has trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of disallowance u/s 14A of the Act. The ld. CIT(A) has at para 9 sub-para 5 held as follows:- "5. Out of the total investments of Rs. 18,088.66 lacs, I agree with the Ld. ARs that the sum of Rs. 6,356.04 lacs which pertained to investment in foreign subsidiary, was only capable of yielding taxable income and therefore the same could not be considered for the purposes of Section 14A of the Act. Out of the remaining sum of Rs. 1,732.62 lacs, investments to the tune of Rs. 11,565.29 lacs was made in shares of two subsidiary companies and two group/associate companies. The investments in these companies belong to HNG group of which the appellant was the flagship. I find that the appellant was the promoter- shareholder of all these subsidiaries / group companies. As such I find merit in the AR's submissions that these investments were made for strategic business purposes and not for the purpose of earning tax free income in form of dividend. For instance, HNG Float Glass Limited in which the appellant held more than 47°c was its extended arm, set-up with the objective of diversifying the float glass & other glass allied items. Similarly I note that Glass Equipment Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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