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TMI Blog2019 (4) TMI 2094X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 3. At the time of hearing, on the instructions of the assessee, learned Authorised Representative did not want to press ground no.6.Hence, ground no.6 is dismissed as not pressed. 4. In ground no.2, the assessee has challenged addition of Rs. 8,90,803, made on account of adjustment towards interest of outstanding receivables from its Associated Enterprise (AE) viz. Essar Africa Holding Ltd. 5. Brief facts are, the assessee, an Indian company, is part of Essar Group and is engaged in power generation. In the course of proceedings under section 92CA of the Act, the Transfer Pricing Officer while verifying the details noticing that the assessee had shown outstanding receivables from the AE amounting to Rs. 18,05,731, called for the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or computing the interest on outstanding receivables, the Transfer Pricing Officer has not brought any comparable to show that such rate applied by him is at arm's length. The learned Authorised Representative submitted, as a normal business practice, the assessee does not charge any interest on outstanding receivables both to AEs and non-AEs. Further, he submitted, before the Transfer Pricing Officer the assessee had made a specific submission that as per the LIBOR rate the interest chargeable on the outstanding receivable is LIBOR plus 0.5%. He submitted, the aforesaid contention of the assessee has not at all been considered either by the Transfer Pricing Officer or by the DRP. 8. The learned Departmental Representative relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the treatment given to such income by him in assessment year 2006-07 to 2012-13, the Assessing Officer treated the aforesaid interest income as income from other sources. 12. The learned DRPalso upheld the decision of the Assessing Officer. 13. The learned Authorised Representative submitted, while deciding identical issue in assessee's own case in the preceding assessment year, the Tribunal has held that interest income from margin money deposit is to be assessed as business income, whereas, interest income from bank deposits and ICDs have to be treated as income from other sources. In this context, he drew our attention to the appeal order passed by the Tribunal for assessment years 2009-10 to 2012-13. 14. Learned Departmental Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough, observed that the assessee has not received any dividend income during the year, however, he was of the view that the investment in shares amounting to Rs. 7418.82 crore is capable of earning exempt income by way of dividend in future. Therefore, he proceeded to compute disallowance under section 14A r/w rule 8D at Rs. 134.46 crore and after reducing the disallowance already made by the assessee, the Assessing Officer added back the amount of Rs. 132.89 crore. Learned Commissioner (Appeals) also confirmed the addition. 18. The learned Authorised Representative submitted, though the assessee has made suomotu disallowance of Rs. 1.57 crore, however, if it has not earned any exempt income during the year no disallowance under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 taxmann.com 286 (P&H). In view of the legal principle laid down in the aforesaid decisions, we direct the Assessing Officer to restrict the disallowance under section 14A r/w rule 8D to the exempt income earned by the assessee during the year. Further, while computing book profit under section 115JB of the Act, no adjustment can be made by way of disallowance under section 14A read with Rule 8D. However, Explanation-1(f) of section 115JB of the Act empowers the Assessing Officer to increase the book profit by disallowing expenditure incurred for earning exempt income. Therefore, the Assessing Officer may look into this aspect. This ground is partly allowed. 21. In ground no.5, the assessee has challenged disallowance of provision for inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. 26. Having considered the rival submissions, we find that the Tribunal, while deciding assessee's appeal for assessment year 2009-10, in ITA no.1849/Mum./2015, dated 17th October 2017, has decided the issue in the following manner:- "21. Ground no. 3 relates to the addition for the provision of income tax recoverable from Gujarat Electricity Board and Essar Steel Ltd while computing normal income under the Act as well as computing book profit u/s. 115 JB of the Act. The issue as regards the addition under the normal provisions of the Act is covered against the assessee by the tribunal's order in assessee's own case as mentioned in the chart above. Accordingly, under the normal provisions of the Act, we confirm the add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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