TMI Blog2022 (4) TMI 1499X X X X Extracts X X X X X X X X Extracts X X X X ..... loan - HELD THAT:- The Hon ble coordinate bench in the case of Everest Kanto Cylinder Limited [ 2015 (12) TMI 683 - ITAT MUMBAI] for Assessment Year 2008-09 has also held that rate to be used for undertaking an adjustment should be LIBOR and not the average yield rates. We find that the LIBOR rate of interest was 5.124% whereas the interest charged by the assessee was 12% per annum. Therefore, we are of the considered opinion that no TP adjustment is required on this transaction. Ground No. 8.3 is allowed. Receivables against expenses incurred on behalf of Nice International Inc and LT Overseas Inc. - While imputing interest rate of 17.26%, the TPO has also applied the same on the receivables outstanding against routine expenses incurred by the assessee on behalf of its AE - HELD THAT:- Facts on record show that the assessee has given advance to employees/directors travelling abroad and also facilitated payment of certain expenses on behalf of the AE. The said payment of expenses by the assessee were for a very short period of time and were adjusted against similar expenditure incurred by AE on behalf of the assessee. We are of the considered view that such payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visory report conducted by the professional firms and on the basis of such report/analysis the assessee identified the target company Kusha Inc for acquisition to help expand export sales of the assessee in USA.Considering the fact that export sales of the assessee increased as per the chart mentioned elsewhere, we are of the considered view that the expenditure was incurred to increase profitability and efficiency of the assessee s business overseas which was incurred in the normal course of business. We are of the considered view that the expenditure incurred on due diligence and advisory reports prior to acquisition of Kusha Inc deserves to be allowed as revenue expenditure. We, accordingly, direct the Assessing Officer to allow the same. Expenditure on not use the trademark - assessee stated that pursuant to the understanding entered into with Lucky House, the impugned amount was treated as full and final settlement of the dispute and therefore, the same is an allowable expenditure under section 37(1) - HELD THAT:- There is no dispute that the impugned amount was paid as final settlement of the dispute which arose due to infringement of use of trademark Daawat. In our c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation Ground with all sub- grounds is partly allowed. - ITA No. 6221/DEL/2012 & ITA No. 6222/DEL/2012 - - - Dated:- 11-4-2022 - Shri N.K. Billaiya, Accountant Member, And Shri Yogesh Kumar U.S, Judicial Member For the Assessee By : Shri Ajay Vohra, Sr. Adv., Shri Rohit Jain, Adv., Shri Abhishek Aggarwal, CA, Ms. Deepashree Rao, CA. For the Department : Shri Surender Pal, CIT-DR. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- These two separate appeals by the assessee are preferred against the order dated 17.10.2012 pertaining u/s 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] for Assessment Years 2008-09 and 2009-10. 2. Both the appeals were heard together and involve common issues. Therefore, they are being disposed of by this common order for the sake of convenience and brevity. 3. We will first address to appeal for Assessment Year 2008-09 in ITA No. 6221/DEL/2012. 4. The grievances of the assessee read as under: 1. That reference to special audit under section 142(2A) is illegal and bad in law and the report submitted by the special auditor is illegal, bad in law and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80IB(11A) of Rs. 2,15,30,363/-. 5.1 That in the absence of any incriminating material found during the search the AO has erred on facts and in law and has exceeded his jurisdiction in making disallowance of deduction u/s 80IB(11 A). 5.2 That in view of the facts and circumstances of the case and in law the A.O. has erred in law and on facts in not following Ld. D.R.P. directions to verify the issue afresh. Addition U/s 14A r/w Rule 8D 6. That in view of the facts and circumstances of the case and in law the A.O./DRP has erred in making disallowance to the tune of Rs. 1,71,16,266/- u/s 14A read with Rule 8D. The disallowance made is unjust, unlawful and is also highly excessive. Addition on Account of Personal Expenses 7. That in view of the facts and circumstances of the case and in law the A.O./DRP has erred in holding that an amount of Rs. 23,38,945/- (Rs. 8,02,575/- + 4,63,232/- + Rs. 10,73,138/-) is in nature of personal expense. 7.1 That in view of the facts and circumstances of the case and in law the erred in law and on facts in taking wrong, figure of. addition under the head personal expenses. Disallowance of Deduction of Bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no separate adjudication. Ground No 8.2 relates to the addition of Rs. 23,857/ on account of export of goods. 8. Briefly stated, the underlying facts of this issue are that during the year under consideration, the assessee has exported rice to its Associated Enterprise [AE] namely Kusha Inc. USA and NICE International, aggregating to Rs. 2588.15 lakhs. For the purpose of benchmarking the said transaction, the assessee has applied CUP/TNMM method as the most appropriate method. For application of CUP method, the average price per unit of international transaction of export of various grades of rice was compared with average price per unit of exports of same grade of rice to un-related party in export and domestic market. 9. Bench-marking analysis is provided at pages 30 to 33 of the paper book and the same is as under: 10. A perusal of the afore-stated details show that the price charged on sale of rice to AE is higher/within range +/- 5% of the price charged from un-related third parties. Therefore, transaction of export of rice to AE was considered to be at arm s length price by the assessee. 11. In the alternative, the assessee has also benchmarked the said tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5550 NICE Int. 08.03. 20017 2 8854 1 4427 0 DashMe sh SINGAPORE 08.08. 2007 278111 44497 -227 455 KHUSHA CORP 28.02. 2008 62 3962 606 4750 7 Van SILLEVEO LDT NETHERLANDS 0303. 2008 57352 00 47793 -286 17852 Total 23857 15. While making the above adjustment, the TPO observed that the effect of 5% allowance is not applicable in the CUP method where the prices are compared on daily basis from transaction to transaction. 16. Objections of the assessee were dismissed by the DRP. 17. We are of the considered view that post-amendment to section 92C(2) by Finance Act No. 2 Act, 2009 with effect from 1.10.2009, the action of the TPO is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1552 14 38803 Palm Rose 17.07. 2007 160764 401 91 -1387 5550 -3.58% Nice Int. 08.03. 20017 8854 1 44270 DashMesh 08.08. 2007 278111 444 97 -227 455 -0.51% khus HA CORP 28.02. 2008 3962 606 47507 Van SILLEVEOldt 0303.2008 573520 0 477 93 -286 17852 -0.60% 22. It can be seen from the above chart that the transaction of export of rice undertaken by the assessee with its AE is within range of +/- 5% of the ALP. It has been brought to our notice that in subsequent assessment years, i.e. 2012 13, 2013 14 and 2014 15, the TPO himself has accepted TNMM analysis undertaken by the assessee in bench-marking such transaction of export of rice. 23. In fact, in A.Y. 2011 12, the ld. CIT(A), vide order dated 08.03.2019, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Cotton Naturals (I) Pvt Ltd ITA No. 233/2014. 32. Per contra, the ld. DR strongly supported the findings of the TPO and vehemently stated that since the loan was given by an Indian company, SBI PLR should be adopted. 33. We have carefully considered the rival submissions. The Hon ble Delhi High Court in the case of Cotton Naturals [supra], while discarding the application of PLR of SBI on foreign currency denominate loan, observed as under: 39. The question whether the interest rate prevailing in India should be applied, for the lender was an Indian company/ assessee, or the lending rate prevalent in the United States should be applied, for the borrower was a resident and an assessee of the said country, in our considered opinion, must be answered by adopting and applying a commonsensical and pragmatic reasoning. We have no hesitation in holding that the interest rate should be the market determined interest rate applicable to the currency concerned in which the loan has to be repaid. Interest rates should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. Interest rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees/directors travelling abroad and also facilitated payment of certain expenses on behalf of the AE. The said payment of expenses by the assessee were for a very short period of time and were adjusted against similar expenditure incurred by AE on behalf of the assessee. 38. We are of the considered view that such payment of expenses are done under normal business circumstances during regular course of business and should not be considered as loan. Our view is fortified by the OECD guidelines, wherein at para 1.648 has mentioned as under: 1.64 A tax administration's examination of a controlled transaction ordinarily should be based on the transaction actually undertaken by the associated enterprises as it has been structured by them, using the methods applied by the taxpayer insofar as these are consistent with the methods described in Chapters II and III. In other than exceptional cases, the tax administration should not disregard the actual transactions or substitute other transactions for them. Restructuring of legitimate business transactions would be a wholly arbitrary exercise the inequity of which could be compounded by double taxation created where the other tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the TPO to consider the rate of interest at 12.72% being PLR of interest by SBI. 43. Pursuant to the directions of the DRP, final adjustment was made at Rs. 21,05,962/ . Before us, the learned counsel placed strong reliance on the decision of the Hon ble jurisdictional High Court of Delhi in the case of Kusum Healthcare Limited ITA No. 765/2016 and also relied upon the decision in the case of Avenue Asia Advisors 398 ITR 120. 44. The learned counsel further pointed out that interest cost has also been suitably factored in sale price as operating profit margin of the assessee is much higher than operating margin of the comparable companies. 45. The ld. counsel for the assessee further stated that the assessee is also in receipt of remittances against sale of rice from unrelated 3rd parties wherein also, on similar delay, no interest has been charged by the assessee. 46. Per contra, the ld. DR strongly supported the findings of the TPO and read the relevant observation of the Assessing Officer/DRP. 47. We have carefully considered the rival submissions. The Hon ble Jurisdictional High Court of Delhi in the case of Kusum Healthcare Pvt Ltd [Supra] has held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act amounting to Rs.12,34,19,871/ . 53. Facts on record show that this is not the first year of claim, but, in fact, is the fifth year of claim, which means that this claim was allowed/ considered in the earlier Assessment Years. 54. We find that for the first time, claim was made in Assessment Year 2004-05 which was allowed by the Assessing Officer. Thereafter, in the reassessment proceedings, claim was reduced by the Assessing Officer. 55. Similar fate was in Assessment Years 2005-06 and 2006-07. The said assessments were completed u/s 153A of the Act. Assessment orders for Assessment Years 2004-05 to 2006-07 were quashed by the Tribunal as the same were based de hors any incriminating material. 56. However, in Assessment Year 2007-08, this issue has been decided on merits by this Tribunal in ITA No. 4046/DEL/2013 in the case of L.T. Foods Ltd wherein, on identical facts, the Tribunal allowed deduction claimed u/s 80IB(11A) of the Act. The relevant findings read as under: 34. On a careful understanding of the above, we also have no hesitation to hold that the beneficial provisions of section 80IB(11A) of the Act was introduced to encourage the development of infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy in the grain management system and minimize post-harvest food grain losses. XXXXX XXXXX 39. In this context, it is necessary to look at the activities conducted by the assessee in their integrated business of handling, storage and transportation of the food grains in furtherance of the above object of enhancing the food security by achieving the greater efficiency in the grain management system and minimizing the post-harvest food grain losses. If the unit of the assessee at Bahalgarh strives to achieve these objectives, it would certainly be entitled to the benefit of deduction under section 80IB(11A) of the Act. We are of the considered opinion that for this 27 purpose we will have to keep it in mind that the incentive is provided for the integrated business of handling, storage and transportation of food grains with this particular avowed object and, therefore, there shall not be any compartmentalization of these activities for the purpose of allowing the deduction. 40. It could be seen from the record that the activities of the assessee include purchasing and transporting paddy, storing paddy, processing the Paddy into rice, handling the Paddy during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rucks for the purposes of carrying food grains from the farmers and mandis to its storage blocks and thereafter to the markets, followed by upgradation and modernization of infrastructure for handling of food grains in order to bring greater efficiency in the storage and grain management system and minimize postharvest food grain losses. Assessee also brought it to the notice of the learned Assessing Officer that the special auditors in the report at pages number is 30 and 31 part II volume 5 observed that the condition that the assessee should be engaged in the business of handling, storage and transportation of food grains was fulfilled. 42. Revenue does not dispute any of the activities carried by the assessee or installing the machinery Per treatment and processing of the 29 Paddy, setting up of storage facilities or hiring of trucks for transportation of the Paddy from the fields/Mandi to the storage and treatment facility and, rice from there to the markets. In fact, the Assessing Officer made a remark in the assessment order that simply because some part of the assessee s business coincides with the part of the provision, he cannot be allowed to take benefit of somethi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fruits or vegetables, it does not exclude all the processes from meaning of handling . As stated supra, there are various steps involved in minimizing the post-harvest losses as per the recommendations of the Agricultural Marketing Information Network. If we exclude the specific activities like storage and transport, all other activities which are preparatory, axillary and sundry in nature, but in furtherance of the avowed object of better grain management and minimizing the post-harvest losses to achieve food security would naturally fall within the category of handling otherwise, such an expression will remain redundant. It cannot be said that the intermediary processes undertaken by the assessee in clearing, steaming, soaking, drying, polishing and grinding besides de-husking the paddy would significantly enhance the life of the food grain , reduces the loss of food grain and contributes to the preservation of food grains. If those activities do not answer the description of handling, we wonder what would be handling. The word has to be understood in its contextual sense and merely because the learned Assessing Officer does not agree with the assessee to include the milling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andling and the assessee is certainly conducting such activities which would entitle to the benefit of deduction under section 80IB(11A) of the Act. XXXX XXXX 53. As we have stated above, we will have to test the expression handling , occurring in section 80IB(11A) of the Acton the touchstone of the object sought to be achieved through such incentive, namely, achieving the enhanced food security by way of greater efficiency in the grain management system by minimizing the post-harvest food grain losses. It is an undeniable fact that traditionally pounding was the way in which the paddy was converted to the form of rice by separating the husk and brawn. It is also common knowledge that that in that process there used to be quantitative and qualitative losses, caused by the breaking of the grains etc. By dehusking the paddy and converting it into rice, no new article is brought into existence which is qualitatively different from the inputs, but is the simple process of de-husking the paddy to obtain the rice. This conversion meets the objective of minimizing the postharvest losses which would lead to the greater efficiency of the food grain management system and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the plant and machinery for Bahalgarh unit used prior to 1/4/2001 and was transferred such old machinery for the new unit. Ld. CIT(A) also referred to the special audit report wherein it was observed that for the purpose of examining the question whether the unit at Bahalgarh had started with effect from October 2002, examination of the stock registers, unit-wise books of accounts and sales tax 45 registration certificate in respect of Bahalgarh unit took place, and it was only after examination of all these things the special auditors concluded that the assessee was engaged in the business of handling, storage and transportation of food grains and such business was eligible for a deduction under section 80IB(11A) of the Act. 58. It is, therefore, clear that there is no material was either examined by the Learned Assessing Officer before reaching the conclusion as to the uses of old machinery nor the same is produced before us, in support of such conclusion. In the absence of any reasons to show the contrary, we find it difficult to take a different view from the view taken by the Ld. CIT(A) that without undertaking any exercise to ascertain the instances of old plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share of profit from partnership firm is concerned, in Assessment Year 2007-08, this Tribunal in ITA No. 4164/DEL/2013 vide order dated 30.09.2020 has deleted the disallowance. The relevant findings read as under: 95. We have gone through the record, in the light of the submissions made on either side. It could be seen from the assessment order, vide paragraph number 11, there were made the report of the special auditor as the basis for the disallowance, special auditor worked out the total disallowance under section 14A of the Act read with Rule 8D of the Rules at rupees, 41, 80, 208/-, but in view of the provisions of section 14A of the Act, he restricted the disallowance to the exempt income and determined the same at Rs.18,18,915/-. Nowhere in the order, assessing officer had considered the accounts of the assessee as to what could have been the expenditure, that has to be allocated for earning the exempt income. 96. Even otherwise, we find strength in the ornament of the Ld. AR that in order to avoid the double taxation once in the hands of the firm and secondly in the hands of the partner, the share in the profits of the partnership form is not taxable in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the disallowance and the submissions of the ARs. The expenditure on travel of the wives and the directors abroad when they have accompanied the directors in business towards is an allowable expenditure. The AO is directed to allow the expenditure on the travel of the wives of the directors when they have accompanied the directors on foreign visits after verification .. 68. The Assessing Officer is bound to follow the directions of the DRP. We, accordingly direct the Assessing Officer to follow the directions of the DRP and decide the issue accordingly. The Assessing Officer is further directed to consider the decision of this Tribunal in assessee s own case in ITA No. 4164/DEL/13 for AY 2007 08. Ground No. 11 is partly allowed. 69. Ground No. 12 relates to the disallowance of expenditure holding same as capital expenditure and not allowing deduction of Rs. 1,96,66,561/- 70. The underlying facts relating to this issue are that during the year under consideration, the assessee incurred expenditure aggregating to Rs.2.87 crores in connection with identification of opportunities outside India to explore the possibility of expansion of distribution of network to boos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal Rs.1,71,61,328 75. The ld. DR strongly supported the findings of the AO/DRP. 76. We have carefully considered the orders of the authorities below. A perusal of the aforementioned bifurcation of expenses shows that the expenses have been incurred on due diligence and advisory report conducted by the professional firms and on the basis of such report/analysis the assessee identified the target company Kusha Inc for acquisition to help expand export sales of the assessee in USA. 77. Facts on record show that the assessee made total export sales of Rs. 48,94,90,338/ to USA out of which substantial sales to the tune of Rs. 28,56,81, 443/ was made to Kusha Inc. 78. We find from the record the export sales of the assessee company increased threefold as under: Sl. No. F.Y Total Sales in USA Total; Sales to Kush Qty (MT) Amt (Rs.) Qty (MT) Amt (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as under: 68. That leaves us with the other question, namely, as to whether the Tribunal was right in allowing the legal expenses of Rs. 15 lakhs incurred towards obtaining advice and by way of consultation fees paid to the auditors of the assessee-company as to the feasibility of acquiring a brewery unit in South Africa 69. As the revenue has not disputed that the assessee had in fact incurred this expenditure and though Sri Seshachala, learned senior standing counsel appearing for the appellantrevenue would bring to our notice the relevant statutory provision, namely, section 35D of the Act as it prevailed at the relevant point of time and submits that any expenditure incurred by way of expansion of business undertaking or in connection with the setting up of new industrial unit etc., is to be amortized as part of the investments, we are not impressed either by the submissions that it is in the nature of 'capital expenditure' or that section 35D of the Act is attracted to the facts of the instant case. 70. We say so for the reason that an expenditure incurred even in connection with acquiring a capital asset which is in the nature of a fee paid towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t could transfer the factory building and other assets to the new company. A certain number of shares of the new company were allotted to the asses- see in consideration of the transfer of these assets. During the years 1975-76 and 1976-77, interest on borrowings which were made for the purpose of these assets was allowed as business expenditure but a similar claim for deduction during the assessment years 1977-78 and 1978-79 was rejected by the 1TO on the ground that the borrowings were made to create assets which were diverted as the capital of new company L. The Tribunal, however, allowed the claim of the assessee for deduction of interest on the borrowings. 84. The Hon'ble Karnataka High Court held as under: The Appellate Tribunal was justified in concluding, from the facts and circumstances, that there was no trusteeship in respect of the setting up of the new company by the assessee, and that the expenditure incurred on the setting up of the undertaking (or the unit) to manufacture mica paper was a expenditure incurred by the assessee as part of its existing busies operation. If, for any reason, the Government of India or any statutory authority refused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the findings of the Assessing Officer /DRP. 93. We have carefully perused the orders of the authorities below. There is no dispute that the impugned amount was paid as final settlement of the dispute which arose due to infringement of use of trademark Daawat. In our considered opinion, any expenditure incurred by the assessee to protect its trademark in the ordinary course of business is to be allowed as revenue expenditure because it was a commercial expediency on the part of the assessee to have made the said payment to protect unlawful use of its trademark and the same was incurred wholly and exclusively for the purpose of business. We, accordingly, direct the Assessing Officer to allow deduction of Rs. 25,05,233/ . Ground No. 12 along with sub-grounds is allowed. 94. Ground No. 13 with sub grounds relates to the disallowance under section 40(a)(ia) of the Act. 95. The underlying facts in this issue are that the Assessing Officer, during the course of assessment proceedings and on perusal of the financial statements of the assessee, found that the assessee has claimed expenditure of Rs. 2,97,02,201/ on which no tax was deducted at source and further found that on Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bonus paid to Farmer 6,06,576 - 11. Legal and Professional Charges 9,91,624 - 12. Other Expenses - Service Charges, AMC, fumigation and inspection charges, canteen and catering charges 4,59,658 - 13. Casting Error 84,758 - Total 2,97,02,201 97. In so far as expenditure mentioned at item No. 9 and 10 above is concerned, the learned counsel, at the very outset stated that he has nothing much to say. In respect of other expenditure, the learned counsel stated that the reasons given in the chart are self explanatory. 98. Ld. DR supported the findings of the AO/DRP. 99. We have carefully perused the chart mentioned hereinabove. In so far as freight and labour charges are concerned, the same are reimbursements and in our considered view, there is no liability of TDS on reimbursement of expenses. 100. We have also perused evidences brought on record in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income and decide the charging of interest afresh after affording reasonable and sufficient opportunity of being heard to the assessee. 111. In the result appeal of the assessee in ITS 6221/DEL/12 is partly allowed. ITA No. 6222/DEL/2012 [Assessment Year 2009-10] 112. The assessee has raised the following grounds of appeals: 1. That the search conducted under Section 132 is illegal, bad in law and without jurisdiction and the assessment made U/s 153A is also bad in law and without jurisdiction. 2. That the notice under section 153A is illegal, bad in law and without jurisdiction and the order passed U/s 153A is also illegal, bad in law and without jurisdiction. 3. That the impugned assessment order passed under section 153A is illegal, bad in law and barred by time limitation. 4. That reference to special audit under section 142(2A) is illegal and bad in law and the report submitted by the special auditor is illegal, bad in law and without jurisdiction. 5 That the special auditor has erred on facts and in law in scrutinizing and auditing those issues which are not part of the terms of reference and has exceeded his jurisdiction in ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IB( 11 A) of Rs. 12,34,19,871/-. 9.1 That in the absence of any incriminating material found during the search the A. O. has erred on facts and in law and has exceeded his jurisdiction in making addition / disallowance of deduction under section 80IB(11A). 9 2 That in view of the facts and circumstances of the case and in law the A.O. has erred in law and on facts in not following Ld. D.R.P. directions to verify the issue afresh. Addition U/s 14A r/w Rule 8D 10. That in view of the facts and circumstances of the case and in law the A.O. has erred in making disallowance to the tune of Rs. 53,26,986/- u/s 14A read with Rule 8D. The disallowance made is unjust, unlawful and is also highly excessive. Addition on account of personal expenses 11. That in view of the facts and circumstances of the case and in law the A.O. has erred in holding that an amount of Rs. 11,24,307/- (Rs. 5,73,775/- + 1,75,000/- + Rs. 1,95,948/- + Rs. 1,79,584/-) is in nature of personal expense. 11.1 That in view of the facts and circumstances of the case and in law the A.O. has erred in law and on facts in not following Ld. D.R.P. directions by not allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given, evidence produced and material placed and made available on record have not been properly considered and judicially interpreted and the same do not justify the addition made. 15. That the addition/disallowance made is based on mere surmises and conjunctures and the same cannot be justified by any material on record. 16. That the interest u/s 234A. 234B, 234C and 234D has been wrongly and illegally charged as there is no delay in filling of return and there is no default of payment of Advance tax as the receipt / income is liable to TDS. 17. That all the above grounds are independent to each other and mutually exclusive. 113. Ground Nos. 1, 2 and 3 are general in nature and need no separate adjudication. 114. Ground No. 4 relates to the T.P. adjustment of Rs. 64,48,052/- on account of adjustment in international transactions carried out with AEs. 115. The break-up of the TP adjustment is as under: i) Rs. 9,23,713/- on account of export of goods; ii) Rs. 32,86,303/- on account of arm s length interest on loan to AEs; and iii) Rs. 22,38,036/- on account of interest receivables from AEs. 116. The underlying facts in the impugned issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,66,209/- 122. The assessee suo moto disallowed Rs. 1,00,52,604/- u/s 14A r.w.r. 8D. Disallowance has been computed by the assessee as under: S. No. Particulars Amount 1 Direct expenditure - 2 Interest expenditure incurred during the year attributed in the ratio of average value of investments resulting in exempt income to average value of total assets [35,03,43,431 * 18,49,67,190/ 7,09,94,39,881] Rs.91,27,768 3 'A % of average value of investments [0.5% * 18,49,67,190] Rs.9,24,836 Total Rs.1,00,52,694 123. Computation of disallowance did not find any favour with the Assessing Officer who proceeded by computing the disallowance as under: S. No. Particulars Amount 1 Direct expenditure - 2 Interest expenditure incurred during the year attributed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the assessee has suo moto disallowed Rs. 1,00,52,694/-, further disallowance is not necessary and the Assessing Officer is directed to delete the disallowance of Rs. 20,47,187/-. Ground No. 6 is, accordingly, allowed. 131. Ground Nos. 7 and 8 are not pressed. The same are dismissed as not pressed. 132. Ground No. 9 relates to disallowance made u/s 40A(ia) of the Act. 133. The underlying facts in this issue are that the Assessing Officer disallowed a sum of Rs. 2,58,94,143/- on account of non deduction of TDS and Rs. 7,26,890/- on account of short deduction of TDS. 134. The break-up of the disallowance made by the Assessing Officer can be understood from the following chart: Sl. No. Nature of payment As per AO Remarks 1 Freight charges paid on purchase of Paddy Rs.1,66,40,816 Reimbursement of freight Charges of paddy paid by party on behalf of assessee - Amount either paid is below taxable limit. 2 Labour Charges Rs.9,58,753 Only reimbursement of labour charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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