TMI Blog2024 (1) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, assessee, as a businessman, has taken a prudent decision to make investments in subsidiary company to derive commercial advantage and thus, we are of the considered view that the AO as well as the DRP are erred in disallowing interest expenses u/s. 36(1)(iii) of the Act, on loans and advances given to subsidiary company and also investment in equity share capital of subsidiary company. Thus we set aside the issue to the file of the AO and direct the AO to verify the issue in accordance with the directions given by the Tribunal for the AY 2012-13 and decide the issue for the impugned assessment year. TDS u/s 195 - disallowance of professional and consultancy fee paid to non-residents u/s. 40(a)(i) for non deduction of TDS - payment made to non-residents are in the nature of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. HELD THAT:- As in assessee s own case for the AY 2015-16 [ 2021 (4) TMI 768 - ITAT CHENNAI] wherein, the Tribunal by following its earlier order for the AY 2012-13, held that in order to bring the impugned payments under the definition of fee for technical services in light of the explanation inserted by the Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f DTAA between India and Singapore allows claim for credit for tax paid in Singapore - HELD THAT:- We find that a similar issue has been considered by the Tribunal in assessee s own case for assessment year 2016-17 [ 2022 (4) TMI 1582 - ITAT CHENNAI] where the issue has been set aside to the file of the Assessing Officer to verify and allow credit for tax paid in Singapore in terms of Article 25 of the DTAA between India and Singapore and also provisions of section 90 of the Act. In the impugned year also, the assessee claims that it had offered income to tax in India in respect of foreign tax paid in Singapore. Therefore, we direct the Assessing Officer to verify the claim of the assessee in light of necessary evidences, if any that may be filed by the assessee including certificate for tax paid in Singapore and allow credit in accordance with law. Incorrect credit for TDS - assessee, submitted that although, the assessee has claimed for TDS credit of Rs. 16,39,92,186/-, but the Assessing Officer has allowed TDS credit for Rs. 16,37,64,684/- only - HELD THAT:- We find that if assessee claims for TDS and same is supported by necessary certificates, and appeared in Form no. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee had also filed appeals against final assessment order passed by the Assessing Officer dated 28.02.2022 18.07.2022, in pursuant to directions of the learned DRP-2, Bengaluru, issued u/s. 144C(5) for assessment year 2017-18 2018-19. Since, facts are identical and issues are common for the sake of convenience, the appeals filed by the assessee and revenue are heard together and are being disposed off, by this consolidated order. ITA No: 798/Chny/2020 for AY 2011-12: 2. The assessee has raised the following grounds of appeal: Sl. No. Grounds of Appeal Tax Effect 1. The order u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 30.09.2019 passed by the Commissioner of Income Tax (A)-1, Chennai (hereinafter referred to as the Ld. CIT (A)) is erroneous both on facts and in law. General Ground 2. The Ld. CIT (A) erred in not quashing the reassessment proceedings u/s 147 of the Income Tax Act without there being any tangible material on record to come to conclusion that there is esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that entire details were submitted before the AO during the original scrutiny proceedings. Rs. 16,61,77,507/- 12. The Ld. CIT (A) ought to have appreciated the fact that in case of capital account transactions not covered under the provisions of Section 43A of the Act and of monetary items, the exchange loss and gains due to fluctuation in exchange rates are to be treated as per the applicable GAAP principles. Rs. 16,61,77,507/- 13. The Ld. CIT (A) ought to have appreciated the fact that as per the GAAP principles read along with Revised AS-11 the transactions in the nature of monetary items and are of capital nature not covered under the provisions of Section 43A are of revenue in nature and corresponding effect of exchange differences are to be accorded in the Profit Loss Account. Rs. 16,61,77,507/- 14. The Ld. CIT (A) ought to appreciate the fact that the method followed by the assessee being based on guidance (Accounting Standards) issued by the ICAI, is very scientific, approved and considered very aspect of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a delay of 304 days in filing the appeal before the Tribunal, for which a petition for condonation of delay along with affidavit explaining reasons for delay has been filed. The Ld. Counsel for the assessee, referring to petition filed by the assessee submitted that the CIT(A) order was issued on 30.09.2019 and ordinarily the appellant should have filed appeal on or before 28.11.2019, but the appeal has been filed on 28.09.2020 with a delay of 304 days. The reasons for delay in filing of appeal is neither wilfull nor for wanton of any undue benefit, but purely for reasons beyond control of the assessee. He further submitted that out of total delay of 304 days, 106 days delay is not covered by Covid period. The balance 198 days is covered by Covid period. The assessee could not file appeal because the Accountant who received the order of the ld. CIT(A) could not take up steps to file appeal in consultation with Counsel who represented the case before the Tribunal. However, immediately after noticed that the appeal has not been filed against CIT(A) order, steps has been taken to file appeal which resulted in delay of 304 days. Therefore, in the interest of justice, the delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a delay of ten months (302 days), the appellant company did not bother to file petition for condonation of delay. Hence, Hon ble ITAT issued defect memo to the appellant company vide its notice dated 06.01.2022. 4. Filing of affidavit by citing false reasons: Upon receipt of this defect memo notice, the appellant company, after nearly 50 days from the date of defect memo filed an affidavit dated 24.02.2022 signed by the Director of the appellant company wherein, it was mentioned that due to covid-19 situation and complete lock down, the appeal was not filed on time. It was also mentioned in the affidavit that papers had been misplaced by one of the office staff. Both the reasons given in the affidavit are not valid reasons and they cannot be accepted on account of the following reasons: a) The COVID-19 lock down was declared by the Government of India only on 23-03-2020. The appellant received the CIT(A) order on 30.09.2019 itself. This fact was duly recorded at point no.3 of the Appeal Memo in Form No.36. Hence the first reason that the appeal delayed due to COVID-19 was a false reason. b) The second reason that the papers had been misplaced is also not fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decisions, Hon ble ITAT, Chennai did not accept casual approach of assessee in filing the appeal with undue delay and furnishing false reasons in the affidavit for condonation of such delay. All these cases are squarely applicable to the facts and circumstances of the present case. Hence, it is prayed that the appeal may kindly be dismissed. 4.2 We have heard both the parties and considered relevant condonation petition filed by the assessee and also considered detailed written submission filed by the ld. DR. Having heard both the sides, we find that out of total delay of 304 days, 198 days delay is covered under Covid period, which is further covered under general exemption provided by the Hon ble Supreme Court in MA No. 665/2021. For balance delay of 106 days, the assessee has explained the reasons for delay in filing of appeal. In our considered view, the reasons given by the assessee for not filing an appeal within the due date prescribed under the Act, comes under reasonable cause and thus, we condone delay in filing of the appeal and admit appeal filed by the assessee for hearing. 5. The Ld. Counsel for the assessee, submitted that the only issue involved in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be allowed as deduction u/s. 37(1) of the Act. We find that a similar issue has been considered by the coordinate bench of ITAT in assessee s own case for assessment year 2010-11 in ITA No. 3063/Chny/2019, where the Tribunal under identical set of facts, the issue has been set aside to the file of the Assessing Officer for further verification. Therefore, consistent with the view taken by the coordinate bench, we set aside the order passed by the ld. CIT(A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to reexamine the claim of the assessee and decide the issue in light of our reasons given in assessee s own case for assessment year 2010-11. 5.4 In the result, appeal filed by the assessee in ITA No. 798/Chny/2020 for assessment year 2011-12 is treated as allowed for statistical purposes. ITA NO: 797/Chny/2020 for assessment year 2011-12: 6. The issue involved in this appeal filed by the assessee is similar to the issue which we have discussed in ITA No. 798/Chny/2020 for assessment year 2011-12. The assessee has filed appeal against order of the ld. CIT(A) dated 18.09.2020, where the ld. CIT(A) has dismissed appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -14: 7. The assessee has raised the following grounds of appeal: 1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2. The learned CIT(A) erred in holding that the investment made by the assessee to M/s Aban Holding Pte Ltd., Singapore (wholly owned subsidiary), for maintaining controlling interest, is for the purpose of business. 3. The learned CIT(A) failed to appreciate the fact that the assessee, M/s Aban Offshore Ltd. is in the business of providing drilling energy oriented services whereas M/s Aban Holdings Pte Ltd. is in the business of investment in other foreign companies, hence it cannot provide any help in expanding or managing assessee s business being not engaged in same line of assessee s business. 4. The Learned CIT(A) erred in allowing the assessee s appeal in light of the decision of Hon ble Mumbai High Court in the case of Crescent Organics (P.) Ltd. vs. DCIT (IT Appeal No.337 of 2012) dated 30 July, 2014 wherein it has been held that interest paid on borrowals utilized for investments in a foreign company was not in course of assessee s business, its claim for deduction under section 36(1)(iii) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that provision of corporate guarantee is a shareholder function and for furtherance of appellant s global expansion of business. f. Erred in not appreciating the fact that the Credit rating of the AE s would be not less than the credit rating of the assessee; the credit facilities are sanctioned by the banker based on the financial stability and credit rating of the associated enterprise. g. Erred in confirming the action of the AO/TPO in not appreciating the fact that the AE has not received any benefit in the form of lower interest rate by virtue of the corporate guarantee given by the taxpayer, and that the taxpayer has not been benefited monetarily from such transaction. Hence, no ALP adjustment is warranted in this regard. h. Erred in confirming the action of the AO/TPO in calculating the ALP of the corporate guarantee fee using CUP as the most appropriate method without complying with the procedure laid down for computation of arms length price as given in the provisions of section 92C of the Act. i. Erred in not appreciating the fact that the TPO has erred in comparing the domestic bank rate with the international transaction which is not in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and the dividend earned thereon on subsequent conversion of loan to investment is also taxable in the hands of the assessee company. g. Ought to have appreciated the fact that the AO has not brought any cogent material on record to show that the assessee company has not utilized the proceeds of the said loan for business purpose. h. Without prejudice to the above grounds, the expenditure incurred towards interest is allowable u/s 37(1) of the Act as it is incurred wholly and exclusively for the purposes of business. i. Without prejudice to the above grounds, even if it is not allowed as a business expenditure, then interest expenditure incurred to make investments in subsidiaries is allowed u/s 57(iii) of the Act. 2. Disallowance s14A of the Act of Rs. 2,08,475/ a. Erred in disallowing interest expenditure of Rs. 2,08,475/without following DRP directions wherein it has directed to follow the honourable ITAT s order in the assessee s own case for the AY 2010-11 AY 2011-12 in ITA No.585/Mds/2016. b. Ought to have appreciated the fact that the investment is made out of assessee s own fund in view of business expediency and for which purpose se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services utilized in the business carried on outside India, these payments were not deemed to accrue or arise in India in view of provisions of sec.9(1)(vii)(b) of the ITA. i. Ought to have appreciated that explanation to sec.9(1)(vii) will not apply to the payments of Rs. 8,78,12,598/as the entire nature of services and activities availed by the assessee comes within the realm of professional services' and not within the meaning of 'FTS' as provided in explanation to the Section 9(1)(vii). j. Ought to have appreciated the fact that the entire amount of Rs. 20,66,05,099/was made outside India for the services rendered outside India and utilized outside India and therefore are not taxable u/s 9(i)(vii) of the Act. k. Erred in making disallowance u/s. 40(a)(i) of the Act of Rs. 20,66,05,099/- without appreciating the decision of the honourable ITAT order in the assessee s own case for the AY 2012 13 in ITA No.450/Mds/2017. l. Without prejudice to above grounds, ought to have appreciated that the assessee is not an assessee in default as defined u/s. 201(1) of the Act and when no order u/s. 201(1) of the Act is passed, disallowance u/s. 40(a)(i) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct memo filed an affidavit dated 24.02.2022 signed by the Director of the appellant company wherein, it was mentioned that due to covid-19 situation and complete lock down, the appeal was not filed on time. It was also mentioned in the affidavit that papers had been misplaced by one of the office staff. Both the reasons given in the affidavit are not valid reasons and they cannot be accepted on account of the following reasons: a) The COVID-19 lock down was declared by the Government of India only on 23-03-2020. The appellant received the CIT(A) order on 30.09.2019 itself. This fact was duly recorded at point no.3 of the Appeal Memo in Form No.36. Hence the first reason that the appeal delayed due to COVID-19 was a false reason. b) The second reason that the papers had been misplaced is also not found to be true that they were in receipt of the order of the CIT(A) on 30.09.2019 itself. What kind of paper were misplaced was not clearly mentioned in the affidavit filed after receipt of Defect Memo. c) After receipt of the order of CIT A dated 30.09.2019 the AO passed giving effect order dated 01.02.2020. Aggrieved against this order the appellant duly filed before CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e up for our consideration from assessee appeal is Transfer Pricing adjustment towards corporate guarantee fees amounting to Rs. 25,78,18,040/-. The AO has made TP adjustment of Rs. 25,78,18,040/- towards corporate guarantee fee @ 1% of total corporate guarantee outstanding at the end of the year amounting to Rs. 2570,60,30,960/- on the ground that corporate guarantee given by the assessee to their AEs, is an international transaction, which needs to be bench marked to determine the ALP of the transaction. It was the submission of the assessee before the TPO that, corporate guarantee given to their AEs is not resulting into any quantifiable benefit to the AEs. Therefore, the same cannot be considered as international transaction to bench mark the ALP of the transaction. 8.1 The Ld. Counsel for the assessee, at the time of hearing submitted that this issue is squarely covered in favor of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2016-17 in IT(TP)A No. 30/Chny/2021, where the issue of addition towards corporate guarantee fees has been decided by the Tribunal and by following the decision of Hon ble Bombay High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the AY 2015-16 had considered an identical issue and the Tribunal by following the decision of the Hon ble Bombay High Court in the case of CIT v. Everest Kento Cylinders Ltd. [2015] reported in 58 taxmann.com 254, has directed the TPO to compute corporate guarantee commission @ 0.5% of total corporate guarantee given to their AEs and outstanding at the end of the relevant Financial Year. The relevant findings of the Tribunal are as under: 8. We have heard both the sides and considered the arguments and had gone through the orders of the lower authorities. 9. In so far as the issue that whether Corporate Guarantee issued by the Assessee to its AEs comes within the definition of International Transaction or not? The Finance Act, 2012 has inserted, an explanation to Section 92B with retrospective effect from 1st April, 2002 to include the term guarantee within the definition of international transaction. Therefore, the Corporate Guarantee issued by an entity on behalf of its AEs is an international transaction as considered by the Bombay High Court in the case of the Commissioner of Income Tax Vs. Everest Kentor Cylinder Limited reported in [2015] 58 Taxmann.com 254 (Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the order of the Tribunal wherein the Tribunal estimated the guarantee commission at the rate of 0.50%. We therefore by considering the facts and circumstances of the case, we are of the opinion that we will fix the guarantee commission at the rate of 0.50%. 6.5 In this view of the matter and consistent with view taken by the co-ordinate Bench, we direct the AO/TPO to compute corporate guarantee fee @ 0.5% of total corporate guarantee given to their AEs. 8.4 In this view of the matter and consistent with the view taken by the coordinate bench, we direct the TPO to compute corporate guarantee fee @ 0.5% on total corporate guarantee given by the appellant to its AE. 9. The next issue that came up for our consideration from assessee appeal is disallowance of interest expenditure u/s. 36(1)(iii) of the Act, amounting to Rs. 3,22,86,80,000/-. The Ld. Counsel for the assessee, submitted that this issue is also covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2016-17 in IT(TP)A No. 30/Chny/2021, where the Tribunal by following its earlier decisions for assessment years 2010-11 to 2012-13, has set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee by the decision of the Tribunal in the assessee s own case for the AY 2012-13 in ITA No.450/Chny/2017 dated 19.06.2017, wherein, the Tribunal after considering the relevant facts and also, by following its earlier decision for the AYs 2010-11 2011-12, has set aside the issue to the file of the AO. The relevant findings of the Tribunal are as under: 4. After hearing both the parties, we are of the opinion that the similar issue was considered by the Tribunal in assesse's own case in ITA Nos.585/Mds/2015 267/Mds/2016 for the assessment years 2010-11 and 2011-12 dated 14.9.2016 wherein Tribunal held that:- 31. We find that the reliance placed on by the ld. DR on the judgment of Madras High Court in the case of Trishul Investments (supra) is misplaced. The main contention of the ld. DR is that the interest expenditure on borrowings used for investment in wholly owned subsidiary cannot be allowed as deduction u/s. 36(1)(iii) of the Act instead it should be added to the cost of investment, in view of the above judgment of the Madras High Court. In our opinion, when activity is under taken as an investment activity and interest incurred up to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the head Profits and gains from business or profession , the deduction account of interest on borrowed fund is provided under section 36(1)(iii) the Act, where the business assets are acquired out of borrowed funds. At this stage, it may be pertinent to note that depreciation is also allowable as deduction under section 32 in respect of business assets on the cost of acquisition. In determining the cost of acquisition, the interest component after bringing the asset into existence is not taken into consideration as Explanation 8 to section 43 of the Act. If the interest is to be added to cost of acquisition, then the assessee would be entitled to double deduction once under section 36(1)(iii) and the other under section 32 of Act, which is not permissible in view of the decision of the Supreme Court in the case of Escorts Ltd. v. UOI[1993] 199 ITR 43. 31.6 Similarly, when the shares are purchased by way of investment, and the dividend is received in respect of such shares, the interest paid on borrowed funds has been held to be allowable as deduction against dividend income. The Supreme Court has gone a step further in the case of CIT vs. Rajendra Prasad Moody [1978] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset is brought into existence or when the asset is put in a working condition. Therefore, on the basis of the Supreme Court judgment, it cannot be said that expenditure incurred after the asset brought into existence, i.e., after the acquisition of the asset would form part of the actual cost. The Supreme Court laid down the proposition that interest paid on monies borrowed for acquisition of capital asset and to meet expenses connected with its installation etc. and capitalized, has to be added to the cost of asset for the purpose of deprecation. 31.8 Thus in our opinion if the money was borrowed for purchase of shares of subsidiary company for the purpose of acquiring controlling interest and acquisition of such controlling interest was of the business of the assessee and it resulted in promote the business of the assessee as well as helpful to the assessee for having management control over said such subsidiary company, then the interest expenditure should be allowed u/s. 36(1)(iii) of the Act. Further if the Assessing Officer found that investment in shares of subsidiary company not for maintaining controlling interest, then the Assessing Officer should see that there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered outside India and the payments were also made outside India, said payment does not come under the definition of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. 10.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The Ld.AR for the assessee submitted that this issue is covered in favour of the assessee by the decision of the coordinate Bench in assessee s own case for the AY 2015-16 in IT(TP)A No.86/Chny/2019, wherein, the Tribunal by following its earlier order for the AY 2012-13, held that in order to bring the impugned payments under the definition of fee for technical services in light of the explanation inserted by the Finance Act with retrospective effect from 01.06.1976, the twin conditions of rendering services in India and utilization of such services in India, are necessary for deducting TDS on such payments. Since, the impugned payments are made outside India for rendering services is also outside India, the question of taxability of said payments in India in the hands of the service provider does not arise and consequently, the assessee is not required to ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereupon. The issue is partly allowed for statistical purposes. 32. In view of the above, we respectfully following the order of Co-ordinate Bench of the Tribunal, we set aside the order passed by the AO and remit the matter back to the AO and direct the AO to follow the above decision of the Co-ordinate Bench of the Tribunal in assessee s own case and pass assessment order thereupon. 10.2 In this view of the matter and consistent with view taken by the co-ordinate Bench, we set aside the issue to the file of the AO and direct the AO to follow the directions of the Tribunal given in the assessee s own case for the earlier assessment years and decide the issue for the impugned assessment year in accordance with law. 11. The next issue that came up for our consideration is disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962. The assessee has earned dividend income from mutual funds/shares and claimed the same as exempt u/s. 10(34) of the Act. The assessee has not made any disallowance of expenditure relatable to exempt income. The Assessing Officer, computed disallowance of expenditure relatable to exempt income u/s. 14A r.w.r. 8D of I.T. Rules, 1962 and determined tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Rules. Further, the AO has considered only those investments, which yielded exempt income for the impugned assessment years. Therefore, we are of the considered view that there is no error in the findings given by the AO to make addition towards disallowance u/s. 14A of the Act. Hence, we are inclined to uphold the findings of the lower authorities and reject the ground taken by the assessee. 11.4 In view of this matter and consistent with the view taken by the coordinate bench, we are inclined to uphold the findings of the ld. DRP and reject ground taken by the assessee. 12. The next issue that came up for our consideration from additional grounds filed by the assessee is not allowing credit for Dividend Distribution Tax (DDT). The Ld. Counsel for the assessee submitted that additional grounds filed by the assessee is purely legal issues, which can be taken at any time of the proceedings, including pending proceedings before the ITAT and thus, in view of the decision of Hon ble Supreme Court in the case of National Thermal Power Co Ltd vs CIT [1998] 229 ITR 383 (SC), additional grounds filed by the assessee may be admitted. 12.1 The ld. DR, on the other hand opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the law. Since, the assessee has filed relevant evidences to prove payment of DDT, in our considered view, the Assessing Officer needs to verify the claim of the assessee and allow as per law. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to verify the claim of the assessee and allow credit for DDT for relevant assessment years as per law. 14. In the result, appeal filed by the assessee in ITA No. 2757/Chny/2017 for assessment year 2013-14 is partly allowed. ITA No: 1672/Chny/2019 for assessment year 2013-14: 15. The Revenue has raised the following grounds of appeal: l. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2. The learned CIT(A) erred in holding that the investment made by the assessee to M/s Aban Holding Pte Ltd., Singapore (wholly owned subsidiary), for maintaining controlling interest, is for the purpose of business. 3. The learned CIT(A) failed to appreciate the fact that the assessee, M/s Aban Offshore Ltd. is in the business of providing drilling % energy oriented services whereas M/ s A ban Holdings Pte Ltd. is in the business of investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition u/s. 154 of the Act on 07.11.2018 and requested the Assessing Officer to follow the directions of the DRP. The Assessing Officer, vide their order dated 19.11.2018 passed u/s. 154 of the Act rejected petition filed by the assessee, on the ground that the assessee has approached the DRP for rectification on the issue of disallowance of interest u/s. 36(1)(iii) of the Act and further, if at the issue needs rectification, the assessee should approach ld. DRP, but not the assessing officer. Aggrieved by the order passed by the Assessing Officer u/s. 154 of the Act dated 19.11.2018, the assessee has filed appeal before first appellate authority. The ld. CIT(A), vide their order dated 22.03.2019, allowed appeal filed by the assessee and directed the Assessing Officer to verify and allow interest expenses as per the order of the DRP dated 13.09.2017 and order of the ITAT for assessment year 2012-13 dated 19.06.2017. Aggrieved by the ld. CIT(A) order, the revenue is in appeal before us. 16.1 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Although, the revenue has filed appeal against CIT(A) order on the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing corporate guarantee commission at higher rate. Therefore, he submitted that the issue may be decided in accordance with law. 18.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by us in assessee own case for Asst. Year 2013.14. We find that the facts in the present year are identical to the facts considered by us for assessment year 2013-14 in ITA No. 2757/Chny/2017. The reasons given by us in preceding Para no. 8.3 to 8.4 for assessment year 2013-14, shall mutandis mutatis apply to this appeal as well. Therefore, for similar reasons, we direct the TPO to compute corporate guarantee fee @ 0.5% on total corporate guarantee given by the appellant to its AE. 19. The next issue that came up for our consideration from assessee appeal is disallowance of interest expenditure u/s. 36(1)(iii) of the Act, amounting to Rs. 1,18,05,20,000/-. The Ld. Counsel for the assessee, submitted that this issue is also covered in favour of the assessee by the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2016-17 in IT(TP)A No. 30/Chny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of the assessee before the AO that, the payment made to non-residents for rendering professional and consultancy services, is for services rendered outside India. Since, the services were rendered outside India and the payments were also made outside India, said payment does not come under the definition of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. 20.1 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by us in assessee own case for Asst. Year 2013.14. We find that the facts in the present year are identical to the facts considered by us for assessment year 2013-14 in ITA No. 2757/Chny/2017. The reasons given by us in preceding Para no. 10.1 10.2 for assessment year 2013-14, shall mutandis mutatis apply to this appeal as well. Therefore, for similar reasons, we set aside the issue to the file of the AO and direct the AO to follow the directions of the Tribunal given in the assessee s own case for the earlier assessment years and decide the issue for the impugned assessment year in accordance with law. 21. The ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26AS and other details if any that may be filed by the assessee and allow credit for TDS in accordance with law. 23. In the result, appeal filed by the assessee in IT(TP)A No. 21/Chny/2021 for assessment year 2017-18 is allowed for statistical purposes. IT(TP)A No: 40/Chny/2022 for assessment year 2018- 19: 24. The only issue that came up for our consideration is Transfer Pricing adjustment towards corporate guarantee fees amounting to Rs. 7,23,96,680/-. The AO has made TP adjustment of Rs. 7,23,96,680/- towards corporate guarantee fee @ 1% on total corporate guarantee outstanding at the end of the year, on the ground that corporate guarantee given by the assessee to their AEs, is an international transaction, which needs to be bench marked to determine the ALP of the transaction. It was the submission of the assessee before the TPO that, corporate guarantee given to their AEs is not resulting into any quantifiable benefit to the AEs. Therefore, the same cannot be considered as international transaction to bench mark the ALP of the transaction. 24.1 The Ld. Counsel for the assessee, at the time of hearing submitted that this issue is squarely covered in favor of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
