BRY AIR ASIA P.LTD,NEW DELHI vs. DCIT, CIRCLE 5(1), NEW DELHI

P a g e | 1 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13)

IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER & SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 1054/Del/2023 (Assessment Year: 2012-13) BRY AIR ASIA PRIVATE Vs. DCIT LIMITED, Rajpur Road, Circle-5(1), 20, Manju Ka Tila area New Delhi North Delhi 11054 �थायीलेखासं./जीआइआरसं./PAN/GIR No: AAACB4050A Appellant .. Respondent

Appellant by : Sh. Shailendra Bajaj, CA Respondent by : Sh. S. K. Jadhav, CIT-DR

Date of Hearing 05.02.2026 Date of Pronouncement 28.04.2026 O R D E R PER VIMAL KUMAR, JM: The appeal filed by the assessee is against the order dated 16.02.2023 of the Ld. Commissioner of Income Tax (Appeals), Delhi - 44 (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of order dated 28.04.2016 of

P a g e | 2 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) the Ld. Assessing Officer/DCIT, Circle -05 (1), New Delhi (hereinafter referred to as “Ld. AO”), u/s 143(3) r.w.s. 144C of the Act for Assessment Year 2012-13.

2.1 As per Form 3CEB filed along with the return of income, company had entered into international transaction associated enterprises/concerns. Reference was made to TPO vide letter dated 05.01.2014 to determine the Arm’s Length Price u/s 92CA(3) of the Income Tax Act, 1961 was passed by the Asstt. CIT, TPO-1(1)(2), New Delhi, on 29.01.2016 which was received in the office of AO on 01.02.2016. The adjustments made in the case are tabulated below:-

P a g e | 3 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) S. No. Nature of ALP determined ALP determined Adjustment u/s International by assessee (Rs.) by this office 92CA Transaction (Rs.) 1 Receivables NIL 5,83,947/- 5,83,947/- 2 Interest on Loan 3,98,521/- 62,35,011/- 58,36,490/- Total 64,20,437/-

2.2 Draft assessment order dated 16.03.2016 was served on the assessee. The assessee vide letter dated 11.04.2016 submitted as under:-

“This has reference to the draft assessment order dated 16.03.2016 send to us under the provisions of section 144C(1) of the Income Tax Act, 1961. In this regard it is submitted that we do not want to pursue recourse with the DRP. We will pursue the matter with CIT Appeal on finalization of the assessment.”

2.3 Final assessment order dated 28.04.2016 was passed by AO by making following additions.

Disallowance u/s 14A (para 4) : Rs. 31,13,558/- Disallowance made u/s 35(2AB) of Income Tax Act Rs. 23,65,782/- Adjustment made u/s 92CA (3) (para 6) Rs. 64,20,437/-

P a g e | 4 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) 3. Against the order dated 28.04.2016 of ld. AO, the assessee filed appeal before the ld. CIT(A) which was partly allowed vide order dated 16.02.2023. Ground No. 1, regarding TPO adjustment of Rs. 5,83,947/- by computing the interest of outstandings of exports sales made to associated enterprises when no interest has been charged by the appellant company even on receivables on sales from non-associates was allowed. Ground Nos. 2a and 2c regarding the transfer pricing adjustment in respect of interest of interest of Rs. 3,98,521/- on loan given by the company to its AE, Bry Air Pro-Kon Sagl was allowed. Ground No. 2b against the addition of Rs. 53,33,982/- in respect of transfer pricing adjustment of interest on loan A+H Germany was partly allowed. The interest was restricted @ 6% which was charged by the AO/TPO to make adjustments. Ground No. 3, regarding the additions of Rs. 31,13,558/- u/s 14A r.w. Rule 8D was allowed. Ground Nos. 4A and B were partly allowed. The AO was directed to verify expenses of Rs. 23,65,782/- and allow the revenue expenditure incurred for business purpose u/s 37(1) of Act. The additions of Rs. 31,13,558/- on account of disallowance u/s 14A and Rs. 23,65,782/- disallowance made u/s 35(2AB) of the Act were deleted. Regarding additions of Rs. 64,20,437/- on account of adjustment u/s 92CA(3). The AO was directed to make adjustment of interest.

P a g e | 5 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) 4. Being aggrieved, appellant-assessee preferred present appeal on following grounds:-

1.a That the order passed by Ld. CIT(A) sustaining the adjustment of interest on loan to German subsidiary under section 92CA is bad in law and against the facts of the case. 1.b That the Ld. CIT(A) has erred both in facts an in law while sustaining the adjustment on interest @ 6% under section 92CA(3) on loan given to Ahlberg +Hennrich Gmbh Germany (A+H), appellant's German subsidiary which was incurring persistent losses and under liquidation. 1.b That while upholding the adjustment of interest on loan to the appellant's German subsidiary under section 92CA (3) Ld. CIT(A) ignored the liquidation order dated 18-01- 2012 passed by Hamburg Court. 2. That the appellant craves leave to add, delete or amend any of the grounds of appeal on or before the disposal of the present appeal.

P a g e | 6 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) dated 08/11/2023 filed before Chief General Manager of CEFA Division page 3-10 of PB, Foreign Exchange Department and copy of order of Reserve Bank of India, Foreign Exchange Department dated 28/05/2024 for CA No. 6322/2023 page 11-14 of PB.

7.1 Copy of agreement regarding acquiring A+H Germany is at page 201- 204 of PB.

7.2 Copy of order of Hamburg district dated 18.01.2012 commencing the liquidation proceedings is at page No. 205 of the paper book.

7.3 The additional evidence filed in the appeal consists of:-

P a g e | 7 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) (a) As per independent auditor’s report page 1 to 2 of PB submitted along with submissions mentioned as under:-

“9 Based on our examination as above, evidences obtained, and the information and explanations, along with the representations provided by the Management and based on the audited financial statements for the years ended 31 March 2013 till 31 March 2021, underlying books of account and other records and documents maintained by the Company for the said period, in our opinion, the investment in the equity share of A+H Germany amounting to Rs. 20,142,000 and loan granted along with accrued interest thereon amounting to Rs. 44,920,077 as at 31 March 2013, has been fully written off in the books of accounts of the Company and there has been no recovery by the Company till 31 March 2021 pursuant to sale of assets of the subsidiary upon liquidation.

(b) Copy of letter dated 08.11.2023 filed before the Chief General Manager, CEFA Division Foreign Exchange Department is at page 3-10 of PB.

(c) Copy of order dated 28.05.2024 of Reserve Bank of India page 11-14 mentions granting of compounding application for contravention regarding interest on loan to German subsidiaries.

7.4 In the interest of justice, the additional evidence consists of copy of Independent Auditor’s report, copy of letter dated 08.11.2023 and copy of order dated 28.05.2024 are taken on record.

P a g e | 8 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) 7.5 In view of above material facts, namely order dated 18.01.2012, auditor’s report mentioning writing off of interest on investment in books of accounts and order dated 28.05.2024 of RBI granting compounding of contravention, the action of ld. CIT(A) in sustaining adjustment on interest @ 6% u/s 92CA(3) of the Act on loan to Ahlberg + Hennrich GmbH, Germany (erstwhile ‘wholly owned subsidiary or A+H, Germany incurring persistent loss under liquidation to the tune of Rs. 53,33,982/- being not just, fair, reasonable and legal is set aside and the matter is remitted to file of ld. AO for fresh adjudication in accordance with law after affording fair opportunity of hearing to the assessee. Ground No. 1a & b and 2 are partly allowed.

Order pronounced in the open court on 28.04.2026

Sd/- Sd/- (Ramit Kochar) (Vimal Kumar) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 28.04.2026 *Ganesh Kumar, Sr. PS Copy forwarded to: 1. Appellant

P a g e | 9 ITA No.1054/Del/2023 BRY AIR ASIA P. Ltd. (AY 2012-13) 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI