ACIT, CC- 3(4), KOLKATA , KOLKATA vs. M/S. HIMATSINGKA SEIDE LIMITED , BANGALORE

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ITSSA 21/KOL/2018Status: DisposedITAT Kolkata31 December 2025AY 2009-1011 pages
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What did the Tribunal hold?

The Tribunal, respectfully following the decision of the Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd., held that in the absence of any incriminating material found during the search, no addition can be made under Section 153A in respect of completed/unabated assessments. The assessment for AY 2009-10 was unabated, and the additions made under Section 14A and transfer pricing were routine disallowances/additions not linked to the search findings. Therefore, the assessment order under Section 153A was quashed, and the additions were deleted. The assessee's grounds related to Section 14A, Section 271(1)(c) (being premature), and the additional ground regarding jurisdiction were allowed. Consequently, the Revenue's appeal challenging the deletion of transfer pricing adjustments was dismissed. The Tribunal concluded that for completed/unabated assessments, the AO can only reopen under Section 147/148, subject to their conditions, and powers under Section 153A are limited to cases with incriminating material.

What were the facts?

The assessee, M/s. Himatsingka Seide Limited, and the Revenue are in cross-appeals against the order of the CIT(A) for Assessment Year 2009-10. A search under Section 132 of the Income Tax Act, 1961, was conducted on the 'Himatsingka Group' on September 22, 2011. Consequently, a notice under Section 153A of the Act was issued to the assessee for AY 2009-10. The Assessing Officer (AO) made additions, including a disallowance of Rs. 22,96,804 under Section 14A read with Rule 8D and a transfer pricing adjustment of Rs. 5,85,44,513 under Section 92CA. The assessee's total income was assessed at Rs. 4,76,74,708 under Section 153A/143(3). The CIT(A) partly allowed the assessee's appeal. The assessee is challenging the confirmation of disallowances and penalty proceedings, while the Revenue is challenging the deletion of transfer pricing adjustments.

What were the issues?

1. Whether the assessment order passed under Section 153A of the Act is without jurisdiction and bad in law, in the absence of any incriminating material found during the search for an unabated assessment year (Section 153A). 2. Whether the CIT(A) erred in confirming the disallowance of expenditure under Section 14A read with Rule 8D for earning exempt income (Section 14A). 3. Whether the CIT(A) erred in disallowing interest on the grounds that no borrowed funds were used for investments yielding dividend income (Section 14A). 4. Whether the CIT(A) erred in upholding the initiation of penalty proceedings under Section 271(1)(c) (Section 271(1)(c)). 5. Whether the CIT(A) erred in deleting the arm's length price adjustment of Rs. 5,53,95,850 made by the AO/TPO on account of inter-corporate loan to an associated enterprise (AE) (Section 92C). 6. Whether the CIT(A) erred in deleting adjustments amounting to Rs. 3,63,836 for international transactions concerning share application money given to an AE (Section 92C). 7. Whether the CIT(A) erred in deleting adjustments amounting to Rs. 27,84,827 for international transactions concerning corporate guarantee to an AE (Section 92C). Assessee's Contention: The assessment order under Section 153A is bad in law as the assessment for AY 2009-10 was unabated, and no incriminating material was found during the search. Therefore, additions made under Section 14A and transfer pricing, unrelated to the search findings, should not have been made. The penalty proceedings are premature. Revenue's Contention: The CIT(A) erred in deleting the transfer pricing adjustments related to inter-corporate loans, share application money, and corporate guarantees. The revenue argued for specific methods for determining arm's length price and highlighted the importance of adjustments for differences between international and uncontrolled transactions.

Which sections of the Income-tax Act were involved?

Section 132,Section 132A,Section 143(2),Section 143(3),Section 147,Section 148,Section 153A,Section 250,Section 271(1)(c),Section 92CA,Section 92C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.(S.S.)A. Assessment Appellant Respondent Nos. Year 18/KOL/2018 2009-10 M/s. Himatsingka DCIT, Central Seide Limited Circle-XVI, Kolkata 21/KOL/2018 2009-10 ACIT, CC- 3(4), M/s. Himatsingka Kolkata Seide Limited PAN: AAACH3507N Appearances: Assessee represented by : Nageshwar Rao, AR. Department represented by : Praveen Kishore, CIT (DR). Date of concluding the hearing : 06-November-2025 Date of pronouncing the order : 31-December-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: These cross appeals filed by the assessee and the Revenue are against the order of the Commissioner of Income Tax (Appeals)-22, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2009- 10 dated 30.01.2018. Since the issues are common, both the appeals were heard together and are being decided vide this common order for the sake of convenience and brevity. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: I. IT(SS)A No. 18/KOL/2018; AY 2009-10:

“3. That the assessment order dated 31.03.2014 passed under section 153A of the Act is wholly without jurisdiction and bad in law.” 2.3 The Revenue is in appeal before the Tribunal raising the following grounds of appeal:

II. IT(SS)A No. 21/KOL/2018; AY 2009-10: “1. That the Ld. CIT (A) has erred on facts & law in deleting the arm's length price adjustment of Rs. 5,53,95,850/- made by the AO/TPO on account of inter corporate loan to the AE 2. That the Ld. CIT (A) has erred on facts & law by not allowing the method of determining the cost of funds plus credit spread as the most appropriate method in the facts of the case of the assessee determining on the basis of Comparable Uncontrolled Price (CUP) method. 3. That the Ld. CIT (A) has erred on facts & law by not determining the arm's length rate of interest in accordance with Section 92C of the Income-tax Act'1961 (the Act) read with Rule 10B & 10C of Income Tax Rules' 1962 (the Rules). 4. That the Ld. CIT (A) has erred on facts & law to also ignore the fundamental fact that LIBOR is just the inter-bank rate to transact between banks and to determine arm's length interest rate for loan transactions between two companies (assessee and its associated enterprise), an

Assistant Registrar ITAT, Kolkata Benches Kolkata

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