Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: SHRI N.K. BILLAIYA & SHRI MAHAVIR PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER
ITA No. 2791 & 2530/Ahd/2014 2 . A.Y. 2010-11 1. ITA No. 2791/Ahd/2014 & 2530/Ahd/2014 are cross appeals by the Revenue and the Assessee preferred against the order of Ld. CIT(A)-XIV, Ahmedabad dated 04.07.2014 pertaining to A.Y. 2010-11.
Both these appeals were heard together and are disposed of by this common order for the sake of convenience.
ITA No. 2791/Ahd/2014 Revenue’s appeal
The first grievance relates to the part relief given on account of TP adjustment in respect of “interest on loans to AEs” and on account of “corporate guarantee”.
At the very outset, the ld. counsel for the assessee stated that the impugned issues have been decided by the Tribunal in assessee’s own case in A.Y. 2009- 10. The ld. counsel placed the order of the Co-ordinate Bench for consideration. The ld. D.R. fairly conceded to this.
We have carefully perused the orders of the authorities below. We find force in the contention of the ld. counsel. We find that the Tribunal has considered a similar issue in assessee’s own case in ITA No. 2074 & 2179/Ahd/2013. The issues was considered at Para 23 of the order while deciding ground no. 4.1 and the relevant findings read as under:-
In ground no.4.1, the Assessing Officer has raised the following grievance:- “4.1). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting upward adjustment of
ITA No. 2791 & 2530/Ahd/2014 3 . A.Y. 2010-11 Rs.14,91,87,270/- made on account interest charged on the loans granted to the Associated Enterprises' at discounted rate to the prevailing Market rate.”
So far as this issue is concerned, it is sufficient to take note of the fact that in the impugned CIT(A)’s order, he has merely followed his order for the assessment year 2008-09 which has not been challenged, on this point, by the Revenue authorities. Learned Departmental Representative does not dispute this fact. 25. In the light of the above factual position, it is clear that once the Revenue authorities accept the stand of the CIT(A) on an issue and allow it to reach finality in one assessment year, it cannot be open to them to challenge the same in the subsequent assessment year. As noted by Hon’ble Supreme Court, in the case of CIT vs. Radhasoami Satsang [(1992) 193 ITR 321 (SC)], while “strictly speaking, res judicata does not apply to income tax proceedings”, “where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year”. 26. In view of these discussions, grievance raised by the Assessing Officer is not maintainable, and is dismissed as such.
As no distinguishing decision has been brought on record, respectfully following the findings of the Co-ordinate Bench, the deletion of the TP adjustment on account of interest on loan is upheld.
Similarly, the TP adjustment on account of corporate guarantee for working capital and Corporate guarantee for financing and other arrangements was
ITA No. 2791 & 2530/Ahd/2014 4 . A.Y. 2010-11 considered by the Tribunal at Para 24 of its order. The relevant findings read as under:- 24. We are in respectful agreement with the views so expressed by the coordinate bench. Having said that, we may add that while it is true that an appeal against the said order, on the same issue, is admitted by Hon’ble jurisdictional High Court but then it is not, and it cannot be, anybody’s case that mere admission of appeal can vitiate binding nature of this judicial precedent. In any case, whatever we hold is, and shall always remain, subject to whatever Hon’ble jurisdictional High Court has to hold on the issue, and Hon’ble High Court, though in the case of another assessee i.e. Micro Ink (supra) is already seized of the matter. Respectfully following the views expressed by the coordinate bench, we hold that the assessee extending corporate guarantees to its AEs, particularly on the facts and in the circumstances of this case and when the assessee has done so in the course of its stewardship activities for its subsidiaries, does not constitute an international transaction, and, as such, no ALP adjustment can be made in respect of the same. Accordingly, entire ALP adjustment stands deleted. As for the quantum of this adjustment, which is mainly the subject matter of grievance raised in revenue’s appeal, once the entire ALP adjustment stands deleted, that aspect of the matter is wholly academic and does not call for any adjudication by us.
25.Ground no. 3 in the Assessing Officer’s appeal is thus dismissed as infructuous, and ground nos. 4,5,6 and 7 in the assessee’s appeal are thus allowed in the terms indicated above.”
We see no reasons to take any other view of the matter that the view so taken, by the co-ordinate bench, for the immediately preceding assessment year. We, therefore, uphold the grievances of the assessee and delete the impugned ALP adjustments.
As we have held that no such ALP adjustment is permissible, grievances raised by the Assessing Officer, with respect to quantification of ALP adjustment, are dismissed as infructuous.
As we part with the matter, we may add that a substantial question of law on this issue, in the case of Micro Ink Limited – the decision followed by us in coming to our aforesaid conclusions, has been admitted by Hon’ble jurisdictional
ITA No. 2791 & 2530/Ahd/2014 5 . A.Y. 2010-11 High Court and the issue is thus pending for adjudication by Their Lordships. In this view of the factual position, even by deciding this appeal in favour of the assessee, it is nothing more than shifting of judicial forum before which the matter is now to be agitated. We have, therefore, refrained from dealing with elaborate arguments of the parties on merits at this stage.
In the result, and subject to the above observations, the appeal of the assessee is allowed.
Respectfully following the same, we confirm the findings of the First Appellate Authority.
The second grievance relates to the deletion of the disallowance of 4,94,79,650/- being foreign exchange fluctuation loss.
An identical issue was considered by the Tribunal while deciding the appeal for A.Y. 2009-10. The issue was considered at Para 16 vide ground no. 2 of Revenue’s appeal wherein the Co-ordinate Bench has followed the decision in assessee’s own case for A.Y. 2008-09.
Respectfully following the findings of the Co-ordinate Bench, we decline to interfere. Ground no. 2 is dismissed.
Ground no. 3 relates to the deletion of the positive adjustment u/s. 14A while determining book profit u/s. 115JB of the Act.
While deciding the appeal for A.Y. 2009-10, the Tribunal has considered this issue at Para 38 while deciding ground no. 7 of Revenue’s appeal wherein the
ITA No. 2791 & 2530/Ahd/2014 6 . A.Y. 2010-11 Co-ordinate Bench has decided the issue in favour of the assessee by drawing support from the decision of the Hon’ble High Court of Gujarat in the case of Alembic Ltd. in ITA No. 1249 of 2014.
As no distinguishing decision has been brought on record in favour of the revenue. Respectfully following the findings of the Co-ordinate Bench, we decline to interfere. Ground no. 3 is also dismissed.
In the result, the appeal filed by the Revenue is dismissed.
ITA No. 2530/Ahd/2014 Assessee’s appeal
Ground no. 1 relates to the disallowance on account of late payment of employees’ contribution to Provident Fund and ESI.
This issue is no more res integra as it has been decided by the Hon’ble Jurisdictional High Court of Gujarat in favour of the Revenue and against the assessee in the case of GSRTC 366 ITR 170.
Respectfully following the same, ground no. 1 is dismissed.
Ground no. 2 relates to the part addition confirmed on account of TP adjustment in respect of corporate guarantee.
This issue has been considered by us while deciding ground no. 1 of Revenue’s appeal. For our detailed discussion therein, this grievance is allowed.