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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Before Shri S.S. Godara & Shri Laxmi Prasad Sahu
O R D E R Per S. S. Godara, J.M. These assessee’s and Revenue’s cross-appeals for A.Y. 2008-09 arise against the Commissioner of Income Tax (Appeals) – 3, Hyderabad’s order; dated 09.09.2019 passed in case No.1038/Hyd/CIT(A)-3/2014-15 involving proceedings u/s 143(3) of the Act Income Tax Act, 1961 (in short, “the Act”).
Heard both the parties. Case files perused.
The assessee’s sole substantive grievance in its appeal ITA 1745/Hyd/2019 pleads that both the lower authorities have erred in law and on facts in disallowing its MAT deduction claim of Rs.13,08,62,793/- u/s 115JB of the Act. The CIT(A)’s detailed discussion affirming the Assessing Officer’s action to this affect reads as under :
“XII) Ground No.4 in appeal relate to disallowance of loss of Rs.13,08,62,793/-. The appellant contended that the Assessing Officer had disallowed and added back the loss on transfer of cement business of Rs.13,08,62,793/ - without appreciating the fact that loss on transfer of cement business was already added back by the appellant in its return of income resulting in double disallowance of loss on transfer of cement business. Facts of the case, grounds of appeal, assessment order and submissions of the appellant were perused. The appellant contended that the company had transferred its cement division/undertaking to its holding company and incurred a loss of Rs.13,08,62,793/- which it sou- moto added back in the computation of income. The appellant contended that the Assessing Officer again disallowed the same without considering that the amount had already been added back by the appellant company. This the appellant contended resulted in double disallowance. It is seen from the computation of income flied for the A.Y.2008-09 that the loss on transfer of cement division/undertaking had already been added back by the appellant company. Considering that there has been double disallowance, the 2 addition made in the assessment is deleted. Hence Ground No.4 in appeal is allowed.
Ground No.5 in appeal relates to not allowing the loss of Rs.13,08,62,793/- as deduction from computation of book profit u/s.115JB of the Income Tax Act, 1961. The appellant contended that the deduction from computation of book profit u/s.115J8 was debited to the P&L Account of the appellant prepared in accordance with Schedule VI of the Companies Act. Facts of the case, grounds of appeal, assessment order and submissions of the appellant were perused. It is seen that the appellant company sou-moto disallowed the loss of sale of cement division/ undertaking in its computation u/s.115JB. However, the appellant company has pressed Ground No.5 and sought for adjudication when the appellant itself had disallowed the loss of sale of sale of cement division/undertaking. The claim made by the appellant company is in the nature of an afterthought by the appellant company and hence; Ground No.5 in appeal is dismissed.”
3. Suffice to say; we note after hearing rival submissions in support of their respective stands that the CIT(A) has simply brushed aside the assessee’s submissions by calling the same as “an afterthought” one only rather than adjudicating the issue on merits u/s 250(6) of the Act requiring framing of points of determination followed by a detailed discussion thereupon in lower appellate proceedings. This is coupled with the clinching fact that the assessee could raise the instant issue in light of the tribunal’s Special Bench decision 2010(4) ITR 551 (SB) (Hyd) declining the group entity / transferer M/s. Rain Commodities’ plea seeking to apply section 47(iv) and exclusion of section 115JB MAT computation which was decided on 02.07.2010 i.e. after the Assessing Officer’s section 143(2) notice dt.21.08.2009 herein. We accordingly are of the opinion that the instant issue requires the CIT(A)’s afresh consideration on merits. We make it clear that section 115JB MAT computation is a complete code in itself as per the various provisions enshrined therein.
4. The Revenue next vehemently contended that the assessee ought to have filed its revised return before the Assessing Officer in light Goetze (India) Limited Vs. CIT (2006) 284 ITR 323 (SC). We find that their lordships’ detailed decision has nowhere impinged upon the appellate jurisdiction in the Act to admit a fresh plea in the given facts and circumstances. We therefore direct the CIT(A) to decide the assessee’s loss claim afresh for the purpose of section 115JB of MAT computation as per law. Ordered accordingly. This assessee’s appeal is accepted for statistical purposes in above terms.
5. We now advert to the Revenue’s cross appeal seeking to revive corporate guarantee adjustment of Rs.6,34,39,200/- made in the course of assessment as reversed in the CIT(A)’s detailed discussion as under :
“X] Ground Nos.2.1, 2.2 and 2.3 in appeal relate to issue of corporate guarantee. Facts of the case, grounds of appeal, assessment order and submissions of the appellant were perused. It was held by the Hon'ble ITAT, Hyderabad in the Company's own case that the amendment in the definition of International Transaction to include corporate guarantee was effective prospectively from A.Y.2013-14. Hence for this particular A.Y. i.e. A.Y.2008-09(Original assessment proceedings), it was submitted no adjustment was to be made for corporate guarantee. The appellant placed reliance on the following:- a) Consolidated ITAT order dated April. 26, 2017 - Refer Paragraph 38 at pages 28-69 of the order - appellant's own case for A.Y.2011- 12 (ITA No.259 & 434/Hyd/2016), read with b) Miscellaneous Application - ITAT order dated November 09, 2017 refer paragraph 5 at Page No.4 - Appellant's own case for A.Y.2009- 10 (MA No.32/Hyd/2017), 2010-11 (MA No.33/Hyd/ 2017). c) Consolidated ITAT order dated January 31, 2018 - Refer Paragraph 7 at Page No.4 - Appellant's own case for AY 2012·13 (ITA No.1729/Hyd/2016). It is seen hat the jurisdictional the Hon’ble ITAT in the appellant’s own cases and its group cases had held that the amendment to Section 92B were applicable prospectively from A.Y. 2013-14. Hence, the amended provision was not applicable to the present assessment year under consideration and therefore ground Nos.2.1, 2.2. and 2.3 in appeal are allowed.”
We note from a perusal of the case records that the very issue had arisen in assessee’s cases itself in assessment years 2013-14 and 2014-15 involving appeal and 1471/Hyd/2018; respectively. This tribunal’s common order dt.24.08.2021 has quoted PCIT Vs. M/s.Redington (India) Ltd. T.C.A.Nos.590 & 59 of 2019 dt.10.12.2020 to hold that the relevant amendment by way of Explanation to section 92B inserted vide Finance Act 2012 with retrospective effect from 01.04.2012 indeed includes a corporate guarantee as well. The said bench thereafter has directed the Transfer Pricing Officer (TPO) to adopt 0.53% corporate guarantee commission rate in identical facts which has nowhere been disputed by the assessee during the course of hearing before us. We thus allow the Revenue’s instant appeal in very terms in principle.
Learned counsel at this stage sought to highlight the point that the assessee as well as its overseas associated 5 enterprise “AEs” had offered cross corporate guarantee(s) to each other and therefore, the TPO or the lower authorities; as the case may be, ought to be proceeded on netting basis only. The Revenue fails to rebut the clinching fact that the cross corporate guarantee issue has nowhere been considered in the lower proceedings. We thus restore the instant quantification issue back to the learned TPO for his afresh computation as per law in foregoing terms. Ordered accordingly. This Revenue’s cross appeal ITA 1773/Hyd/2019 is partly allowed in foregoing terms.
To sum up, the assessee’s appeal Revenue’s cross appeal is partly allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the Open Court on 17th March, 2022.