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Income Tax Appellate Tribunal, DELHI ‘I-1’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. SUCHITRA KAMBLE
off by this common order for the sake of convenience and brevity.
This appeal by the Revenue is preferred against the order of the CIT(A) - 37, New Delhi dated 29.07.2016 pertaining to A.Y. 2007-08.
The sum and substance of the grievance of the Revenue is that the ld. CIT(A) erred in deleting the penalty on TP adjustment on account of difference in interest on loan charged from Associated Enterprise [AE] and disallowance made u/s 14A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] r.w.r. 8D of the Income tax Rules.
At the very outset, it was brought to our notice that the quantum additions have been deleted by the Tribunal in ITA No. 4249/DEL/2013.
It was further brought to our notice that only addition of Rs. 25,000/- u/s 14A of the Act was sustained on estimated basis.
We have carefully perused the orders of the Tribunal in ITA No. 4249/DEL/2013. We find that the TP adjustments were made on two counts. Firstly, the addition was on account of difference in interest on loan charged from AE and secondly, addition on account of adjustment of corporate guarantee. We find that these TP adjustments were deleted by the Tribunal at paras 58, 60, 67 and 68 of its order.
We further find that the disallowance made u/s 14A of the Act has been restricted on estimated basis at Rs. 25,000/- and findings can be found at para 72 of the order of the Tribunal.
Since the foundation has been removed, the super structure must fall. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A).
In the result, the appeal of the revenue is dismissed.
ITA No. 6380/DEL/2016 [Revenue’s appeal]
This appeal by the Revenue is preferred against the order of the CIT(A) - 37, New Delhi dated 21.10.2016 pertaining to A.Y. 2009-10.
At the very outset, the ld. DR pointed out that inadvertently, this appeal was filed and the same may be treated as infructuous because a separate appeal has been filed by the Revenue in ITA No. 6130/DEL/2016.
On such concession, this appeal is dismissed as having become infructuous.
In the result, the appeal of the revenue is dismissed.
ITA No. 6517/DEL/2016 [ Assessee’s appeal] [Revenue’s appeal]
The above cross appeals by the assessee and Revenue are preferred against the order of the CIT(A) - 37, New Delhi dated 21.10.2016 pertaining to A.Y. 2009-10.
First we will take up assessee’s appeal in ITA No. 6517/DEL/2016.
First ground relates to TP adjustment of Rs. 26,10,077/- made in Arm’s Length Price [ALP] of export of goods.
Representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides.
Facts on record show that the appellant in the relevant A.Y has exported various grades of stainless steel products to the AEs, namely, PT Jindal Stainless, Indonesia aggregating to Rs. 74.43 crores as under:
Value INR Product Quantity Average Rate Exported (MT) HR SS Plate Grade J4 241.695 78,289 1,89,21,994 13,16,17,635 HR SS Coils Grade J4 HRAP 1,978.979 66,508 30,00,20,597 HR SS Coils Grade J4 Black 4,817.835 62,273 16,92,517 HR SS Coils Grade J4L HRAP 29.510 57,354 16,84,738 HR SS Coils Grade J4L Black 29.400 57,304 2,28,00,925 HR SS Coils Grade 204CU Black 321.805 70,853 92,14,026 HR SS Coil JSL Tube Black 154.185 59,760 34,91,314 HR SS Coils Grade 304 HRAP 33.485 1,04,265 HR SS Coils Grade 304 Black 2,04,25,418 253.480 80,580 HR SS Coils Grade 430 Black 7,14,80,951 1,436.035 49,777 HR SS Coils Grade 409L Black 22,01,256 51.600 42,660 HR SS Coils Grade 410S Black 37,64,958 88.255 42,660 17,70,33,571 HR SS Coils Grade JSL AUS 1,645.490 1,07,587 Black 76,43,49,899 Total 11,081.754 17. Since similar goods were sold by the appellant to unrelated third parties, the appellant, in its transfer pricing study has applied Comparable Uncontrolled price (‘CUP’) for benchmarking the aforesaid transaction. It was also submitted that since the goods exported by the appellant, namely, hot rolled and cold rolled stainless steel coils contains metal components such as nickel and iron, and the price of such metals varies on day to day basis, an appropriate comparison would be average of monthly prices of each variety of goods. (Page 73- 74 of the paper book).
Accordingly, in transfer pricing document, the appellant had benchmarked the international transactions of export of goods of various grades of steel by comparing the average monthly prices of goods sold to associated enterprise with average monthly prices of goods sold to uncontrolled enterprises of same grades, applying CUP method. Comparison of price of goods on monthly average prices is enclosed at pages 73-74 of the paper book.
The TPO, in the impugned order, disregarded the comparison of average price of goods exported by the assessee to its AEs and sought to carry out a detailed comparison on day to day basis considering date of order acceptance as the basis for the purpose of benchmarking the export of stainless steel products made to associated enterprise.
Detailed comparison of the price of goods on the basis of date of acceptance of order is enclosed at pages 245 of the paper book.
The TPO, out of the total transactions of sale of goods, picked up the following transactions, wherein, the price of goods sold to associated enterprise was found to be lower than the price of goods sold to unrelated parties, on the basis of date of acceptance and accordingly, made an addition of Rs. 26,10,077/- in the arm’s length price of international transactions of export of goods to associated enterprises.
On appeal, the ld. CIT(A) upheld the addition made by the TPO/Assessing Officer.
Before us, the ld. counsel for the assessee challenged the adjustment vehemently stating that the comparison on the basis of date of order of acceptance cannot be applied. The ld. counsel for the assessee referred to Para 3.9 of the revised OECD guidelines and further drew our attention to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case Sony Eriscsson Mobile Communications India Pvt Ltd 374 ITR 118. Further reliance was placed on the decision of the co-ordinate Bench at Mumbai in the case of Essar Steel Ltd ITA No. 3727/MUM/2011.
Per contra, the ld. DR strongly supported the findings of the lower authorities and pointed out that a similar issue was decided by the Tribunal in assessee’s own case for A.Ys 2007-08 and 2008-09.
We have given thoughtful consideration to the factual matrix discussed elsewhere and judicial decisions relied upon by the ld. counsel for the assessee. We find that all the contentions made by the ld. counsel for the assessee were duly considered by the Tribunal while deciding the appeals of the assessee for A.Ys 2007-08 and 2008-09 in and 6337/DEL/2012 respectively.
We further find that on principle, the co-ordinate bench allowed the appellant to make comparison of prices on monthly average basis.
However, set aside the issue to the TPO. The relevant findings read as under:
“42. The third contention of the assessee that prices based on the date of order acceptance cannot be applied in the present case. The claim of the assessee is that the products sold by the assessee contains metal components such as nickel , the prices of the goods sold by the appellant is determined considering the prices prevailing in London metal exchange on the respective dates. It was further stated that there were huge price variation in the price of nickel in a particular year where it has fluctuated 33 times the base price. It was therefore stated that the price of the product sold on one specific date cannot be compared with the price of goods sold on any preceding or subsequent date and therefore it was stated that monthly average prices should be taken. For this proposition para number 3.9 of the revised OECD guidelines on transfer pricing was also relied upon along with the decision of the honourable Delhi High Court in case of Sony Ericsson Mobile Communications India private limited versus CIT 374 ITR 118. The assessee has also relied upon several other decisions, which are already reproduced by us earlier. The learned AR vehemently relied upon the decision of the coordinate bench in case of ACIT versus Essar Steel Limited in ITA number 3727/ MUM/ 2011 where the assessee has compared the average price of eight transactions of export of goods made to associated enterprise applying CUP method was upheld. We have carefully considered the argument of the learned authorised representative and the decision of the coordinate bench in CIT versus Essar Steels Ltd (Supra). The facts in that particular cases were that the appellant had considered all the transaction with its associated enterprise in totality by aggregating the same. The Transfer Pricing Officer picked up only two transactions where the price charged was less than the average market price and also beyond 5% permissible band width to make the addition ignoring other transactions where the average price charged was more. On careful consideration of the above decision, it is apparent that if the transactions are the interlinked transactions then the ALP should be considered of export of goods on aggregate basis. It can be established in many ways that transactions are interlinked, one of the illustrative way is supply of goods billed separately but the purchase order is common and the rates are also predetermined with adjustments on account of material prices. Before us, no such data is available or any other information by which we can say that the transactions of export to associated enterprise are interlinked transactions. It is also clear that merely because they are the export of the same goods over a period to the Associated Enterprises, they do not become interlinked. There has to be a binding element behind all the transactions to make them one and connected. Such data was also not available before the learned Transfer Pricing Officer or learned Dispute Resolution Panel. If this fact is established by the assessee then the issue is squarely covered in favour of the assessee on this point by the decision of the coordinate bench. Therefore, respectfully following the decision of the coordinate bench, we also direct the AO to compute the ALP considering the transactions of export to associated enterprise on aggregate basis after assessee establishes before him that all these export transactions of the associated enterprise are interlinked. To this extent, this issue is sent back to the file of the learned AO/TPO with a direction to the assessee to substantiate the argument that the transaction of export of goods to associated enterprise are interlinked”.
Respectfully following the decision of the co-ordinate bench, we direct accordingly.
The ld. counsel for the assessee further argued that benefit of tolerance range of +/- 5% in the price charged from the AE vis a vis ALP should be given. For this proposition, reliance was placed on the decision of the co-ordinate Mumbai bench in the case of Development Bank of Singapore, 155 TTJ 265. It was pointed out that the Tribunal held that the benefit of range of +/-5% is available not only to a situation where more than one price is determined as ALP by the most appropriate method but also where only one price is determined as ALP.
We find that the Tribunal, in assessee’s own case, for A.Ys 2007- 08 and 2008-09 [supra] has allowed this claim of the assessee holding as under:
“45. The sixth argument of the assessee is with respect to, without prejudice, that the difference in the arm’s length price of goods exported by the appellant to its associated enterprise fall within the range of 5% of the transacted price as provided under the second proviso to section 92C (2) Development Bank of Singapore [155 TTJ 265] wherein the tribunal held that the benefit of range of 5% is available not only to a situation where more than one price is determined as arm’s length price by the most appropriate method but also where only one price is determined as arm’s length price. The identical issue has been considered by the coordinate bench in appellant’s own case for assessment year 2006-07 in ITA number 4111 and 4248/del/2013 wherein para number 23 – 30 this issue has been considered. In para number 30 the coordinate bench has held that :
“30. The fine from the submissions that the details are not coming out clearly which requires a revisit to the file of the TPO for proper appreciation of the facts. We therefore in the interest of justice, deed it proper to restore the ground raised by the assessee relating to TP adjustment to the file of the TPO for fresh adjudication of the issue in the light of the submission details filed by the assessee in the paper book…”
Therefore, respectfully following the decision of the coordinate bench in the assessee’s own case, we set aside this argument of the assessee to the file of the learned assessing officer/Transfer Pricing Officer, with a direction that if there are more than one prices, the learned Transfer Pricing Officer is directed to consider the ± 5 percent as in the case for assessment year 2006-07. Accordingly this argument of the assessee is accepted.”
In light of the aforementioned directions of the c-ordinate bench, we direct the assessee to furnish necessary computation and the TPO is directed to examine the same and decide this issue afresh.
Second grievance of the assessee is that the credit of TDS amounting to Rs. 14,27,213/- has not been allowed.
We find that the Assessing Officer denied credit of TDS/TCS on the ground that the same pertained to preceding years, i.e. Rs. A.Y. 2007-08 and 2008-09. Accordingly, in terms of section 199 read with Rule 37BA(3), the credit of tax deducted at source was denied.
We do not find any error or infirmity in the findings of the Assessing Officer. But, at the same time, the Revenue should not be benefitted unjustly. We, accordingly, direct the Assessing Officer to allow the credit of TDS/TCS as per provisions of law in preceding A.Ys.
We hold accordingly.
In the result, the appeal of the assessee is allowed in part for statistical purposes.
ITA No. 6130/DEL/2016 [Revenue’s appeal]
First grievance relates to deletion of addition of Rs. 7,63,15,464/- on account of adjustment in TP.
Representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides.
This adjustment can be bifurcated into two parts. Firstly, the adjustment relates to interest on loan received from AE amounting to Rs. 1,45,49,640/- and secondly, the issue of corporate guarantee amounting to Rs. 6,17,65,824/-.
During the financial year 2005-06, the appellant received interest of Rs. 56,68,570 on loan amounting to USD 25,00,000 granted to PT Jindal Stainless, Indonesia. Interest is charged on the loan at the rate of 3 moths LIBOR plus 200 basis point.
In case of appellant, comparable transaction is available where appellant JSL has availed loan from financial institutions, viz., State Bank of India, at the rate of 3 months LIBOR + 170 basis point and from ICICI at 3 months LIBOR + 140 basis point. JSL had provided the loan to PT Jindal Stainless, Indonesia at higher rate, i.e., 3 months LIBOR + 200 basis points. Copy of loan agreement entered with SBI and ICIC Bank is placed at pages 100-102 of the paper book.
Also, the associated enterprise, viz., PT Jindal Stainless, Indonesia has obtained external commercial borrowings from unrelated parties for meeting its working capital requirements at LIBOR + 200 basis point.
Considering that the international transaction of receipt of interest by JSL at LIBOR + 200 basis points was higher or comparable to comparable uncontrolled prices for similar uncontrolled transactions, the ‘international transaction of interest received is considered as being at arm’s length applying Comparable Uncontrolled Price method.
The Transfer Pricing Officer, however, in the impugned order has disregarded the benchmarking analysis undertaken by the appellant and determined the arm’s length price of interest on loan at 17.24% on the basis of information provided by the CRISIL, sought under section 133(6) of the Act and accordingly, made an adjustment of Rs. 1,45,49,640/-.
On appeal, following the decision of the jurisdictional High Court in the case of CIT vs Cotton Naturals [ITA 233 of 2014], wherein, the High Court has negated the use of domestic lending rates such as PLR for comparing interest charged on foreign currency denominated loans, the ld. CIT(A) deleted the addition made by the TPO/ AO.
We find that this issue was considered by the Tribunal in assessee’s own case in Assessment Year 2007-08 and 2008-09 in and 6337/DEL/2012 respectively, wherein the co- ordinate bench followed the order of the Hon'ble Jurisdictional High Court in the case of Cotton Naturals ITA 233 of 2014 and has deleted similar adjustments. The relevant findings read as under:
“58. In the above decision, the honourable High Court has held that PLR rates are not applicable to loans to be repaid in foreign currency and the interest rates are dependent on the foreign currency in which the repayment is to be made. It is also not dependent on the residence of either party. Therefore, the interest rate should be applied based on the currency in which the repayment is to be made. Therefore, in the present case the LIBOR should be the basis and not the prime lending rate. The assessee has benchmark the interest by applying LIBOR +200 basis points applying the CUP method. The learned Transfer Pricing Officer has adopted the LIBOR+ 400 the information available in public domain on various websites of Indian banks and various free public reports where the lending rates are ranging from libor+ 350 basis points to 650 points for FY 2006 – 07. The assessee has granted loan to its subsidiary company. Therefore, economic purpose and substance of the debt claim or debt for which granting of credit calls for the lending rate would be determinative. The commercial expediency and related benefits of close connections with the above transaction, of course, would have a marginal significance and effect. The lending rates shown by the bankers as adopted by the learned Transfer Pricing Officer will not have any factoring of that consideration. Furthermore, the credit rating would also be an issue when the banks are lending to a foreign party. The learned assessing officer has also stated that adjustment for securities also required to be made and the bankers extending loan in foreign currency would be insisting on sufficient security which looking at the financial health of the subsidiary is not possible and therefore interest rates are required to be imputed which will take care of this aspect also. In the present case, the borrower is the subsidiary of the lender company and therefore we do not find it necessary to include the same in the interest cost. Therefore, the interest rate adopted by the learned Transfer Pricing Officer is further required to be reduced by this factor. In view of these facts, we do not find any reason that interest charged by the assessee at LIBOR +200 is not at arm‘s-length. “ Now we come to the other issue where there should be an adjustment of the transaction cost and adjustment for security. The learned Transfer Pricing Officer has made addition of 300 basis points on account of transaction cost. Learned Transfer Pricing Officer has made an adjustment at the rate of 3% on account of transaction cost, security, and single customer risk on interest rate. Contesting this adjustment the learned authorised representative has relied upon the decision of the coordinate bench in case of Bharti Airtel Limited V ACIT [5816/Del/2012] wherein it has been held that that when the Transfer Pricing Officer has taken the lender as the tested party and yet made adjustment for higher risk on account of assumed lack of security and increased risk of single party dealing is not based on any rational for adjustment on account of higher risk. Apparently, in this case the assessee, lender is a tested party and further the loan is advanced to 100% wholly owned subsidiary in Indonesia the facts of the case are clearly covered by the decision of coordinate bench. The honourable Delhi High Court in CIT vs Cotton Naturals (supra) has already held that the transaction cost of hedging cost is borne and paid by the borrower therefore transaction cost is not applicable in case in question the loan had to be repaid in the foreign currency. Even otherwise according to us the markup towards the transaction cost is exorbitant and comparison with the bank is also untenable. In view of this, we do not see any rational in the impugned in further cost and risk premium on the rate directed by the learned Dispute Resolution Panel. Accordingly we direct the learned Transfer Pricing Officer to not to charge any risk premium following the decision of the coordinate bench. In view of this, the transaction cost imputed of 300 basis points cannot be sustained.
60. In view of our above discussion, we find that the learned Transfer Pricing Officer should have considered for both the years the LIBOR +200 basis points in both the financial year financial year for the benchmarking for the interest income of the assessee.
61. In view of this ground number 3 of the appeal for assessment year 2007 – 08 and ground number 4 of appeal of the assessee for assessment year 2008 – 09 is partly allowed.”
Respectfully following the decision of the co-ordinate bench [supra], we hold accordingly.
In so far as the adjustment on account of corporate guarantee is concerned, we find that this issue was also considered and decided by the co-ordinate bench in A.Ys 2007-08 and 2008-09 [supra]. The relevant findings of the order read as under:
“67. The second contention raised before us is that benchmarking by the assessee should be accepted. The assessee has charged guarantee commission from AE @ 1.5 %. The ld TPO has bench marked it after obtaining the quotation from various banks, which are 2.68 %. He further added 2 % as mark up because of security and margin adjustments. The assesse substantiated the Alp stating that ING Vasya bank has given a quote of 1.5 % further similar is stated to be the quote of Indusind bank. The TPO has also taken the quotes of Axis Bank, Canara Bank, PNB, and ICICI bank, bank of Baroda, HDFC bank, and SBI. He arrived at Arithmetic mean of 2.68 %. In the present case the ld TPO has benchmarked the transaction by obtaining the quote from bankers and Hon Bombay High court in case of [2015-TII-16-HC-MUM-TP] THE COMMISSIONER OF INCOME TAX, MUMBAI Vs. M/s EVEREST KENTO CYLINDERS LTD as relied by the AR has held as under :- ………………………….. …………………….. …………….
Even otherwise the commission charged by the assessee also in conformity with the rates quoted by Indusind bank and ING vasya bank. Further, the reasons given by us with respect to Risk adjustments and margins while deciding the issue of Interest receipt relying on the decision of Bharti Airtel decision (Supra) are equally applicable for this transaction too. In view of this Ground No 5 for Ay 2008- 09 and Ground No 4 for Ay 2007-08 are partly allowed.”
Accordingly, since the reason provided by the CIT(A) in deleting the adjustment stands approved by the Hon’ble Tribunal in order passed for preceding years, the order of the CIT(A) ought to be upheld.”
Respectfully following the same, this adjustment is also deleted.
Second grievance relates to deletion of addition of Rs. 16224643/- made u/s 14A r.w.r 8D.
Facts on record show that during the year under consideration, the assessee has earned dividend income of Rs. 2,37,000/-. Though this dividend was included by the assessee in its total income, the same was treated exempt by the Assessing Officer while framing the assessment order. Invoking provisions of section 14A of the Act by r.w.r. Rule 8D, the Assessing Officer computed the disallowance of Rs. 1,62,24,643/-.
Without going into the legal jargon in respect of relevant provisions of the Act, we are of the considered opinion that the disallowance should not exceed exempt income of Rs. 2,37,000/-. For this proposition, we draw support from the decision of the Hon'ble Jurisdictional High Court in the case of Joint Investment Pvt Ltd 372 ITR 694 wherein it has been held as under:
“By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case.”
in light of this decision of the Hon'ble High Court [supra], we direct the Assessing Officer to restrict the disallowance to Rs. 2,37,000/-. This ground is partly allowed.
In the result, the appeal of the Revenue is partly allowed.
ITA No. 6518/DEL/2016 [ Assessee’s appeal] [Revenue’s appeal]
The above cross appeals by the assessee and Revenue are preferred against the order of the CIT(A) - 37, New Delhi dated 21.10.2016 pertaining to A.Y. 2010-11.
First we will take up assessee’s appeal.
First grievance relates to TP adjustment of Rs. 16,65,766/- on account of alleged difference in ALP of international transaction on export of goods.
In addition to the challenge to this TP adjustment, the assessee has also claimed benefit of +/- 5% range as provided under the proviso to section 92C(2) of the Act.
An identical issue has been considered by us hereinabove in [supra]. For our detailed discussion therein, we hold accordingly.
Second grievance related to rejection of set off of prior period expenses of Rs. 46.39 lakhs from prior period income.
Facts on record show that during the year under consideration, adjusted expenses related to earlier years amounting to Rs.46.39 lakhs with the prior period income amounting to Rs.433.12 lakhs, and has shown net income of Rs. 386.73 lakhs in the Profit & Loss A/c.
The assessing officer, however, disallowed expenses related to prior period and made addition of Rs. 46.39 lakhs.
The assessee carried the matter before the CIT(A) but without any success.
Before us, the ld. counsel for the assessee vehemently stated that the liability to pay the sum got crystallized only in the year under consideration. It is the say of the ld. counsel for the assessee that the observations of the Assessing Officer that the assessee should have accounted for and claimed the expenses in the earlier year does not hold any water as the said expenses were neither determined nor had crystallized in the earlier year.
Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Nonsuch Tea Estate Ltd. 98 ITR 189 and the Hon'ble Gujarat High Court in the case of Saurashtra Cement & Chemical Industries213 ITR 523 wherein it has been held that merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question.
Per contra, the ld. DR strongly supported the findings of the Assessing Officer.
We have given thoughtful consideration to the orders of the authorities below. In our considered opinion, if the Assessing Officer was of the strong belief that the prior period expenses cannot be allowed in the year under consideration, then the Assessing Officer should have realized that he is taxing prior period income earned during the year under consideration. We do not find any reason why the prior period expenses should not be netted off against the prior period income, which in our opinion is most logical way of treating the same.
For this proposition, we draw support from the decision of the Hon'ble High Court of Delhi in the case of Exxon Mobil Lubricants (P)
Ltd. 328 ITR 17, wherein the High Court observed that expenses pertaining to prior period were allowable in the relevant year in which the same were crystallized. On facts of the case, we direct the Assessing Officer to allow set off of prior period expenses with prior period income. This ground is, accordingly, allowed.
In the result, the appeal of the assessee is allowed in part for statistical purposes.
ITA No. 6539/DEL/2016 [Revenue’s appeal]
First grievance relates to deletion of addition of Rs. 1,38,48,378/- on account of difference in interest charged on loan.
Similar issue has been considered and decided by us in ITA No. 6130/DEL/2016. For our detailed discussion therein, this ground is dismissed.
68. Second grievance relates to deletion of disallowance of Rs. 2,27,65,934/- made u/s 14A of the Act r.w.r 8D.
Facts on record show that the assessee has earned dividend income of Rs. 1,77,000/-. Thought this dividend was included by the assessee in its revised return of income, but the assessing officer, allowed exemption while framing the assessment order. However, invoking the provisions of section 14A of the Act r.w.r 8D, the Assessing Officer made disallowance of Rs. 2,27,65,934/- which was deleted by the ld. CIT(A).
Without going into the legal jargon in respect of relevant provisions of the Act, we are of the considered opinion that the disallowance should not exceed exempt income of Rs. 1,77,000/-.
Accordingly, we direct the Assessing Officer to restrict the disallowance to Rs. 1,77,000/-. This ground is partly allowed.
In the result, the appeal of the Revenue is partly allowed.
To sum up:
Revenue’s Appeals :
ITA No. 6130/DEL/2016 [A.Y : 2009-10] - Partly allowed [A.Y : 2009-10] - Dismissed ITA No. 6539/DEL/2016 [A.Y : 2010-11] - Partly allowed Assessee’s Appeals :
ITA No. 6517/DEL/2016 [A.Y : 2009-10] - Partly allowed for statistical purposes [A.Y : 2010-11] - Partly allowed for statistical purposes
The order is pronounced in the open court on 30.09.2020.