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Income Tax Appellate Tribunal, MUMBAI BENCHES “K”, MUMBAI
Before: SHRI SHAMIM YAHYA (AM) & SHRI RAM LAL NEGI (JM)
O R D E R PER RAM LAL NEGI, JM These are the appeal and cross objection filed by the revenue and the assessee respectively against the order dated 13.10.2016 passed by the Commissioner of Income Tax (Appeals) (for short ‘the CIT (A)’)-58, Mumbai, CO No. 104/Mum/2018 Assessment Year: 2010-11 pertaining to the Assessment Year 2010-11, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against order passed u/s 143 (3) r.w.s. 144 C of the Income Tax Act, 1961 (for short ‘the Act’). 2 The revenue has raised the following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):-
1. “Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT (A) erred in deleting the Transfer Pricing adjustment of addition of interest chargeable on loan granted by the assessee to its Associated Enterprise on the ground that the Associated Enterprise was in the process of liquidation during the previous year? 2. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT (A) failed to appreciate that the loan was advanced in the year 2000 and thus interest rate, at arm’s length would have been decided in the year 2000 based on economic circumstances then existing and hence the events in F.Y. 2008-09 or 2009-10 would not influence the decision that was taken in the year 2000? 3. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT (A) erred in failing to appreciate that the arm’s length interest rate would not be dependent on whether the debtor is under liquidation or not and that the process of liquidation at best may only be a factor to write off such interest in the books of accounts of the assesee and cannot be ground for non recognition of the income by the assessee who is bound by the mercantile system being followed by it? 4. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT (A) erred in deleting the adjustment made by TPO and AO in respect of charging of interest from AE by holding that ALP of interest to be charged from AE should be zero when AE is in liquidation and not giving direction to CO No. 104/Mum/2018 Assessment Year: 2010-11 charge interest @ LIBOR plus mark up as held by him in assessee’s own case in A.Y. 2011-12?”
At the outset, the Ld. counsel for the respondent/assessee pointed out that the tax effect of the relief granted by the Ld. Commissioner of Income Tax (Appeals) is below Rs.20 lacs and as per the CBDT Circular No. 3/2018, F. No. 279/Misc.142/2007-ITJ (Pt) dated 11th July, 2018 issued by Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India limit fixed by the CBDT for filing the appeal before the ITAT is 20 lacs.
The Ld. Departmental Representative (DR) fairly conceded that this appeal is not maintainable in light of the above said CBDT Circular. The Ld. DR also did not point out that this appeal falls in any of the exceptions carved out in the above said circular.
We have gone through the order of the Ld. Commissioner of Income Tax (Appeals) and the grounds of appeals. We find that the tax effect in the above referred appeal is less than Rs. 20 lacs. Accordingly, we dismiss the aforesaid appeal filed by the Revenue.
CO No. 209/MUM/2018 (Assessment Year: 2010-11) The assessee has filed the cross objection against the impugned order on the following effective grounds:
“Without prejudice to the grounds raised
by the Department in its appeal, the learned CIT and the learned CIT (Appeals) should have allowed the amount of Rs. 46,55,093/- as a bad debt.
2. The learned Dy. CIT should have allowed the expenses of Rs. 5,78,480/- disallowed as prior period expenses in the AY 2013-14 as pertaining to AY 2010-11. CO No. 104/Mum/2018 Assessment Year: 2010-11
The Ld. counsel for the assessee submitted that the assessee does not want to press the present CO. In view of the submission made by the Ld. counsel, the present CO is dismissed as not pressed. In the result, appeal filed by the revenue as well as the Cross Objection filed by the assessee, are dismissed.