EIH LIMITED,KOLKATA vs. DCIT, CIRCLE - 8(1), KOLKATA , KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : KOLKATA [Before Hon’ble Shri S.S. Godara, JM & Shri M.Balaganesh, AM ] I.T.A No. 2225/Kol/2017 Assessment Year : 2013-14 M/s EIH Limited -vs- DCIT, Circle-8(1), Kolkata [PAN: AAACE 6898 B] (Appellant) (Respondent) For the Appellant : Shri Ravi Sharma, AR For the Department : Shri G.Mallikarjuna, CIT DR Date of Hearing : 03.09..2018 Date of Pronouncement : 14.09.2018

ORDER M. Balaganesh, AM:

2 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 3. Ground nos. 1 to 1.4 raised by the assessee is with regard to determination of arm’s length price (in short the ‘ALP’) of Corporate Guarantee Fees. This issue had been dealt elaborately in assessee’s own case in I.T.A. No. 117/Kol/2017 for assessment year 2012-13 dated 16.05.2018 wherein it was held as under:

“5. We have heard the contentions of both the parties and perused the materials available on records. At the outset we note that the impugned issue has already been decided in favour of assessee by this Tribunal in its own case in ITA No. 110/Kol/2016 for the AY 2011-12 vide order dated 12.1.2018. The relevant extract of the order is reproduced below: “12.10. We note that M/s. EIH flight is a startup company, it required funds primarily for acquisition of capital assets for setting up its operation and guarantee facilities given by the assessee/assessee company to the lender bank is normal business practice and obligation towards a subsidiary. Since the AE was a startup company, the assessee extended corporate guarantee to the third party borrowers as a matter of commercial prudence to protect its interest by fulfilling the shareholders obligation. We agree with the contention of the ld AR that the corporate guarantee as provided by the assessee was a matter of commercial prudence to protect and by fulfilling the shareholder obligation, as any financial incapacitation of the subsidiary would jeopardize the investment of the assessee. For that we rely on the order of the Coordinate Bench of this Tribunal in the case of Tega Industries Ltd. Vs DCIT (ITA No.1912/Kol/2012 wherein it was held that the provision of corporate guarantee is in the nature of shareholder activity and hence, no TP adjustment on account of corporate guarantee is required. In the said case, this tribunal had held that “the assessee’s expectation from provision of guarantee was not that of a guarantor i.e. to earn a guarantee fee, rather, the expectation was of a shareholder to protect its investment interest, to help it achieve the assessee’s business objective”. Thus, we agree with the contention of the assessee that the objective of the assessee for providing guarantee was not to earn guarantee fee but to earn returns in the form of appreciation in investment value and receive dividends and, therefore, no TP adjustment ought to have been made in the facts and circumstances of the case. 12.11. Coming to the alternate plea of the assessee that, in the facts and circumstances the corporate guarantee is not an International Transaction u/s. 92B of the Act, we note that term 'guarantee' was inserted in the definition of 'international transaction' in section 92B by inserting an Explanation in the Finance Act, 2012 with retrospective effect from 01/04/2002. The Explanation states that- "For the removal of doubts, it is hereby clarified that (i) the expression "international transaction" shall include .... 2

3 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 (c) capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business." The Explanation states that it is clarificatory in nature and is 'for the removal of doubts'. Thus, it does not alter the basic character of definition of 'international transaction' under the main section 92B. Under this Explanation, five categories of transactions have been clarified to have been included in the definition of 'international transactions'. Clauses (a) (b) and (d) do not cover guarantee, lending or loans. Other two, (c) and (e) deal with (i) capital financing, and (ii) business restructuring or reorganization. Clause (c ) refers to lending or guarantee. But the Explanation which is for removal of doubts or is clarificatory, cannot be read independent of Section 92B(1). Section 92B(1), provides those transactions as international transactions which are in the nature of purchase, sale or lease of tangible or intangible property (explained by clauses (a) and (b) of the Explanation), or provision of services, (explained by clause (d) of the Explanation), or lending or borrowing money (explained by Clause (c) of Explanation). The plain reading of provisions of sec. 92B(1) of the Act indicate that the various transactions mentioned in section 92B(1) of the Act, (i.e. purchases, sales, provision for services, lending or borrowing or any other transaction) should have bearing on the profits, incomes, losses or assets of such enterprises. In our opinion, the condition precedent of a transaction having a bearing on profits, incomes, losses, or assets would apply to each of the aforesaid transactions namely purchase, sale, or lease of tangible or intangible property or provision of services, or lending or borrowing money or any such transaction. This understanding of ours gets further clarified by way of insertion of Explanation in section 92B(1) by the Finance Act 2012 with retrospective effect from 01.04.2002 vide clause (a) to (d). We find that in the said explanation, clause (e) alone has been carved out as an exception wherein, the transaction thereon has been specifically mandated to be an international transaction where a transaction of business restructuring or reorganization, entered into by an enterprise with an AE irrespective of the fact that it has bearing on the profits, incomes, losses, or assets of such enterprises at the time of transaction or at any future date. 12.12. Thus, we hold that when a parent company extends an assistance to the subsidiary, being associated enterprise, such as corporate guarantee to a financial institution for lending money to the subsidiary, which does not cost anything to the parent company, and which does not have any bearing on its profits, income, losses or assets, it will be outside the ambit of international transaction under section 92B(1) of the Act. In this regard, we would like to hold that issuance of corporate guarantee by the assessee to its AE would have ‘influence on the profits , incomes, losses or assets of enterprise’ but not necessarily have ‘any impact on the profits, incomes, losses or assets’ as admittedly no consideration was received by the assessee in respect of this 3

4 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 corporate guarantee from its AE. We find that the Ahmedabad Tribunal in the case of Micro Ink in ITA No. 2873/Ahd/2010 had observed that if a subsidiary (AE in the instant case) could not borrow money from third party sources on its own standing and the guarantee provided by the parent (assessee in the instant case) enables it to make such borrowing, then the guarantee could be said to be a shareholder function, not warranting a guarantee fee. This ratio would squarely be applicable to the facts of the instant case before us.

12.13. The Ld. CIT, DR’s reliance in the case of Everest Kanto Cylinder Ltd. (supra) would not come to the rescue of Revenue because in that case, the parent company charged a fee of 0.5% on the AE for rendering this service. On this factual aspect, the Tribunal as well as the Hon’ble High Court held that it is an international transaction. Since in the case in hand, the assessee has not charged a penny from the AE, so the facts of the case are different and case law is distinguishable and, therefore, the Hon’ble High Court’s order cannot come to the rescue of the Revenue. We find that the ld. AR pointed out that in the said case, the Hon’ble Bombay High Court did not answer the specific question as to whether the issuance of corporate guarantee is inherently within the ambit of definition of ‘international transaction’ irrespective of whether or not such transactions have any “bearing on profits, income, lossess or assets of such enterprises” u/s. 92B of the Act. We also note that the Ahmedabad Bench of this Tribunal supra after considering the decision of the Hon’ble Bombay High Court in Everest Kanto Cylinder Ltd. (supra) observed as under:

“We are unable to see, in the judgment of Hon’ble Bombay High Court, any support to the proposition that issuance of corporate guarantee is inherently within the ambit of definition of ‘international transaction’ under section 92B irrespective of whether or not such transactions have any ‘bearing on profits’ incomes, losses, or assets of such enterprises’. Revenue, therefore, does not derive any help from the said decision.” 12.14. The ld CIT DR would have had a case where a fee has been charged for the intra service which has been rendered (in the context of corporate guarantee), and, therefore, the assessee or the Court has treated it as an international transaction, then the charge of corporate guarantee has to be in accordance with Arm's Length principle. This means that the price for corporate guarantee should be that which would have been paid and accepted by independent enterprises in comparable circumstances. In that case transfer pricing adjustments are required. In that case, it has to be determined what will be the ALP of corporate guarantee commission paid by associate enterprise to the parent company providing corporate guarantee. Since that is not the case before us, we need not go into it.”

Respectfully following the same, we hold that the issuance of Corporate Guarantee by the assessee to its subsidiary company does not fall under the ambit of International 4

5 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 Taxation u/s 92B of the Act in the facts and circumstances of the case, in as much as there was no guarantee fee charged by the assessee from its subsidiary company. In view of this observation, the adjudication of ground no. 1.4 raised by the assessee on the percentage of guarantee fee need not be gone into. Accordingly, ground nos. 1.1. to 1.4 raised by the assessee are allowed.

“13.4. We have heard the rival submissions and are of the opinion that the LIBOR and basis points should be the criteria for meeting the cost of interest on the international transaction in respect of interest to be charged on the loan advanced to AE. For this purpose the credit rating of the assessee as well as the credit rating of the AE should be taken into account. Accordingly we deem it fit to remand the issue to the ld. TPO to determine the basis points on the basis of the aforesaid parameters and such other relevant parameter in accordance to law. Therefore, we remand this issue for this limited purpose back to the ld TPO / ld AO and to determine the issue as directed by us. Accordingly, the Grounds 2.1. & 2.2. raised by the assessee are allowed for statistical purposes and Ground 1 raised by the revenue is dismissed.”

Respectfully following the same we restore the issue to the file of TPO/AO for the fresh adjudication according to law and in the light of above stated discussion. Thus the ground of appeal of the assessee is allowed for statistical purposes.”

6 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 Since the facts and circumstances are identical in this year also, we deem it fit and give similar direction for this year also. Accordingly, ground nos. 2.1 to 2.3 raised by the assessee are allowed for statistical purposes.

5.1. Brief facts of this issue is that the assessee company had earned dividend income of Rs. 14,16,38,749/- during the year and claimed the same as exempt. The breakup of the said dividend income are as under:

Dividend from subsidiary companies (Long term investments) Rs. 11,72,50,000/- Dividend from other investments (Trade) Rs. 2,12,43,999/- Dividend from mutual fund Rs. 31,44,750/- Total Rs. 14,16,38,749/-

The assessee stated that the aforesaid dividend includes dividend earned amounting to Rs. 5.53 crores from one foreign subsidiary company which was treated as income from other sources in the return of income. Accordingly, it was pleaded that the said foreign dividend was not claimed as exempt under Chapter III of the Act and accordingly, the provisions of section 14A of the Act cannot be applied for the same. The assessee had made suo-moto disallowance u/s 14A of the Act as under:

7 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14

The assessee also stated that the basis of determination of the amount to be offered u/s 14A of the Act has been consistently followed by it over the years and duly certified by the tax auditors. This sum of Rs. 30,73,963/- was suo-moto disallowance offered by the assessee in the return of income both under the normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Act. The ld. AO proceeded to make disallowance by applying the provision of Rule 8D(2) as under: Disallowance under Rule 8D(2)(i) Rs. 1,576/- Disallowance under Rule 8D(2)(ii) Rs. 2,87,10,339/- Disallowance under Rule 8D(2)(iii) Rs. 1,07,95,524/- Total Rs. 3,95,07,439/- Less: Disallowance made by the assessee Rs. 30,73,963/- Further disallowance u/s 14A r.w.r.8D Rs. 3,64,33,476/- 7

8 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 The ld. AO disallowed the sum of Rs. 3,64,33,476/- u/s 14A of the Act read with Rule 8D of the Rules both under normal provisions as well as in the computation of book profits u/s 115JB of the Act. Aggrieved the assessee is in appeal before us.

5.2. We have heard ld. AR. We find from the comparative statement of own funds vis-à- vis the investment made for the last six years as submitted by the ld. AR that the assessee is possessing sufficient own funds which are much more than the domestic investments made by it. Hence by placing reliance on the decision of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Limited reported in 313 ITR 340, we hold that no disallowance of interest is required to be made under Rule 8D(2)(ii) of the Rules.

5.3. With regard to disallowance under Rule 8D(2)(iii) of the Rules, the assessee pleaded that domestic investments which had yielded dividend income alone should be considered for the purpose of computing the disallowance under Third limb of Rule 8D(2) of the Rules, We find this argument is in consonance with the decision rendered by this Tribunal in the case of REI Agro Ltd. reported in 144 ITD 141. Accordingly, we direct the ld. AO to re-compute the disallowance in the light of the decision referred to supra. There is no dispute with regard to disallowance made under Rule 8D(2)(i) of the Rules. Accordingly, ground nos. 3.1 to 3.4 raised by the assessee are partly allowed for statistical purposes.

5.4. With regard to disallowance u/s 14A of the Act read with Rule 8D of the Rules while computing the book profits u/e 115JB of the Act, we hold that the Hon’ble Special Bench of Delhi Tribunal had held in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 165 ITD 27 that the computation mechanism provided under Rule 8D of the Rules cannot be applied for the disallowance u/s 14A in the computation of book profit u/s 115JB of the Act and for this purpose, the expenditure debited in the 8

9 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 profit & loss account is to be gone into by the ld. AO. In the instant case, the assessee had voluntarily disallowed a sum of Rs. 30,73,963/-having regard to its accounts by considering various expenditures debited in the profit and loss account and had attributed some percentage of the same towards the disallowance. We direct the ld. AO to verify the veracity of the said workings and proceed to make disallowance u/s 14A of the Act vis-à-vis computation of book profits u/s 115JB of the Act in the light of the aforesaid Special Bench decision . Needless to mention that the ld AO while arriving at the said disallowance should reduce the amount already disallowed by the assessee in the return of income. Accordingly, ground no. 3.5 raised by the assessee is allowed for statistical purposes.

6.1 We find that this issue is squarely covered in favour of the assessee in its own case in I.T.A. No. 117/Kol/2017 for assessment year 2012-13 dated 16.05.2018 wherein it was held as under:

“21. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we note that the issue has already been decided by the co-ordinate Bench of this Tribunal in assessee’s own case in ITA No.110/Kol/2016 (supra) and the relevant extract of this order is reproduced below:- “11.1. We have heard the rival submissions. We find that the issue under dispute is settled by the order of this tribunal in assessee’s own case for the Asst Year 2008-09 in ITA No. 529/Kol/2013 dated 19.2.2016 in favour of the assessee. Though this decision was rendered in the context of validity of section 263 proceedings of the ld CIT, this tribunal had adjudicated the issue on merits also and hence the reliance placed on the same is well founded. The operative portion of the said judgement is as under:- “4.4.1. On merits of the issue, on perusal of the various clauses in the lease deed (which are not reproduced herein for the sake of brevity) forming part of the paper book vide pages 87 to 98, we find that the ownership / title on the vehicles always lies with M/s Orix Auto Infrastructure Services Limited (lessor) during the subsistence of the lease vide clause 8 of the lease deed. We find that during the 9

10 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 subsistence of this lease arrangement and till the vehicles are delivered back to the lessor, the lessee shall insure the vehicles with the lessor’s name as the owner vide clause 11 of the lease deed. Clause 15 of the Lease deed clearly specifies that upon expiration or earlier termination of the lease, the lessee shall deliver to the lessor the said vehicles at a place designated by the lessor. We hold that since the ownership does not vest with the assessee at any point of time during the subsistence of the lease, the claim of allowability of depreciation u/s 32 of the Act as owner of the vehicles, does not arise. We hold that the lease arrangement cannot be considered as one of hire purchase as per Circular No. 9/1943 No. 9 [R.Dis.No. 27(4)-IT/43] dated 23.3.1943, since the terms of the agreement does not provide that the equipments shall eventually become the property of the hirer or confer on the hirer an option to purchase the equipments. We hold that merely because the lease arrangement has been considered as finance lease for the purpose of AS 19, that itself does not render the lessee (assessee herein) as the owner of asset for IT Act for claiming depreciation. We find that AS 19 provides for various situations in order to decide as to whether the lease can be considered as finance lease or operating lease for the limited purpose of such AS 19. We find that the assessee had duly complied with the Circulars laid down in this regard more so when the CBDT has itself clarified vide Circular No. 2/2001 dated 9.2.2001 that the AS 19 will have no implication on the allowance of depreciation on assets under the provisions of IT Act. It is well settled that the CBDT Circulars are binding on the revenue. As per this Circular No. 2/2001 dated 9.2.2001, in a lease transaction, the owner of the assets is entitled to depreciation. In the instant case, the lessor (Orix Auto) being the owner had the right to claim depreciation and the assessee has not claimed any depreciation as per the provisions of the IT Act and instead had claimed the entire lease rental as revenue expenditure. We find that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of I.C.D.S. Ltd vs CIT reported in (2013) 350 ITR 527 (SC) wherein it was held that :- “Held, affirming the decision of the Tribunal, (i) that the assessee was a leasing company which leased out the trucks that it purchased. Therefore, on a combined reading of section 2(13) and (24) of the Act the income derived from leasing of the trucks would be business income, or income derived in the course of business, and had been so assessed. Hence, it fulfilled the requirement of section 32 of the Act, that the asset must be used in the course of business. The assessee did use the vehicles in the course of its leasing business. The fact that the trucks themselves were not used by the assessee was irrelevant for the purpose of section. (ii) That a scrutiny of the material facts at hand raised a presumption of ownership in favour of the assessee. The vehicle, along with its keys, was delivered to the assessee upon which, the lease agreement was entered into by the assessee with the customer. The fact that at the end of the lease period, the ownership of the vehicle was transferred to the lessee at a nominal value did not make the assessee in effect a financier. No inference could be drawn from the registration certificate as to ownership of the legal title of the vehicle. If the lessee was in fact the owner, he would have claimed depreciation on the vehicles, which, as specifically recorded in the order of the Tribunal, was not the case.

11 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 (iii) That the entire lease rent received by the assessee was assessed as business income in its hands and the entire lease rent paid by the lessee been treated as deductible revenue expenditure in the hands of the lessee. This reaffirmed the position that the assessee was in fact the owner of the vehicle, in so far as section 32 of the Act is concerned. (iv) That, therefore, the assessee was the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 of the Act and, hence, was entitled to claim depreciation in respect of additions made to the trucks, which were leased out. (v) That for purposes of the assessee's claim to the higher rate of depreciation, the interpretation of the term "purposes of business", used in second proviso to section 32(1) of the Act would not be any different from that ascribed to it under section 32(1) of the Act. Therefore, the assessee fulfilled even the requirements for a claim of a higher rate of depreciation and was entitled thereto.” Though this decision has been rendered on the allowability of depreciation on leased assets from the angle of the lessor, the principle laid down could be made very much applicable to the facts of the instant case for allowability of lease rentals in the hands of the assessee (lessee). We also find that the issue is squarely covered by the decision of the Hon’ble Rajasthan High Court (Jaipur Bench) in the case of Rajshree Roadways vs Union of India & Ors reported in (2003) 263 ITR 206 (Raj) wherein it was held that :- Held, that under the agreement there was a clause that after completion of lease period, if one per cent. of the total consideration of the trucks was paid, the lessee would be the owner of those trucks. However, the agreement dealt with the ownership of the trucks under the agreement. There was a clear provision that the said machinery shall at all times remain sole and exclusive property of the lessor and the lessee shall have no right, title or interest thereon. It further that irrecoverable undertaking of the lessee that at no time during the currency of the lease agreement, which shall be non-cancellable, would the lessee attempt to capitalise the leased assets in its balance-sheet. As per clause 8, it had been agreed that the ownership of the said assets during the tenure of the lease and inclusive of any renewal options that the lessor may concur indisputably rested with the lessor. So in clear terms, the agreement provided that during the lease period, only the lessor shall be treated as owner of the trucks and not the lessee. Moreover, the lessor had been allowed depreciation on the trucks. Therefore, considering the terms and conditions of the lease agreement and the fact that depreciation on these trucks had been allowed to the lessor, the lease rent was deductible as revenue expenditure”- In the aforesaid case, there was a clause in the lease agreement giving an option to the lessee to buy back the asset on termination of the lease agreement. In the instant case, the assessee (lessee) falls in a better footing, in as much as there is no clause in the lease agreement, enabling the lessee to buy back the assets on termination of the lease arrangement. 11

12 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 We find that the case law relied upon by the Learned DR on the decision of Delhi Tribunal need not be discussed as the issue is squarely covered by the High Court and Supreme Court in favour of the assessee.”

Respectfully following the aforesaid decisions, we find no infirmity in the order of the ld CITA in this regard. Accordingly, the Ground No. 4 raised by the revenue is dismissed.”

Respectfully taking the consistent view of this Tribunal as discussed above, we reverse the order of Ld. DRP and direct the AE to delete the same. This ground of appeal of the assessee is allowed.”

Respectfully following the aforesaid decision we direct the ld. AO to delete the said disallowance. Accordingly, ground nos. 4.1 to 4.3 raised by the assessee are allowed.

7.1. The assessee company during the previous year had made the following foreign currency payments towards the following expenditures: Advertisement, participation, sales promotion expenses- Rs. 1,74,67,659/-

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The assessee being in the luxury hospitality, its business heavily depends on clients from the western world. Consequently as in the past it spent a considerable sum of money of advertisement both in the print, web media. Such advertisement are printed

14 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 mostly in USA and UK etc. The servers of the web are also located outside India. The targets for the advertisement are foreign tourists. Hence these foreign advertisements are circulated mainly in USA, UK and certain other European countries. The taxability of the said advertisement, participation and sales promotion expenses under the domestic law and under the Double Taxation Avoidance Agreement (in short ‘DTAA’) either in the nature of royalty or Fees for Technical Services (in short ‘FTS’) was subject matter of examination by the ld. AO and the assessee had furnished the aforesaid details before the ld. AO.

7.1.1 The assessee has furnished the supporting documents in respect of aforesaid expenditures and also furnished the following explanation country wise before the ld. AO.

7.2. Professional and Consultancy Fees – Rs. 14,48,960/- The said payment includes payments made to consulting firms for providing marketing and feasibility study. The service providers are also involved in providing innovative

15 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 ideas for generating interest in Oberoi’s hotels and resorts. The country wise payments details of the same are as under:

The assessee further submitted the following details as under:

7.3. Marketing and Development Expenses – Rs. 1,29,57,532/- The assessee company made various foreign remittances towards marketing promotion to support business growth at Oberoi Hotels. The assessee filed the sample copy of the

16 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 agreements evidencing nature of remittances before the ld. AO. The country wise details of foreign remittances made in this regard are as under:

The assessee further submitted the following details are as under:

17 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 7.4. Business Fair and Exhibition Expenses – Rs. 30,29,516/- During the year, the assessee company has participated in various hotel programmes, exhibitions, designs & management and events held outside India. These programmes are arranged by very reputed organizations. Senior persons/ executives of the assessee company from marketing & sales department represented the assessee in those trade shows, exhibitions and event for marketing and promoting its hotel business. Since the assessee company’s business is mainly dependent on foreign guest, it is necessary to promote and market its business outside India. This type of convention is a great platform to meet, interact with and present its hotel business to the meeting industry professionals who have potential for business into India. Besides, it also gets a great opportunity to meet world level recognized travel agents at one place. The country wise details of foreign remittances made in this regard are as under:

The assessee further submitted the following details are as under:

18 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 7.5 Inspection Fees – Rs. 21,96,677/- The said payments are made for quality audit and the service provider provides report for quality assurance. The same includes fees paid to an overseas party for carrying on inspection outside India. The service is being availed from the same service provider each year and the vendor carries on independent audit about the quality standard of the hotels pertaining to the assessee. The country wise foreign remittances of this expenditure is as under:

The assessee further submitted the following details are as under:

The ld. AO disregarded the aforesaid contentions of the assessee and proceeded to disallow the entire expenditure of Rs. 3,71,00,345/- u/s 40a(ia) of the Act in the final assessment order. Aggrieved the assessee is in appeal before us.

7.6. We have heard ld. AR. We find that the details of aforesaid various expenditures, nature of remittances, country wise foreign remittances, taxability of the same under the domestic law as well as under DTAA, availability of FTS clause, availability of make available clause in DTAA and non-existence of Permanent Establishment (in short PE) in India have been narrated hereinabove. The same are not reproduced herein for the 18

19 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 sake of brevity. We find that the ld. CIT(A) had granted relief to the assessee in the earlier years on the very same issue by placing reliance of ‘make available clause’ prevailing in various tax treaties but the same was not done by the ld. DRP in the year under consideration. Since various factual and legal submissions were indeed made by the assessee before lower authorities as narrated above which were not properly examined by the ld. AO, we deem it may fit and appropriate, to remand this entire issue to the file of ld. AO, for de novo adjudication of the issue afresh in accordance with law. We find that the similar direction has been given by this Tribunal in assessee’s own case for assessment year 2012-13 in I.T.A. No. 117/Kol/2017 dated 16.05.2018. Accordingly, ground nos. 5.1 to 5.3 raised by the assessee are allowed for statistical purposes.

8.1. We find that this requires factual verification and accordingly we direct the ld. AO to verify the veracity of the said claim of the assessee and grant necessary TDS/TCS credit to it as per law. Accordingly, ground no. 6 raised by the assessee is allowed for statistical purposes.

9.1. We find that this issue has been adjudicated by this Tribunal in assessee’s own case for assessment year 2012-13 in I.T.A. No. 117/Kol/2017 dated 16.05.2018, wherein, this issue was remanded back to the file of the ld. AO. Respectively following the same, we remand ground no. 7 raised by the assessee to the file of ld. AO.

20 ITA No.2225/Kol/2017 M/s EIH Limted A.Yr.2013-14 10. Ground no. 8 raised by the assessee is with regard to charging of interest u/s 234D of the Act is consequential in nature and does not require any specific adjudication.

Order pronounced in the Court on 14.09.2018

Sd/- Sd/- [S.S.Godara] [ M.Balaganesh ] Judicial Member Accountant Member Dated : 14.09.2018 SB, Sr. PS Copy of the order forwarded to: 1. M/s EIH Limited, 4, Mangoe Lane, 6th Floor, Kolkata-700001 2. DCIT, Circle-8(1), Kolkata, Aayakar Bhawan, 5th Floor, P-7, Chowringhee Square, Kolkata-700069. 3. C.I.T(A)- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.