SHAPOORJI PALLONJI AND COMPANY PVT. LTD,MUMBAI vs. DCIT CIR 3(3) (1) , MUMBAI

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ITA 2025/MUM/2021Status: DisposedITAT Mumbai28 March 2024AY 2014-15Bench: SHRI B R BASKARAN (Accountant Member), MS. KAVITHA RAJAGOPAL (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's finding in the assessment order amounted to recording dissatisfaction with the assessee's claim, rejecting the argument that dissatisfaction was not properly recorded. Regarding advances, the Tribunal upheld the CIT(A)'s deletion of the addition, finding that the assessee's interest-free funds exceeded the advances made. For the property sale, the Tribunal noted that the transaction and consideration receipt occurred in an earlier year, making the current year's addition unsustainable.

What were the facts?

The assessee company, engaged in civil construction, had its income selected for scrutiny. The Assessing Officer made additions and disallowances, leading to an appeal before the CIT(A), who partly allowed the assessee's appeal. Both the Revenue and the assessee filed appeals against the CIT(A)'s order.

What were the issues?

Whether the Assessing Officer properly recorded dissatisfaction for disallowance under Section 14A and Rule 8D, and whether additions related to advances and property sale were justified in the current assessment year.

Which sections of the Income-tax Act were involved?

Section 14A,Section 69A,Section 50C,Section 115JB

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI B R BASKARAN, AM & MS. KAVITHA RAJAGOPAL, JM & CO No. 55/Mum/2022

For Appellant: Shri Rajan Vora & Nikhil Tiwari
For Respondent: Shri H M Bhatt
Hearing: 19.01.2024Pronounced: 28.03.2024

per the provisions of the Act in case of each assessee for every year. It is also pertinent to point out that various decisions of the Hon'ble Jurisdictional High Court relied upon by the ld. AR has held tha the letter of comfort given by the assessee on behalf of its AE clearly excludes letter of comfort within the expression of ‘international transaction’.

Having stated so, there is no necessity for determining the ALP for the said transaction.

31.

From the above observation, we are of the considered view that the matter should be remanded back to the file of the ld. TPO for the purpose of applying any of the prescribed methods for determining the ALP of the international transactions only to the extent of the finance guarantee given by the assessee on behalf of its AEs. As the performance guarantee has already expired in 2013, there would not be any necessity to determine the ALP and, hence, we confirm the deletion made by the ld. CIT(A) on this ground. Hence, Ground Nos. 5 to 12 of the Revenue’s appeal and the ground no.1 of the assessee’s appeal are allowed for statistical purpose.

32.

In the result, the appeal and cross objection filed by the assessee and the appeal filed by the Revenue are all partly allowed.

Order pronounced in the open court on 28.03.2024.

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