SHAPOORJI PALLONJI AND COMPANY PVT. LTD,MUMBAI vs. DCIT CIR 3(3) (1) , MUMBAI
Facts
The assessee, a domestic company engaged in civil construction and real estate, filed its return of income declaring a loss. The case was selected for scrutiny, leading to an assessment order with additions and disallowances. Both the Revenue and the assessee filed appeals against the order of the CIT(A), who had partly allowed the assessee's appeal.
Held
The Tribunal remanded the issue of disallowance under Section 14A to the CIT(A) for a decision on merits. The Tribunal allowed the assessee's cross-objections and dismissed the Revenue's appeal regarding the adjustment of book profit under Section 115JB, stating that Section 14A read with Rule 8D is not applicable for computing profit under Section 115JB. The Revenue's appeal regarding disallowance under Section 36(1)(iii) was dismissed, and the assessee's cross-objections were allowed. The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objections concerning the addition for unexplained money from the sale of immovable property.
Key Issues
The main issues revolved around the disallowance of expenses under Section 14A, adjustment of book profit under Section 115JB, disallowance of interest under Section 36(1)(iii), addition for unexplained money from property sale, and transfer pricing adjustments for guarantees.
Sections Cited
14A, 8D, 115JB, 36(1)(iii), 69A, 50C, 92CA, 10, 143(1), 143(3), 144C, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI B R BASKARAN, AM & MS. KAVITHA RAJAGOPAL, JM & CO No. 55/Mum/2022
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
19 ITA Nos. 2025 & 2233/M/2021 and CO No. 55/M/2022 Shapoorji Pallonji and Company Private Limited does not come under the purview of an international transaction and the provision also
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.
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.
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.
Sd/- Sd/-
(B R Baskaran) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 28.03.2024 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai
