DCIT 3(3) (1) , MUMBAI vs. M/S. SHAPOORJI PALLONJI CENTRE 41/44 MINOO DESAI MARG, MUMBAI
Facts
The Revenue and the assessee filed cross-appeals and a cross-objection challenging the order of the CIT(A). The appeals primarily concerned the disallowance made under Section 14A, adjustments to book profit under Section 115JB, and disallowance of interest under Section 36(1)(iii).
Held
The Tribunal observed that the AO's finding amounted to a recording of dissatisfaction. The Tribunal decided to remand the issue of disallowance under Section 14A to the CIT(A) for decision on merits. Regarding book profit under Section 115JB, the Tribunal allowed the assessee's cross-objection and dismissed the Revenue's appeal. For disallowance of interest under Section 36(1)(iii), the Revenue's appeal was dismissed and the assessee's cross-objection was allowed. The Tribunal remanded the issue of transfer pricing adjustments for finance guarantee to the TPO.
Key Issues
The primary issues were regarding the disallowance under Section 14A, adjustment of book profit under Section 115JB, disallowance of interest under Section 36(1)(iii), sale of immovable property, and transfer pricing adjustments for guarantees.
Sections Cited
14A, 115JB, 36(1)(iii), 92CA, 50C, 69A, 143(3), 144C(3), 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
