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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
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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
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.
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.