Corporate Guarantee facility provided to overseas AE is international transaction

By POONAM GANDHI Income Tax Judiciary July 31, 2023

TaxGuru Citation: 2023 taxguru.in 4661
Case Name: DCIT Vs JSW Steel Ltd. (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2008-09
Courts: All ITAT, ITAT Mumbai

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DCIT Vs JSW Steel Ltd. (ITAT Mumbai)

ITAT Mumbai held that Corporate Guarantee facility provided to overseas AE by the assessee is an international transaction and hence addition towards Arm’s Length Guarantee Fee confirmed.

Facts- The assessee is public limited company deriving income from manufacturing and selling of steel pellets, hot and cold rolled coils/ sheets, galvanized coils / sheets and plates, blooms, billets, bars, roads and slag cement.

The issue is that the assessee had advanced intra-group unsecured loan of USD 15,00,000/- to its AE, JSW Netherlands on 14.01.2008 and was in receipt of interest of Rs 1,92,949/- against the same. The said loan was provided by the assessee company to its AE at Libor plus 100 basis points. Since the said loan was in the nature of short term loan, the same was benchmarked using buyer credit facility availed by the assessee from foreign banks. The buyers credit facility availed from foreign banks is at Libor plus 22 basis points. The assessee explained that since the interest rate charged by Assessee Company is more that the interest rate charged by foreign banks for short term credit facility, the transaction of interest received is at Arm’s Length.

However, TPO came to a conclusion that interest on outbound loan was not to be benchmarked with LIBOR since no company would like to advance loans outside India without security as the interest rate in India would be higher than those prevailing in the developed country. Finally, TPO considered the rate of 12.75% out of three rates to benchmark the stated transactions. Adjusting the interest of Rs 1,92,949/- as charged by the assessee from its AE, the net TP adjustment, thus proposed, worked out to be Rs 2,84,526/-.

During the year under consideration, the assessee company has given guarantee to lender banks to enable the overseas subsidiaries to borrow funds. The assessee did not make any adjustment on account of Corporate Guarantee facility provided to it’s AE. The Transfer Pricing Officer (TPO) held that the Corporate Guarantee is an international transaction. Accordingly, TPO arrived at the amount of Rs. 19,75,28,327/- as Arms Length Guarantee Fee.

Conclusion- Held that since the rate charged by the assessee from the AE is higher than the buyer credit facility availed from foreign bank (Libor plus 22 basis points), the transaction of interest received is considered at Arm’s Length. Further, the computation of the same has nowhere been disputed by the revenue. Applying LIBOR + spread-over, ALP interest has been worked out to be Rs 1,92,949/-. We are of the considered opinion that this spread over as computed by the assessee was undisputed, quite fair and reasonable and the same was to be accepted.

Held that Corporate Guarantee facility provided to overseas AE by the assessee is an international transaction. We direct the transaction of corporate guarantee fee at 0.35% to be charged by the assessee from its AE at arm’s length and accordingly, the addition confirm to that extent.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

1. The aforesaid cross appeals have been filed against the order dated 31.03.2017, passed Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2008-09, 200910, 2010-11, 2011-12.

2. The facts in brief are that the assessee is public limited company deriving income from manufacturing and selling of steel pellets, hot and cold rolled coils/ sheets, galvanized coils / sheets and plates, blooms, billets, bars, roads and slag cement.

3. For the sake of convenience, the grounds raised by the revenue and the assessee in their appeals for respective years are reproduced as under:

Revenue’s grounds of appeal(AY 2008-09):

1.“On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to AE at LIBOR + 100 bps is at arm’s length by comparing it with interest paid by the assessee on buyers credit facility extended by foreign bank, disregarding the fact that the AE’s credit rating and interest rate payable by the AE to banks were relevant rather than the interest rate payable by the assessee to banks”

2. “On the facts and circumstances of the case and in law, the Ld. CIT(A) was not justified in determining the Arm’s Length Price of fee on corporate guarantee extended to the lenders by assessee to its five AEs at Rs. 13,72,20,858/-by holding that the TPO had not given any reason for rejecting the assessee’s benchmarking even though the TPO has discussed the reasons in detail in the TP order, which have not been considered by the Ld. CIT(A)”

3. “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in accepting determination of credit rating of Santa Fe Mining, USA using financials of parent company and holding company and rejecting the contention of the TPO that credit rating shall be determined using its standalone financials”

4. “On the facts and the circumstances of the case and in law, the Ld CIT(A) erred in accepting the comparable loans transaction from different geography viz. from USA, Canada and Europe for determining the fee to be charged on corporate guarantee extended on behalf of AEs viz JSW Steel Service Centre (UK) Ltd. and JSW Netherland, (even though the AEs which had taken loan, were situated in UK and Netherland)”

5. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 14A of the Act rw.Rule 8D of Rs. 2,04,19,763/- as against a disallowance of Rs 42,84,300/- made by the assessee in the return of income by holding that investment in mutual funds of the nature of growth funds do not yield dividend income ignoring the fact that these investments on holding for more than a year yield exempt income.”

6. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 58,28,74,773/-as Capital Receipt ignoring the fact that the refund was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka’s scheme.”

7. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (^„CER‟) receipts as Capital Receipt even though the receipt is attributable to the business carried on by the assessee company.”

8. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (CER) receipts as Capital Receipt by relying on the judgement of Andhra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon’ble Supreme Court.”

9. “On the facts and the circumstances of the case und in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the increased written down value of the assets received from the merged companies thereby allowing additional depreciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off.”

10. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during F.Y. 2004-05 & F.Y. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in light of the fact thaton cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis.”

11. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 58,28,74,773/- as Capital Receipt, directing the deletion of disallowance u/s 14A and to consider the income on sale of Certified Emission Reductions (‘CER’) receipts as Capital Receipt for the purpose of computing book profit u/s 115JB of the Act.

The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.

Assessee’s grounds of appeal (AY 2008-09):

1. “On facts and circumstances of the case and in law, the Hon’ble Commissioner of Income-tax (Appeals) (hereinafter referred to as the ‘CIT(A)’) has erred in not holding that the order passed by the Assessing Officer (hereinafter referred to as the ‘AO’) under Section 144C(3) r.w.s 153A r.w.s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) on 30.05.2014 is barred by limitation under the provisions of the Act, and the same is void ab initio”

2. On facts and circumstances of the case and in law, the Hon’ble CIT(A) has erred in not appreciating that provision of corporate guarantee is not covered under the definition of ^„international transaction‟ under Section 92B of the Act.

3. On facts and circumstances of the case and in law, the Hon’ble CIT(A) has erred in not appreciating that provision of corporate guarantee is primarily a shareholder service and has no bearings on the profits, income, losses or assets of associated enterprise.

4. The Hon’ble CIT(A) has erred in facts and circumstances of the case in not appreciating that provision of corporate guarantee is in the nature of ^„quasi equity‟ not subject to any remuneration.

Each of the above grounds are independent of and without prejudice to all others. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds.

Revenue’s grounds of appeal (AY 2009-10):

1. “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest received by assessee on foreign currency loon advanced to AE at LIBOR + 200/350 bps is at arm’s length by comparing it with interest paid by the assessee on buyers credit facility extended by foreign bank, without appreciating that a loan to an AE by the assessee is a different kind of transaction from a buyers credit by a bank to the AE on several factors and under CUP the similarity of products and services is of paramount importance.”

2. “On the facts and the circumstances of the case and in law, the CIT(A) was not justified in accepting the Arm’s Length Price of fee on corporate guarantee extended to the lenders by assessee on behalf of five AEs at Rs. 22,62,06,353/-“

3. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting determination of credit rating of Santa Fe Mining, USA using financials of parent company and holding company and rejecting the contention of the TPO that credit rating shall be determined using its standalone financials under the arm’s length principle.”

4. “On the facts and in the circumstances of the case and in law, the CIT(A) erred in accepting the comparable loans transaction from different geography viz. from USA, Canada and Europe when the AEs which had taken loan, were situated in UK and Netherland, for determining the fee to charge on corporate guarantee extended on behalf of AEs viz JSW Steel Service Centre (UK) Ltd and JSW Netherland”

5. On the facts and circumstances of the case and in law, the CIT(A) was not justified in determining the Arm’s Length Price of fee on corporate guarantee extended to the lenders by assessee on behalf of the AE, JSW Steel (USA) Inc. at 133.65 bps, same as that in the case of anther AE. JSW Steel Holding (USA) without determining credit rating of JSW Steel (USA) Inc and without knowledge of terms of loan taken by AE from the lender.

6. “On the facts and the circumstances of the case and in law, the CIT(A) erred in deleting adjustments of Interest computed on amount advanced towards preliminary expenses, even though it is in the nature of a loan or credit extended to the AE.”

7. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 14A of the Act rw.Rule 8D of Rs 4,43,17,563/- as against a disallowance of Rs 2,54,20,159/- mode by the assessee in the return of income by holding that investment in mutual funds of the nature of growth funds do not yield dividend income ignoring the fact that these investments on holding for more than a year yield exempt income.”

8. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 89,40,89,905/-as Capital Receipt ignoring the fact that the refund was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka’s scheme.”

9. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (CER) receipts as Capital Receipt even though the receipt is attributable to the business carried on by the assessee company.”

10. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (CER) receipts as Capital Receipt by relying on the judgement of Andhra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon’ble Supreme Court.”

11. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the increased written down value of the assets received from the merged companies thereby allowing additional depreciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off.”

12. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during F.Y. 2004-05 & F.Y. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in light of the fact that on cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis.”

13. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of purchases of Rs. 2,58,750/- as bogus purchases.”

14. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 89,40,89,905/- as Capital Receipt, directing the deletion of disallowance u/s 14A and to consider the income on sale of Certified Emission Reductions (^„CER’) receipts as Capital Receipt for the purpose of computing book profit u/s 115JB of the Act”

Assessee’s grounds of appeal (AY 2009-10):

2. “On facts and circumstances of the case and in law, the Hon’ble CIT(A) has erred in not appreciating that provision of corporate guarantee is not covered under the definition of ‘international transaction’ under Section 92B of the Act.”

3. “On facts and circumstances of the case and in law, the Hon’ble CIT(A) has erred in not appreciating that provision of corporate guarantee is primarily a shareholder service and has no bearings on the profits, income, losses or assets of associated enterprise.”

4. “The Hon’ble CIT(A) has erred in facts and circumstances of the case in not appreciating that provision of corporate guarantee is in the nature of ‘quasi equity’ not subject to any remuneration.”

5. The Hon’ble CIT(A) has erred in confirming the action of Assessing Officer in making addition u/s 69C on account of unexplained expenditure for alleged payments made to Shri MadhuKoda amounting to Rs. 10,00,00,000.

6. “On the facts and the circumstances of the case and in law, the Hon’ble CIT(A) erred in passing order in violation of the principle of natural justice without providing an opportunity for cross examination to the appellant on account of unexplained expenditure.”

7. “On the facts and the circumstances of the case and in law, the Hon’ble CIT(A) erred in not sharing with Appellant the copies of relevant correspondences and documents and not allowing the Appellant to cross-examine the persons whose views were relied upon by Hon’ble Assessing Officer in the impugned assessment order to substantiate the appellants claim.”

Each of the above grounds are independent of and without prejudice to all others. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds.

Revenue’s grounds of appeal (AY 2010-11):

1. “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to AE at LIBOR±200/350 bps is at arm’s length.”

2. “On the facts and the circumstances of the case and in law, the CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to JSW Steel Netherland and JNRL Mauritius at LIBOR± spread is at arm’s length by comparing it with interest paid by the assessee on buyers credit facility extended by foreign bank, without appreciating that a loan to an AE by the assessee is a different transaction from a buyers credit by a bank to the AE on several factors and under CUP the similarity of products and services is of paramount importance.”

3. “On the facts and the circumstances of the case and in law, the CIT(A) erred in holding that interest received by assessee on foreign currency loan advanced to IEL, Chile and JSW Holding USA at LIBOR± spread is at arm’s length by comparing it with lons taken by them from banks even though the terms of loans taken by AE from banks and taken from the assessee are not the same.”

4. “On the facts and in the circumstances of the case and in law, the CIT(A) was not justifed in accepting the Arm’s Length Price of fee on corporate guarantee at Rs. 9,27,13,353/- extended to the lenders by assessee to its three AEs.”

5. “On the facts and circumstances of the case and in law, the CIT(A) failed to appreciate the fact that in the case of guarantee given to lenders for loans provided in AY 201011 to AEs, JSW Holding USA, JSW (USA) and JSW Netherland, the assessee, for determining the spread to be charged on loan in case of uncontrolled comparable transaction, has taken the year of loans for such comparable transactions as FY 2007-08 /2008-09, even though the terms of loan taken by AE from bank, for which guarantee was provided by the assessee, where different for the year under consideration i.e. FY 200910.”

6. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting the comparable loans transaction from different geography viz. from USA, when the AE, which had taken loah, were situated in Netherland, for determining the fee to be charged on corporate guarantee extended on behalf of AE, JSW Netherland.”

7. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting the fee for corporate guarantee extended to lenders on behalf of AEs as determined by the assessee even though credit rating of comparables companies is not same as that of the AEs.”

8. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance w/s 14A of the Act r.w.Rule 8D of Rs.11,71,01,241/- as against a disallowance of Rs. 9,19,70,334/- made by the assessee in the return of income by holding that investment in mutual funds of the nature of growth funds do not yield dividend income ignoring the fact that these investments on holding for more than a year yield exempt income.”

9. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 91,53,07,290/-as Capital Receipt ignoring the fact that the refund was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka’s scheme.”

10. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (‘CER’) receipts as Capital Receipt even though the receipt is attributable to the business carried on by the assessee company.”

11. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (‘CER’) receipts as Capital Receipt by relying on the judgement of Andhra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon’ble Supreme Court.”

12. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the increased written down value of the assets received from the merged companies thereby allowing additional depreciation even though the conditions of Sec 72A(2) were not satisfied rendering the unabsorbed depreciation as not allowable for set off.”

13. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during FY. 2004-05 & FY. 2005-06 on cancellation of forward exchange contract considered as capital expenditure in light of the fact that on cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis.”

14. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deletion of disallowance us 37 of the I-T Act, of the payments of Rs.10,00,00,000/-made to manpower supply companies.”

15. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 91,53,07,290/- as Capital Receipt, directing the deletion of disallowance us 144, to consider the income on sale of Certified Emission Reductions (‘CER’) receipts as Capital Receipt and directing the Assessing Officer to exclude the amount of Rs. 125,00,00,000- transferred to Debenture Redemption Reserve (‘DRR’) for the purpose of computing book profit us115JB of the Act.”

The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.

Assessee’s grounds of appeal (AY 2010-11):

1. “On facts and circumstances of the case and in law, the Hon’ble Commissioner of Income-tax (Appeals) (hereinafter referred to as the ‘CIT(A)) has erred in not holding that the order passed by the Assessing Officer (hereinafter referred to as the ‘AO’) under Section 144C (3) r.w. 153A r.w. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) on 30.05.2014 is barred by limitation under the provisions of the Act, and the same is void ab initio.”

3. “On facts and circumstances of the case and in law, the Hon’ble CIT(A) has erred in not appreciating that provision of corporate guarantee is primarily a shareholder service and has no bearings on the profits, income, losses or assets of associated enterprise.”

4. “The Hon’ble CIT(A) has erred in facts and circumstances of the case in not appreciating that provision of corporate guarantee is in the nature of ^„quasi equity‟ not subject to any remuneration.”

Each of the above grounds are independent of and without prejudice to all others. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds.

Revenue’s grounds of appeal (AY 2011-12):

1. “On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in holding that interest received by assessee on foreign currency loan advanced to AEs at LIBOR+ spread is at arm’s length even though the uncontrolled transactions of loans selected by the assessee were not comparable with the loan transactions between the assessee and As for the reasons pointed out by the TPO at para 5.2 of his order”

2. “On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in accepting the Arm’s Length Price of fee at Rs. 7,02,52,115/-on corporate guarantees extended to the lenders by assessee to its three AEs, even though loan transactions selected by the assessee for the benchmarking guarantee fee using interest saving approach were not comparable with the loan transactions of these AEs, for which guarantee was provided by the assessee for the reasons pointed out by the TPO at para 6.3 & 6.4 of his order.”

3. “On the facts and circumstances of the case and in law, the CIT(A) failed to appreciate the fact that in the case of guarantee given by the assesses to lenders on behalf of AEs, JSW Holding USA and JSW (USA), the comparable loan transactions shall be of the same year in which the loan with different terms was taken by the AEs and not of earlier years.”

4. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting the comparable loans transaction from different geography viz. from USA, for determining the fee to be charged on corporate guarantee extended on behalf of AE, situated in Netherland.”

5. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting the fee for corporate guarantee extended to lenders on behalf of JSW Holding USA, as determined by the assessee, even though credit rating of comparables companies selected by the assessee was not same as that of the AEs and comparable loans were not of the same year in which AE had taken loan from the bank.”

6. “On the facts and the circumstances of the case and in law, the CIT(A) erred in accepting the fee for corporate guarantee extended to lenders on behalf of AEs as determined by the assessee, even though credit rating of comparables companies selected by the assessee was not same as that of the AEs.”

7. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 14A of the Act r.w.Rule 8D of Rs.8,47,76,845/- as against a disallowance of Rs. 5,82,845/- made by the assessee in the return of income by holding that investment in mutual funds of the nature of growth funds do not yield dividend income ignoring the fact that these investments on holding for more than a year yield exempt income.”

8. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 174 48,34,433/- as Capital Receipt ignoring the fact that the refund was in the nature of incentive/concession and revenue in nature as per the purpose test of Government of Karnataka’s scheme.”

9. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (‘CER’) receipts as Capital Receipt even though the receipt is attributable to the business carried on by the assessee company.”

10. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the income on sale of Certified Emission Reductions (CER’) receipts as Capital Receipt by relying on the judgement of Andra Pradesh High Court in the case of My Home Power Ltd which has been challenged by the Revenue by filing SLP before the Hon’ble Supreme Court.”

12. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in allowing consequential depreciation in respect of foreign currency loss of incurred during FY. 2004-05 on cancellation of forward exchange contract considered as capital expenditure in light of the fact that on cancellation of forward exchange contracts, payments are not actually made and Sec 43A allows adjustments only on actual payment basis”

13. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to consider the refund of Sales Tax of Rs. 174,48,34,433/- as Capital Receipt, directing the deletion of disallowance us 14A and to consider the income on sale of Certified Emission Reductions (CER’) receipts as Capital Receipt for the purpose of computing book profit us 115JB of the Act.”

The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

The appellant craves leave to amend or alter any ground and or add new grounds which may be necessary.

Assessee’s grounds of appeal (AY 2011-12):

1. “On facts and circumstances of the case and in law, the Hon’ble Commissioner of Income-tax (Appeals) (hereinafter referred to as the ‘CIT(A)’) has erred in not holding that the order passed by the Assessing Officer (hereinafter referred to as the ‘AO’) under Section 144C(3) r.w. 153A r.w.s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) on 30.05.2014 is barred by limitation under the provisions of the Act, and the same is void ab initio.”

Each of the above grounds are independent of and without prejudice to allothers. The Appellant craves leave to add to or modify or amend and or withdraw all or any of the above grounds.

4. In this background we take up the year-wise cross appeals as follows:

ITA No.4632/Mum/2017 AY 2008-09 (Revenue’s appeal)

First we deal with the Transfer Pricing Issue:

Certain International Transactions as carried out by the assessee with its Associated Enterprises [AE] and as reported in Form 3CEB were referred to Ld. Transfer Pricing Officer-1(3), Mumbai [TPO] for determination of Arm’s Length Price [ALP]. The details of the transactions, which are subject matter of present appeal before us, are as follows: –