Tata Power Co. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that once assessee’s claim of deduction u/s. 80IA of the Income Tax Act on Supa Wind Power Project 17 MW Unit has been accepted in the initial Assessment Year, the same cannot be denied in the subsequent Assessment Years.
Facts- The assessee is engaged in generation, transmission and distribution of electricity. During the period relevant to assessment year under appeal, the assessee had entered into international transaction of provision of loan to its Associated Enterprise(AE), Tata Power Mauritius and provision of corporate guarantee to its other A.E.
AO referred international transactions to TPO. The TPO vide order dated 24/10/2011 made adjustment of Rs. 154,46,89,113/- in respect of aforesaid loan transaction and corporate guarantee. AO further made additions/disallowances under various provisions of the Act. Aggrieved by the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP vide directions dated 28/09/2012 granted part relief to the assessee. AO passed the final impugned assessment order, accordingly. The assessee in appeal has raised multiple grounds assailing the assessment order and the directions of DRP confirming additions.
Conclusion- Held that the Revenue has not disputed the fact that the manner of determination of suo-motu disallowance u/s. 14A of the Act by the assessee is in accordance with the method accepted by Revenue in the past. Merely for the reason that Rule 8D was introduced from the impugned assessment year it cannot be said that there is any defect in the manner of computation of disallowance u/s.14A by the assessee.
Held that the Department has accepted the findings of Tribunal in allowing deduction u/s. 80IA on Supa Wind Power Project 17 MW Unit in Assessment Year 2007-08. Thus, the said Assessment Year becomes the initial Assessment Year for claiming deduction u/s. 80IA of the Act on Supa Wind Power Project 17 MW Unit. Once assessee’s claim of deduction has been accepted in the initial Assessment Year, the same cannot be denied in the subsequent Assessment Years.
Held that where assessee has extended loan to its AE, adjustment should be made at average LIBOR rate existing at that time. It is a settled legal position that for the purpose of determination of ALP the rate of interest should be charged in the currency in which loan is borrowed. Thus, we find merit in the submissions of assessee in applying LIBOR in respect of loan advanced from India to the AE.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the assessment order dated 30/11/2012 passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961[in short ‘the Act’], for the Assessment Year 2008-09.
2. The assessee is engaged in generation, transmission and distribution of electricity. During the period relevant to assessment year under appeal, the assessee had entered into international transaction of provision of loan to its Associated Enterprise(AE), Tata Power Mauritius and provision of corporate guarantee to its other A.E. In assessment proceedings the Assessing Officer referred international transactions to the Transfer Pricing Officer (TPO). The TPO vide order dated 24/10/2011 made adjustment of Rs. 154,46,89,113/- in respect of aforesaid loan transaction and corporate guarantee. The Assessing Officer further made additions/disallowances under various provisions of the Act. Aggrieved by the draft assessment order dated 29/12/2011, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP vide directions dated 28/09/2012 granted part relief to the assessee. The Assessing Officer passed the final impugned assessment order, accordingly. The assessee in appeal has raised multiple grounds assailing the assessment order and the directions of DRP confirming additions.
3. Shri Nitesh Joshi appearing on behalf of the assessee submitted that the assessee has filed concise grounds of appeal vide letter dated 18/11/2021,the same may be considered for adjudication. Since, the assessee has raised multiple grounds of appeal, the grounds raised in appeal are decided in seriatim.
Ground No.1: Disallowance u/s. 14A of the Act – Rs.32.60 crores.
4. The ld.Counsel for the assessee submitted that during the period relevant to assessment year under appeal, the assessee has earned following income exempt from tax:-
