Adani Ports & Special Economic Zone Ltd Vs Jt. Commissioner of Income Tax (OSD) (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, has delivered a mixed, yet largely favorable, ruling for Adani Ports & Special Economic Zone Ltd. (APSEZ) in an appeal against the Joint Commissioner of Income Tax (OSD). The Tribunal’s decision addressed two key areas of dispute: the disallowance of depreciation on office expenses and, more significantly, the transfer pricing adjustment related to corporate guarantees extended to an Associated Enterprise (AE). While acknowledging a shift in judicial precedent regarding the classification of corporate guarantees as international transactions, the ITAT ultimately found no grounds for an upward adjustment in APSEZ’s specific instance.
The first issue, concerning the disallowance of depreciation on office expenses at a 15% rate instead of the qualified 10%, was resolved swiftly. The ITAT noted that an identical disallowance had been made by the Assessing Officer (AO) for Assessment Year (AY) 2011-12, but was subsequently deleted by the Commissioner of Income Tax (Appeals) [CIT(A)]. This deletion was upheld by the Tribunal itself in APSEZ’s own case (ITA No. 122 & 167/AHD/2015 for A.Y. 2011-12) via an order dated March 29, 2023. Given that the Revenue failed to present any new material or distinguishing facts to challenge this established precedent, the Tribunal in the current appeal found no infirmity in the CIT(A)’s finding and directed the AO to delete the disallowance. This effectively dismissed the Revenue’s ground of appeal on this point.
