Case Law Details
EIH Limited Vs DCIT (ITAT Kolkata)
ITAT Kolkata held that the disallowance u/s 14A of the Income Tax Act, read with Rule 8D of the Income Tax Rules should be restricted to the dividend yielding investments. Accordingly, AO directed to re-compute disallowance.
Facts- The issue in the present appeal is regarding the disallowance of Rs. 50,51,380/- u/s 14A of the Act r.w. Rule 8D, r.w. section 115JB of the Act. Briefly, it is observed that the appellant had suo-moto disallowed Rs. 10,32,739/- on this account. However, AO applied Rule 8D of the I.T. Rules and disallowed the impugned amount.
Conclusion- Held that the judicial pronouncements on this issue are in favour of the appellant in as much as it is fairly well settled as of now that any disallowance u/s 14A of the Act, r.w. Rule 8D will need to be made on investments yielding exempt income. Thus, AO is directed to recompute the disallowance u/s 14A of the Act by taking into account only exempt income yielding investments. Needless to say, the disallowance already made by the assessee will need to be given credit for.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
1. These are a batch of two appeals for AYs 2017-18 and 2018-19, with several common grounds. Accordingly, these appeals are being disposed of through a single order.
ITA No. 181/Kol/2022 (AY 2017-18)
2. In this case, the assessment was completed vide order u/s 143(3) w.s. 144B of the Income Tax Act, 1961 (in short “the Act”) dated 28.02.2022, through which the following additions (as are relevant for this adjudication) were made:
(i) TP Adjustment on account of Corporate Guarantee (hereafter CG) of Rs. 63,57,591/-.
(ii) Disallowance u/s 14A of the Act r.w. Rule 8D at Rs. 50,51,380/- and also adding this amount for computing income u/s 11 5JB of the
(iii) Disallowance on account of principal repayment of lease rental at 3,38,64,203/-.
(iv) Addition of Rs 4,47,59,532/- on account of cash deposits made during demonetisation period.
These additions have been challenged through the following grounds of appeal.:
“1. FOR THAT the Dispute Resolution Panel (hereinafter referred to as “the DRP”) erred in confirming the transaction of corporate guarantee extended by the Appellant to EIH Flight Services Ltd. Mauritius, (hereinafter referred to as “the AE”) as international transaction without appreciating that it does not fall within the definition of “International transaction” under section. 92B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and accordingly the direction to make an of INR 63,57,591 is bad in law.
2. FOR THAT the DRP erred in not appreciating the fact that corporate guarantee has been advanced by the Appellant as a matter of commercial prudence to protect the business interest of the group by fulfilling the shareholder’s obligation as any financial incapacitation of the subsidiary would jeopardize the investment of the Appellant.
3. FOR THAT the DRP erred in not appreciating that the reference made to the TPO is without jurisdiction as the AO has not even identified as to what transactions have been referred to the TPO, thereby, the reference is in violation of principles of natural justice and is liable to be quashed.
4. FOR THAT the DRP failed to acknowledge that the AO has erred referring the case of the Appellant to the TPO without affording any opportunity to the Appellant of being heard against the provisions of section 92CA read with CBDT Instruction No. 3/2016 dated 10 March 2016 and hence the directions issued by the DRP confirming the said order of the TPO is without jurisdiction and liable to be
5. FOR THAT the DRP erred in appreciating that the AO has failed to record his satisfaction as to why and how the alleged international transaction has a bearing on the income of the Appellant and thus the reference to the TPO itself is without jurisdiction, arbitrary and liable to be quashed.
6. FOR THAT, without prejudice to the above, the DRP erred in contending that the corporate guarantee provided by the Appellant has resulted in reduction of lending rate and consequential increase in profit of the AE and that the DRP has failed to consider the letter duly certified by the lending bank and hence the directions issued are in gross violation of principles of natural justice.
7. FOR THAT, without prejudice to the above, the DRP erred in confirming the application of Safe Harbour Rules by the Transfer Pricing Officer (hereinafter referred to as the TPO”), for which option is available to the assessee only.
8. FOR THAT, without prejudice to the above, the DRP erred in arbitrarily assuming the guarantee commission at 1% when a guarantee commission of 0.3%-0.5% would meet the arm’s length criteria based on various legal jurisprudence on the
9. FOR THAT, without prejudice to the above, the DRP erred confirming the method of the TPO in computing an ad-hoc arm’s length price without conducting any analysis for selection of most appropriate method.
10. FOR THAT the DRP grossly erred in making upholding disallowance made by the AO under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter referred to as “the Rules”) without appreciating the fact that the same was disallowed by the AO without recording satisfaction regarding the correctness of the claim of the Appellant.
11. FOR THAT the DRP grossly erred in making disallowance under section 1 4A of the Act without considering the submissions and calculations of the Appellant.
12. FOR THAT the DRP grossly erred in not considering the fact that the Appellant has not incurred any expenditure and that no new investments were made during the assessment year under consideration and hence no disallowance under section 14A is called for except for the direct expenses in earning exempt dividend income.
13. FOR THAT, without prejudice to the above, the DRP grossly erred in considering total value of investments in computing the disallowance under section 1 4A read with Rule 8D of the Rules and not excluding the value of investments which did not yield any exempt income, completely ignoring the principles laid down by the jurisdictional tribunal duly approved by Kolkata High Court CIT -vs- REI Agro Ltd. (ITAT 161 of 2013-Cal HC).
14. FOR THAT the DRP grossly erred in confirming the adjustment made by the AO of INR 50,51,380 computed as per Rule 8D while arriving at book profit under section 11 5JB of the Act without appreciating that provisions of subsection (2) & (3) of Section 14A which prescribes for estimated disallowance by the AO as per Rule 8D did not find place in clause (f) of Section 11 5JB and in absence of any expenditure directly relatable to earning dividend income, no adjustment as per Rule 8D was called for under clause (f) of Section 11 5JB, completely ignoring the principle laid down by the Jurisdictional High Court in case of CIT -vs.- Jayshree Tea & Industries Ltd. (G.A. No. 1501 of 2014 dated 19-11-2014 which was followed by the Kolkata ITAT in assessee’s own case DCIT -vs- EIH Limited [2017] in LT.A. No. 866/Kol/2012 (Assessee’s) and 932/Kol/2012 (Dept’s).
15. FOR THAT the DRP erred in not applying the ratio decidendi laid down in the decision of Supreme Court in the case of M/s. LC.D.S. Ltd. -vs.- CIT [(2013) 350 ITR 527 (SC)] which was squarely applicable in the case of assessee and also erred in ignoring the decision of Hon’ble Kolkata Tribunal in assessee’s own case in EIH Limited vs DCIT I.T.A. No. 529/Kol/2013 for AY 2008-09 in relation to disallowance on account of lease rental.
16. FOR THAT the DRP has grossly erred in not following the order of the Hon’ble Calcutta High Court in Appellant’s own case for AY 2009-1 0 in PCIT-vs-EIH Limited in ITAT 38 of 2020 dated 17 January 2022 and also its own order in appellant own case in AY 2013-14 for deciding the issue of disallowance on account of lease rental and hence the directions of the DRP is ex-facie arbitrary, illegal and liable to be quashed.
17. FOR THAT the DRP erred in confirming the disallowance of amount of INR 3,38,64,203 on account of lease rental on the contention that the principal repayment amounted to capital expenditure not allowable as business expense even after admitting that the lessor had not transferred the title of ownership to the lessee and claimed depreciation under section 32 of the Act on the said leased assets being the legal owner.
18. FOR THAT the DRP erred in applying the decision of the jurisdictional tribunal in the case of Phillips India and the Delhi High Court in the case of Rio Tinto, when both these cases have been reversed by the jurisdictional Tribunal and the Supreme Court respectively.
19. FOR THAT the DRP erred in confirming the addition of INR 4,47,59,532 made by the AO without appreciating the fact that the AO did not seek any further documentary evidence during the remand proceedings and that the addition made is arbitrary and without considering any factual data submitted by the Appellant during the remand proceedings.
20. FOR THAT the DRP failed to appreciate that the AO made the aforesaid addition without providing any opportunity to the Appellant during the remand proceedings and hence is against the principles of natural justice.
21. FOR THAT the DRP failed to appreciate that the AO merely shirked off the responsibility to discharge the burden of proof and has made an ad-hoc disallowance without any application of mind and hence is arbitrary, illegal and liable to be deleted.
22. FOR THAT the appellant craves leave to add, alter, amend, withdraw or substitute the ground or grounds on or before hearing of this appeal.”
2.1 Before us, the Ld. AR initially filed a voluminous paper book which was later abridged and the same was thereafter placed on record.
3. Regarding the issue of CG of Rs. 63,57,591/-, it has been averred that the Hon’ble ITAT has given relief on this issue for AY 2011-12 (ITA No. 110/Kol/2016), AY 2012-13 (ITA No. 117/Kol/2016) and AY 2013-14 (ITA No. 2225/Kol/2017). The Ld. AR took us through the relevant passages of the relied upon orders of ITAT and also claimed, without prejudice to these decisions, that there are a catena of judgment which limit CG at no more than 0.5% in cases where facts are similar or identical to the present appeal.
3.1 The Ld. DR relied on the finding given in the order of DRP and argued that the 1% CG rate assessed by the TPO was adequate and fair.
3.2 We have carefully considered the rival submissions and carefully gone through the cases relied upon and other documents before us. It is felt that with the passage of time this issue has been more or less settled in four of a 0.5% CG in cases like the present one. For this matter certain extracts from a coordinate Bench order in the case of M/s Graphite India Ltd. (ITA No. 473/Kol/20 18, order dated 13.09.2024) would place the issue in perspective as there also the appellant had claimed a zero liability on account of CG:
“7.3. It is seen that in neither of the years sought to be relied upon, in the appellant’s own case, the Hon’ble Benches of ITAT- Kolkata had the benefit of a subsequent judgement of the Hon’ble Madras High Court in the case of PCIT vs. Redington (India) Ltd. reported in [2021] 430 ITR 298 (Madras), order dated 10.12.2020 in which this issue involving an unambiguously worded statute stating clearly that the amendment to section 92B of the Act was retrospectively effective from 01.04.2002, has been settled conclusively as under:
The argument of the assessee is that prior to the amendment brought about in section 92B by Finance Act, 2012, the Tribunal had decided that furnishing of a guarantee by an assessee was not an ‘international transaction’ as it did not fall within any of the limbs of section 92B. It is submitted that to get over the judicial pronouncement, the explanation was inserted. The argument is that clause (c) of the Explanation supports the case of the assessee inasmuch as the Explanation makes it clear that giving of a Corporate Guarantee is not a service. Without prejudice to the said contention, it is submitted that only Corporate Guarantee is given by the assessee, which are in the nature of lending are covered under clause (c) of Explanation 1 to section 92B. Further, it is submitted that the nature of transactions covered by clause (e) specifically include even those transactions which may not have a ‘bearing on the profit, income, losses or assets of such enterprises at the time of transaction’ are covered if they have such a bearing ‘at any future date’. It is argued that the language used in the Explanation makes it clear that in so far as the transactions that fall within the main part of section 92B are concerned, such transactions must have a bearing on profit, income, losses or assets of an assessee in the year in which the transaction is effected. In the assessee’s case, the Corporate Guarantees represent a contingent liability and lay dormant and have no bearing on the current year’s profits, income or losses of an assessee and Corporate Guarantee are not covered within the definition of international transaction. It is submitted that applying ‘doctrine of fairness’ as explained by the Supreme Court of India in the case CIT v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466 the explanation ought to be read as prospective in its application and retrospective in its effect such that it will also cover within its ambit guarantees issued prior to the introduction of the Explanation by Finance Act, 2012. [Para 70]
■ A new Enactment or an Amendment meant to explain the earlier Act has to be considered retrospective. The Explanation inserted in section 92B by Finance Act, 2012 with retrospective effect from 1-4-2002 commences with the sentence ‘for the removal of doubts, it is hereby clarified that’. [Para 72]
■ An Amendment made with the object of removal of doubts and to clarify, undoubtedly has to be read to be retrospective and Courts are bound to give effect to such retrospective legislation. [Para 73]
■ In Co-operative Co. Ltd. v. CIT 2008 com 1086 (SC), it was held that when an amendment is brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. The Explanation in section 92B specifically has been given retrospective effect and it is clarificatory in nature and for the purpose of removal of doubts. This issue was considered by this Court in the case of Sudexo Food Solutions India (P.) Ltd. v. State of Tamil Nadu [Tax Case (Revision) Nos. 14 & 15 of 2013, dated 30-4- 2019]. [Para 74]
■ The concept of bank Guarantees and Corporate Guarantees was explained in the decision of the Hydrabad Tribunal in the case of Prolifics Corpn. Ltd v. Dy. CIT [2015] 55 com 226/68 SOT 104 (URO). In the said case, the revenue contended that the transaction of providing Corporate Guarantee is covered by the definition of international transaction after retrospective amendment made by Finance Act, 2012. The assessee argued that the Corporate Guarantee is an additional guarantee, provided by the Parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of section 92B does not enlarge the scope of the term ‘international transaction’ to include the Corporate Guarantee in the nature provided by the assessee therein. The Tribunal held that in case of default, Guarantor has to fulfil the liability and therefore, there is always an inherent risk in providing guarantees and that may be a reason that Finance provider insist on non-charging any commission from Associated Enterprise as a commercial principle. Further, it has been observed that his position indicates that provision of guarantee always involves risk and there is a service provided to the Associate enterprise in increasing its creditworthiness in obtaining loans in the market, be from financial institutions or from others. There may not be immediate charge on profit & loss account, but inherent risk cannot be ruled out in providing guarantees. U1 and adjustment are to be made on guarantee commissions on such guarantees provided by the Bank directly and also on the guarantee provided to the erstwhile shareholders for assuring the payment of Associate Enterprise.
The case of Redington (India) Ltd. (supra) leaves no room for doubt that the amendment in question is retrospective, as clearly mentioned in the statute itself, and would thus apply to the present case. Accordingly, it is required to respectfully differ from the findings of the Coordinate Bench orders in the appellant’s own case to hold that CG is an international transaction and would need to be considered for arm’s length pricing.
7.5. The records reveal that the Ld. TPO has adopted an ALP of 3% following some rates quoted by the HSBC Bank and is seen to have made an upward adjustment of Rs. 3,35,13,140. On this issue it is felt that a CG offered by a commercial bank would definitely be on the higher side as compared to a CG offered by a company to its subsidiaries or associated enterprises. The Ld. AR has argued, without prejudice to their claim of CG not being an international transaction for the year under consideration, and has stated that in any case there cannot be any upward adjustment of more than 0.25%. For this proposition reliance has been placed on the case of M/s. Everest Kanto reported in 232 Taxman 307 (Bom), a copy of which was supplied to us during the course of hearing. On a perusal of the Everest Kanto case (supra) it is seen that if one were to read paras 4 and 10 of this order conjointly then it is clear that CG charged by a commercial Bank cannot be equated with CG charged by a corporate entity from its AEs. There can obviously be no argument on this proposition, as has already been mentioned earlier. However, the Hon’ble Bombay High Court has confirmed the 0.5% commission charged by the Appellant and merely disagreed with the upward adjustment @ 3%. Thus, the appellant does not have a sound case for considering 0.25% as commission, as asked for based on the Everest Kanto case (supra). On the other hand, a review of cases on this subject, reveals that a CG commission of 0.5% or even above this has been held to be reasonable in the following cases:
(i) NCC Ltd 157 com 144 (Hyd-Trib)
(ii) Aurobindo Pharma Ltd 152 com 469 (Hyd-Trib)
(iii) Havells India Ltd 140 com 576 (Delhi-Trib)
(iv) Electro Steel Castings Ltd 125 com 308 (Kol-Trib)
(v) Mahindra & Mahindra Ltd 117 com 518 (Mum-Trib)
(vi) Tata Consultancy Services Ltd 121 com 190 (Mum-Trib)
It is understood that TP adjustments are actually estimations arrived at after analysis of relevant data. Accordingly, here also there would need to be an estimation of CG commission. It is in this light that following the decisions in the above mentioned cases, the CG commission is restricted to 0.5% as against 3% worked out by the ld. AO/TPO. The appellant gets consequential relief.”
Considering that the facts are largely similar in the present case, then following the finding given in the Graphite India Ltd. case (supra), it is held that the CG estimated at 1% by the Ld. TPO deserves to be restricted to 0.5%, with consequential relief.
4. the next issue is regarding the disallowance of Rs. 50,51,380/- u/s 14A of the Act r.w. Rule 8D, r.w. section 115JB of the Act. Briefly, it is observed that the appellant had suo-moto disallowed Rs. 10,32,739/- on this account. However, the Ld. AO applied Rule 8D of the I.T. Rules and disallowed the impugned amount. The Ld. AR pointed out that in the appellant’s own case for AY 2013-14 (ITA No. 2225/Kol/2017, para 5.3 of this order) it has been held that the disallowance u/s 1 4A of the Act, r.w. Rule 8D of the I.T. Rules should be restricted to the dividend yielding investments.
4.1 Per contra, the Ld. DR read out portions from the DRP’s order, wherein reliance was placed on CBDT’s Circular No. SO 1949(E) dated 02.06.2016, and averred that it was not necessary to have exempt income as a condition to apply Rule 8D of the I.T. Rules.
4.2 We have carefully considered the rival contentions and perused the orders in appellant’s own case relied upon by the assessee. The judicial pronouncements on this issue are in favour of the appellant in as much as it is fairly well settled as of now that any disallowance u/s 14A of the Act, r.w. Rule 8D will need to be made on investments yielding exempt income. The following cases cover this issue in favour of the appellant:-
(i) Williamson Financial Services Ltd. [166 com 607 (Guwahati)
(ii) Era Infrastructure (India) Ltd. [ 448 ITR 674 (Delhi] (iii) Avantha Realty Ltd. [164 com 376 (Cal)]
In light of these case laws, the Ld. AO is directed to recompute the disallowance u/s 14A of the Act by taking into account only exempt income yielding investments. Needless to say, the disallowance already made by the assessee will need to be given credit for.
4.3 Regarding the issue of considering the disallowance u/s 14A of the Act being considered for computing tax liability u/s 11 5JB of the Act, the issue is covered in favour of the appellant by the following cases:
(i) Appellant’s own case for AY 20 13-14 [ITA No. 2225/Kol/2017]
(ii) Moon Star Securities Trading and Finance Co. (P) Ltd. [161 com 158 (Delhi – 2024)
(iii) J.J. Glastronics (P) Ltd. [139 taxmann.com 375 (Kar) This issue is accordingly decided in favour of the appellant.
4.4 Before parting with this issue it is felt that a brief mention is deserved on the issue of recording of satisfaction before invoking the provisions of section 14A r.w. Rule 8D. Since the appellant has succeeded on the main issue of the quantum of permissible disallowance u/s 14A r.w Rule 8D it is not felt necessary to adjudicate in detail on the issue of
whether “satisfaction” has been recorded as mandated or not. In this regard, the case of FL Smidth (P) Ltd. reported in 118 taxmann.com 272 (Mad) sheds hight on how the recording of “satisfaction” can be inferred from the action of the Ld. AO. Paras 18-23 and para 29 of this case law provide sufficient guidance on this issue. However, as mentioned earlier, this issue is not specifically adjudicated since the assessee has already succeeded on the main ground of challenge.
5. Regarding the issue of disallowance of Rs. 3,38,64,203/- on account of re-payment of lease rental, it has been averred by the Ld. AR that this issue is squarely covered by earlier years orders in assessee’s own case as under:
(ì) AY 2008-09( ITA No. 529/Kol/2013)
(ii) AY 2009-10 (ITA No. 352/Kol/2013)
(iii) AY 2012-13 (ITA No. 1 17/Kol20 16)
(iv) AY 20 13-14 (ITA No. 2225/Kol/2017)
Copies of these orders were placed on record for perusal.
5.1 the Ld. AR pointed out that the DRP had directed the Ld. AO to follow the ITAT’s orders in appellant’s own case if the I.T. Department had not gone in appeal before the Hon’ble Calcutta High Court. The Ld. AO apparently found that indeed the Department had gone in appeal on this issue and accordingly he proceeded to add the impugned amount.
5.2 The Ld. DR relied on the findings of the Ld. AO.
5.3 We have considered this issue at length and gone through the findings of ITAT in appellant’s own case for earlier years (supra). Neither side has informed us of any contrary decision by any High Court. We are, accordingly, inclined to allow this issue in favour of the assessee considering the earlier year orders in appellant’s own case.
6. The last issue in this appeal pertains to the cash deposits made during the demonetization period and Rs. 4,47,59,532/- being added on the alleged ground of inadequate verification regarding the said cash deposits. The Ld. AO invoked the provision of section 69A of the Act and made the impugned addition. At this point, it is necessary to extract certain relevant portions from the DRP’s order, wherein a remand report was called from the Ld. AO:
“7.5 The AO in his Remand Report has stated that he had asked the assessee to produce all documentary evidence of cash deposit between 09/11/2016 to 30/12/2016 and to produce month wise summary along with bank statements for FY 2015-16 & FY 2016-17. The AO has stated that he had examined the same and found the source of cash deposit explained. It has also been stated that summary of cash deposited, unit wise cash books of bankbooks with bank statement during the demonetization period have been examined and found that entries had been made in the cash books and statement of bank accounts. The sample invoices were also found duly accounted for. The AO has also pointed out that generation of huge case from cash sales cannot be verified from a small sample of invoices. It has also been pointed out that perusal of cash books of bank statements shows that there was cash in books on 08/11/2016 but it was not clear whether all cash was in SBN as cash was deposited during demonetization period and reported in 360 profile of system was in SBN. Moreover, the submissions of the assessee could not substantiate whether case received from foreign nationals was all in SBN. Cash received from foreign national exceeding Rs. 5000/- was also not supported by document.
7.6 The DRP notes that the assessee has not given any explanation as to why all cash deposited during the period under consideration was in SBN. Moreover, a small sample was produced by the assessee before the AO during the course of remand proceedings. The assessee has not stated how the sample of invoices produced was a representative sample keeping in view the circumstances faced by the assessee. Moreover, the assessee has not substantiated its contention with proof regarding cash deposits received from foreign nationals was only in SBNs. In view of the same the DRP upholds the findings of the AO. The ground of appeal is rejected.”
6.1 The Ld. AR pointed out that while the amount of cash deposit appeared large, it actually represented deposits in 31 different locations. It was further stated that out of a total turnover of Rs. 1277 Crores this cash represented merely 0.31% of total receipts. He also stated that all manner of evidence in the shape of cash book, bank statement, sample invoices, month wise comparison of cash deposits during FY 20 16-17 with previous year etc. were presented for verification. It was argued that ultimately it was a business requirement to accept payment in whatever form the customer was willing to pay in.
6.2 The Ld. DR relied on the findings given in the Ld. DRP’s order.
6.3 The arguments of the Ld. AR/DR the documents before us and the findings in the impugned order have been carefully considered. In this case what stands out clearly is that the appellant has made all efforts to discharge the onus cast on him to prove that the deposit in cash were justified. As has been mentioned earlier, the appellant had filed a paper book running into around 3000 pages, representing documents in support of his contention that the cash deposits were duly accounted for at the time of receiving them. Even in the abridged paper book filed later it is seen that there is a comparison of cash deposits over a period of time, even prior to the demonetization period. Considering the totality of facts and circumstances it is felt that since the impugned amount represents merely 0.3% of the total turnover of business and the receipt have happened across 31 hotel properties of the appellant, we are persuaded to believe that the appellant has done everything within his powers to maintain meticulous records of such receipts and the same have also been presented before the authorities below. In short, the appellant could have done no better than whatever he has done to establish the genuineness of such receipts. In result, the addition made on this account is directed to be deleted.
7. In result, the appeal (ITA No. 181/Kolo/2022) is partly allowed.
8. In this case, the appellant has challenged the action of Ld. DRP/AO through as many as 13 grounds of appeal which within themselves are divided into several sub-parts. Considering that the grounds of appeal are lengthy and argumentative the issues for adjudication are summarized as under:
(i) Transfer pricing adjustment on account of CG at Rs. 5 1,24,939/-
(ii) Disallowance u/s 14A r.w. Rule 8D, r.w. 115JB at Rs. 35,04,883/-
(iii) Disallowance on account of principal re-payment of lease rental of 3,46,68,173/-.
(iv) Alleged failure to consider revised computation withdrawing the claim of education cess of Rs. 1,74,38,807/- and of short credit of TDS amounting to Rs. 8,73,363/-.
(v) Interest charged u/s 234B/C of the Act.
8.1 Regarding the issue of arm’s length pricing of CG a detailed finding has been given in para 3.2 (supra). Considering the finding given thereon it is directed that CG rate of 0.5% must be adopted in placed of the figure taken by the Ld. AO, with consequential relief to the appellant.
9. Regarding the issue of disallowance u/s 14A r.w. Rule 8D, r.w. section 115JB of the Act the finding given in paras 4.2 and 4.3 (supra) is directed to be used to work out the disallowance for the purposes of section 14A of the Act.
10. Regarding the disallowance on account of repayment of lease rental the findings given in paras 5 and 5.3 will apply for the present year in the appellant’s case, with consequential relief.
11. Regarding the claim of education cess the matter is remanded back to the file of Ld. AO to pass an appropriate order, after giving opportunity of being heard to the appellant.
12. Regarding the remaining two issues of granting credit for TDS and chargeability of interest u/s 234B/C, it is directed that the credit of TDS must be given after verification of the same and interest, if any, may be charged at the time of giving effect to this appellate order.
13. In result, this appeal is partly allowed.
14. In the result, both the appeals of the assessee are partly allowed.
Order pronounced in the court on 18.11.2024.
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