SRF Limited Vs ACIT (ITAT Delhi)

In a detailed ruling concerning Assessment Year 2020-21, the Income Tax Appellate Tribunal (ITAT), Delhi, partly allowed the assessee’s appeal against the assessment order passed under Sections 143(3), 144C(3), and 144B of the Income Tax Act. The dispute involved multiple transfer pricing adjustments, disallowances, and levy of interest.

The assessee had originally filed a return declaring income of Rs. 194.99 crore. The case was selected for complete scrutiny on various issues including transfer pricing, stock valuation, deductions under Section 80-IA, expenditure relating to exempt income, foreign remittances, and other matters. The Assessing Officer ultimately determined the total income at Rs. 1162.74 crore after several additions and transfer pricing adjustments.

One major issue related to the corporate guarantee fee charged to Associated Enterprises (AEs). The Transfer Pricing Officer (TPO) had adopted a guarantee fee rate of 0.50% instead of the 0.25% charged by the assessee, resulting in an adjustment of Rs. 2.74 crore. The assessee argued that the 0.25% rate was supported by quotations obtained from HDFC Bank and Yes Bank and had already been accepted in earlier assessment years by the ITAT. The Tribunal noted that identical issues had been decided in favour of the assessee in earlier years and accepted the 0.25% rate as arm’s length. Accordingly, the adjustment was deleted.

Another dispute involved allocation of software costs to AEs. The TPO treated the reimbursement transaction as an intra-group service and applied a markup of 10.04%, resulting in an adjustment of Rs. 15.04 lakh. The assessee argued that the transaction was merely a cost-to-cost reimbursement with financing charges on deferred payments and relied on earlier ITAT orders in its own case. The Tribunal observed that the TPO had relied on comparables from manufacturing companies for benchmarking a pure reimbursement transaction, which was unjustified. Referring to earlier decisions and the Supreme Court judgment in Engineering Analysis Centre of Excellence Pvt. Ltd., the Tribunal deleted the adjustment.

The appeal also concerned transfer pricing adjustments relating to inter-unit transfer of electricity and power generated by captive power plants and wind power units located in Rajasthan, Madhya Pradesh, and Tamil Nadu. The TPO rejected the assessee’s Comparable Uncontrolled Price (CUP) based on State Electricity Board (SEB) rates and instead relied on Indian Energy Exchange (IEX) data and other external benchmarks. The Tribunal examined recent judgments of the Delhi High Court in DCM Shriram Ltd. and the Supreme Court in Jindal Steel & Power Ltd., which recognized SEB consumer tariff rates as appropriate benchmarks for determining arm’s length price in similar cases. The Tribunal held that IEX rates were not comparable to regular electricity supply transactions due to significant differences in pricing structure and market conditions. The matter was restored to the Assessing Officer for fresh adjudication in accordance with law after verification and granting opportunity of hearing to the assessee.

The Tribunal also considered the disallowance of deduction under Section 80-IA amounting to Rs. 18.69 crore relating to the captive power plant unit at Bhiwadi, Rajasthan. The assessee argued that the same amount had already been subjected to transfer pricing adjustment, resulting in double disallowance. The Tribunal noted that similar issues in earlier years had been rectified and that the Assessing Officer was required to verify the claim with supporting documents. The matter was remanded to the Assessing Officer with directions to verify and delete the double disallowance if found correct.

On the issue of disallowance under Section 14A read with Rule 8D, the Assessing Officer had made a disallowance of Rs. 6.13 lakh despite the assessee not earning any exempt income during the relevant year. The Tribunal observed that this issue had consistently been decided in favour of the assessee in earlier years and noted that the assessee possessed sufficient own funds and reserves. Holding the disallowance unsustainable in absence of exempt income, the Tribunal deleted the addition.

The Tribunal further dealt with addition of education cess amounting to Rs. 2.31 crore while computing book profits under Section 115JB. The assessee contended that no such deduction had been claimed in the MAT computation. The Tribunal observed that the addition appeared to have been made inadvertently and restored the matter to the Assessing Officer for verification and fresh adjudication.

Regarding levy of interest under Section 234A amounting to Rs. 1.61 lakh, the assessee argued that its return had been filed within the extended due date notified by the Ministry of Finance. The Tribunal referred to its earlier order in the assessee’s own case and restored the matter to the Assessing Officer for fresh examination after verification.

The appeal was ultimately partly allowed, with several additions deleted and certain issues remanded to the Assessing Officer for fresh verification and adjudication.

FULL TEXT OF THE ORDER OF ITAT DELHI

The appeal filed by the assessee is against the assessment order dated 29.07.2024 of the Ld. Assessing Officer/ National Faceless Assessment Centre (hereinafter referred to as “Ld. AO”), u/s 143(3) r.w.s 144C(3) r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2020-21.

2. Brief facts of the case are that, the assessee company filed return of income of Rs. 194,99,62,340/- on 15.01.2021. The case of assessee was selected for complete scrutiny assessment on following issues:

1. Claim of Any Other Amount Allowable as Deduction in Schedule BP

2. Stock Valuation

3. Loss from Currency Fluctuations

4. Ind-AS Compliance and Adjustment

5. Refund Claim

6. Deduction Claimed for Industrial Undertaking u/s 801A/801AB/801AC/IB/IC/IBA/80ID/80IE/10A/10AA

7. ICDS Compliance and Adjustment

8. Expenses Incurred for Earning Exempt Income

9. Investment in Intangible Assets

10. Specified Domestic Transactions

11. Foreign Outward Remittance

12. Deduction on Account of Donation for Scientific Research

13. Deduction from Total Income under Chapter VI-A

14. Capital Gains/Income on Sale of Property

15. Expenditure by Way of Penalty or Fine for Violation of any Law

3. The details of opportunities and response is as under:-

4. Despite several opportunities, the assessee had not replied to the show cause notices. On completion of proceedings draft assessment order u/s 144C(1) of the Act dated 26.09.2023 determining the total income of Rs. 1162,74,51,662/-. Subsequently, the assessee filed its objections before the Dispute Resolution Panel (DRP) against draft order dated 26.09.2023. The DRP gave direction u/s 144C(5) on 26.06.2024. Ld. AO vide assessment order dated 29.07.2024 made final computing of income as under:-

5. Being aggrieved, the appellant/assessee preferred present appeal on following grounds:-

“1. General Grounds: That the Learned Assessing Officer (‘Ld. AO’) has erred in law and on the facts & circumstances of the assessee’s case in making transfer pricing adjustments / additions of Rs. 27,31,69,354/- arising out of the order of the Ld. Transfer Pricing Officer (‘TPO’) u/s 92CA(3) of the Act and additions / disallowances of Rs. 18,75,24,315/- on account of various non-transfer pricing issues under normal provisions of the Act and addition of Rs. 2,31,61,053/-on account of education cess while computing the book profits u/s 115JB of the Act in the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act dated 29th July, 2024 pursuant to the directions of the Learned Dispute Resolution Panel (‘Ld. DRP’) dated 26th June, 2024.

2. That the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act dated 29th July, 2024 is bad in law.

3.1 Corporate Guarantee Fee from AE’s Adjustment of Rs. 2,74,15,890/-

That the Ld. DRP and consequently Ld. TPO/Ld. AO have erred in law and on the facts and circumstances of the assessee’s case in making an upward adjustment of Rs. 2,74,15,890/- by imputing the arm’s length corporate guarantee fee rate @ 0.50% instead of @ 0.25% charged by assessee from its AEs [wholly owned subsidiaries] based on the specific quotations obtained from HDFC Bank and Yes Bank, which constituted the valid comparable data under the ‘Other Method’ in assessee’s specific case.

3.2 Without prejudice, the Ld. DRP and consequently Ld. TPO/Ld. ΑΟ have exceeded their jurisdiction in making a transfer pricing adjustment w.r.t. extension of corporate guarantees which do not involve incurring of any cost and therefore, are out of the ambit of international transactions u/s 92B of the Act and therefore, not subject to re­determination under Chapter-X of the Act.

3.3 The Hon’ble ITAT may be pleased to hold that: –

a. the act of giving corporate guarantee by the assessee on behalf of the AE’s is not an international transaction and, therefore, not amenable to any adjustment under Chapter X of the Act;

b. no adjustment is required as AE has provided back-to-back counter guarantees of equal amounts on similar terms and hence no adjustment/addition is required;

c. no adjustment is required as @ 0.25% charged by the assessee as corporate guarantee fee from its AE’s [wholly owned subsidiaries] is at arm’s length and thus upward adjustment of Rs. 2,74,15,890/- be directed to be deleted;

d. no adjustment is required as corporate guarantee fee charged by the assessee @0.25% has also been accepted at arm’s length by Hon’ble Jurisdictional ITAT in assessee’s own case for Α.Υ. 2010-11, A.Y. 2012-13 and A.Y. 2014-15.

4.1 Allocation of Software Cost to AE’s 15,04,002/-Adjustment of Rs. That the Ld. DRP and consequently Ld. TPO/ the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an adjustment of Rs. 15,04,002/- in respect of international transaction of allocation of software cost amounting to Rs. 1,49,80,098/- to AE’s by imputing a mark-up @ 10.04% over and above the pure software cost allocation.

4.2 That the Ld. DRP and consequently the Ld. TPO/Ld. AO have erred in holding that not charging of mark-up is not reflective of arm’s length behavior of the transaction and thus failing to appreciate that the assessee while performing its role of a parent company of the group incurs various costs for and on behalf of its group entities/AE’s at group HO level (which are charged to group entities without any mark-up), as incurring such cost (such as software implementation, license etc.) at individual entity level may not be commercially and economically feasible.

4.3 That the Ld. DRP and consequently Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not appreciating and completely ignoring the fact that assessee has recovered the software allocation cost along with financing charges @10% which should have been accepted as ALP mark-up having regard to the nature of the transaction.

4.4 That the Ld. DRP and consequently Ld. TPO/the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in proposing a mark-up @ 10.04% on software cost based on the average margins of some companies engaged in manufacturing of polyfilms which is highly unjustified & untenable under law while benchmarking the transaction of software cost allocation which is in the nature of pure cost reimbursement.

4.5 The Hon’ble ITAT may be pleased to direct the Ld. TPO/Ld. AO to delete aforesaid adjustment of Rs. 15,04,002/- in respect of allocation of software cost to AE’s.

5.1 Transaction of inter-unit transfer of Power (Electricity and Steam) by Captive Power Plant (CPP) Unit at Bhiwadi, Rajasthan – Adjustment of Rs. 18,69,10,815/-That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 18,69,10,815/- in respect of transaction of transfer of electricity by the CPP unit at Bhiwadi by rejecting the assessee’s comparable uncontrolled price data in forη of actual purchase of electricity from Rajasthan State Electricity Board (‘RSEB’) @ Rs. 7.30 per unit and instead using the average price rate charged by Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (‘RVUNL’) @ Rs. 4.34 per unit obtained u/s 133(6) of the Act for the purpose of benchmarking the transaction.

5.2 That the Ld. DRP and consequently the Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting, without any cogent reason, the assessee’s reliable CUP data in form of actual transactions of purchase of electricity from the State Electricity Board(s) [‘SEB’] and instead applying the external data obtained u/s 133(6) of the Act, being the average price charged by RVUNL from state electricity boards, which is far from being comparable.

5.3 That the Ld. DRP/Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s in acting contrary to the judgments of various courts including the judgment of Hon’ble Supreme Court in case of Jindal Steel & Power Ltd. (CA.13771/2015 & Others) wherein the rate at which SEB transfers the electricity to its consumers was held as an appropriate market rate for benchmarking the similar transaction of transfer of electricity.

5.4 The Hon’ble ITAT may be pleased to delete the transfer pricing adjustment of Rs. 18,69,10,815/- in respect of transaction of transfer of electricity by the CPP unit at Bhiwadi.

6.1 Transaction of inter-unit transfer of Power (Heating and Cooling) by Captive Power Plant (CPP) Unit at Bagdoon, Madhya Pradesh – Adjustment of Rs. 1,57,48,098/-That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 1,57,48,098/- in respect of transaction of transfer of power (heating and cooling) @ Rs. 4.27 per unit by the CPP unit at Bagdoon, Madhya Pradesh by rejecting the assessee’s comparable uncontrolled price data in form of actual purchase of electricity from Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. @ Rs. 5.31 per unit and instead using the external price data being the average of Indian Energy Exchange (IEX) rates [@ Rs. 2.99 per unit] plus mark-up of 30% thereon [effectively @ Rs. 3.89 per unit).

6.2 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on facts and in circumstances of the assessee’s case in arbitrarily rejecting the assessee’s most reliable internal CUP data in form of actual transactions of purchase of electricity from the SEB and instead applying the external average price data from IEX obtained u/s 133(6) of the Act with adhoc mark-up of 30% thereon, which is far from being comparable.

6.3 That the Ld. DRP and consequently the Ld. TPO/Ld. AO have erred in law and on facts and in circumstances of the assessee’s case in treating the average rates of power traded on IEX obtained u/s 133(6) of the Act, as comparable uncontrolled rates / prices. IEX transactions are not at all comparable with the assessee’s transactions of power on account of following factors: –

• • • the modus operandi and business model of IEX which is a spot energy exchange is not comparable to the assessee’s case.
    • the rates obtained from IEX u/s 133(6) of the Act do not qualify as an appropriate comparable data for the application of CUP method.
    • there are material differences between the terms and conditions of transaction entered into by the assessee and those taken from IEX.

6.4 That the Ld. DRP/Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s in acting contrary to the judgments of various courts including the judgment of Hon’ble Supreme Court in case of Jindal Steel & Power Ltd. (CA.13771/2015 & Others) wherein the rate at which SEB transfers the electricity to its consumers was held as an appropriate market rate for benchmarking the similar transaction of transfer of electricity.

6.5 The Hon’ble ITAT may be pleased to delete the transfer pricing adjustment of Rs. 1,57,48,098/- in respect of transaction of transfer of electricity by the CPP unit at Bagdoon, Madhya Pradesh.

7.1 Transaction of inter-unit transfer of Power (Heating and Cooling) by Captive Power Plant (CPP) Unit at Pithampur, Madhya Pradesh – Adjustment-NIL That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s comparable uncontrolled price data in form of actual purchase of electricity from Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. @ Rs. 4.07 per unit and instead using the external price data being the average of Indian Energy Exchange (IEX) rates [@ Rs. 2.99 per unit) plus mark-up of 30% thereon [effectively @ Rs. 3.89 per unit]. [Even though no adjustment has been made as the assessee’s transfer price was Rs. 3.74 per unit. ].

7.2 That the remaining grounds of appeal in respect of rejection of asessee’s comparable in form of actual purchase of electricity from Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. @ Rs. 4.07 per unit and instead applying the external price data being the average of Indian Energy Exchange (IEX) rates [@ Rs. 2.99 per unit] plus mark-up of 30% thereon [effectively @ Rs. 3.89 per unit] are same as raised in ground no. 6 above.

7.3 The Hon’ble ITAT may be pleased to uphold the application of assessee’s CUP in form of actual purchase of electricity from Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. over the Id. TPO/AO’s application of IEX data.

8.1 Transaction of inter-unit transfer of Power (Electricity) by Wind Power Mill (WPP) Unit at Tamil Nadu Adjustment of Rs. 4,15,90,549/-That the Ld. DRP and consequently Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 4,15,90,549/- in respect of specified domestic transaction of transfer of electricity @ Rs. 6.35 per unit by the assessee’s WPP unit at Tamil Nadu on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted.

8.2 That the Ld. DRP and consequently Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s reliable CUP data in form of actual purchase of electricity from Tamil Nadu State Electricity Board (TNSEB’) /Tamil Nadu State Electricity Corporation (TNSEC’) and instead taking the average of power sale price of various power generating companies in the state of Tamil Nadu @ Rs. 4.45 per unit as obtained by the Ld. TPO u/s 133(6) of the Act.

8.3 That the Ld. DRP and consequently the Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the average sale price of various power generating companies in the state of Tamil Nadu does not qualify as an appropriate comparable data under CUP method instead it is the actual price charged by the State Electricity Board (which actually sells electricity to consumers) which can be used as appropriate comparable in the application of CUP method.

8.4 That the Ld. DRP/Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s in acting contrary to the judgments of various courts including the judgment of Hon’ble Supreme Court in case of Jindal Steel & Power Ltd. (CA.13771/2015 & Others) wherein the rate at which SEB transfers the electricity to consumer was held as appropriate market rate for benchmarking the similar transaction of transfer of electricity.

8.5. Without prejudice, the Id. DRP and consequently the Ld. TPO/Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in applying the average price of various power generating companies, without appreciating that assessee’s transfer price falls within the range of such prices [obtained by Id. TPO u/s 133(6) of the Act] and hence no adjustment is warranted.

8.6 The Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. TPO to delete the above adjustment of Rs. 4,15,90,549/- in respect of specified domestic transaction of transfer of electricity by WPP unit of the assessee.

9.1 Disallowance of Deduction u/s 80-IA of the Act amounting to Rs. 18,69,10,815/-That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in disallowing the amount of deduction claimed by the assessee u/s 80-IA of the Act amounting to Rs. 18,69,10,815/- in respect of its CPP Unit at Bhiwadi equal to the amount of TP adjustment made by the Ld. TPO on grounds which are purely based on conjectures, surmises and non-application of mind.

9.2 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the double addition/disallowance of Rs. 18,69,10,815/-, first on account of transfer pricing adjustment and again disallowing the deduction u/s 80-1A of the Act by the same amount in respect of the CPP units of Bhiwadi.

9.3 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the disallowance of deduction u/s 80-IA of the Act amounting to Rs. 18,69,10,815/-.

10.1 Disallowance u/s 14A of the Act amounting to Rs. 6,13,500/-That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of Rs. 6,13,500/- u/s 14A of the Act read with rule (‘r.w.r.’) 8D(2)(iii) of the Income Tax Rules, 1962 (‘the Rules’) inspite of assessee having no exempt income during the year under consideration. The said disallowance is on wholly unjust, illegal, erroneous and untenable grounds on the facts & circumstances of the assessee’s case & based on conjectures and surmises and is prayed to be deleted before your honour.

10.2 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the appellant’s case in computing the disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules:

a) by following the CBDT Circular No. 05/2014 (F. No. 225/182/2013- ITA.II) dated 11.02.2014, which has been overruled by many High Courts including that of Jurisdictional High Court by holding the view that the CBDT Circulars can’t override the express provisions of section 14A of the Act r.w.r. 8D of the Rules:

b) by not following the various judicial precedent which have subsequently rendered on this issue wherein it has been explained that CBDT cannot expand the scope of provisions of Section 14A of the Act by issuing any circular on the provisions of law which expressly do not lay down the provisions as, explained in the circular.

c) by not following the binding judicial precedents including that of jurisdictional High Court of Delhi in case of Holcim India Pvt; Ltd [2015 57 Taxmann, 28 [Detj, Chem Invest Limited vs. CIT (ITA No. 749/2014/Delhi HC)-SLP also dismissed, Joint Investments Pvt. Ltd. (2015) 372 ITR 694 and others, which have held that no disallowance u/s 14A r.w.r. 8D of the Act can be made in absence of any tax-free income or the disallowance under said section can be made to the extent of tax free income actually received.

10.3 The Hon’ble ITAT may be pleased to delete the disallowance u/s 14A of the Act amounting to Rs. 6,13,500/-.

11.1 Disallowance of ‘education cess’ amounting to Rs. 2,31,61,053/-while computing the book profits u/s 115JB of the Act.

That the Ld. AO has erred in law and on the facts & circumstances of the appellant’s case in making inadvertent addition on account of ‘education cess’ amounting to Rs. 2,31,61,053/- while computing the book profits u/s 115JB of the Act without appreciating the fact that assessee had not claimed any deduction of the same in computation of book profits u/s 115JB of the Act.

11.2 The Hon’ble ITAT may be pleased to delete the disallowance u/s 115JB of the Act amounting to Rs. 2,31,61,053/-.

12.1 Charging of alleged Interest u/s 234 of the Act The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in charging the alleged interest of Rs. 1,61,864/- u/s 234 of the Act on wholly unjust, illegal, erroneous and untenable grounds.

13.1 Initiation of penalty u/s 270A of the Act.

The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by initiation of penalty proceedings u/s 270A read with section 274 of the Act for under reporting of income which is in consequence of misreporting thereof since there was no under reporting/misreporting of any income, nor any default according to law by the assessee.

13.2 Without prejudice to the above ground, the Id. AO has erred in initiation of the penalty u/s 270A read with section 274 of the Act in respect of disallowance of education cess amounting to Rs. 2,31,61,053/- notwithstanding the assessee’s withdrawal of the same during the course of the assessment and no appreciating that non-filing of form no. 69 is only a procedure lapse for which the assessee can’t be burdened with penalty.

14.1 Other Grounds of Appeal

That the assessee craves leave to amend, alter, change vary or substitute any of the aforesaid grounds of appeal or add & raise an additional ground of appeal if it becomes necessary to do so in the interest of justice.

14.2 That each ground of appeal is independent of and without prejudice to the other grounds of appeals raised herein.”

6. Ld. Authorized Representative for the appellant/assessee submitted written submissions and synopsis. Ground of appeal Nos. 1 & 2 are general in nature.

7. Ld. Authorized Representative for the appellant/assessee submitted that ground of appeal Nos. 3.1 to 3.2 are regarding corporate guarantee fee from AE-adjustment of Rs. 2,74,15,890/- is covered by order of Hon’ble ITAT in assessee’s own case for Assessment Years 2010-11, 2012-13, 2014­15 and 2016-17 by holding CG rate @ 0.25% at ALP. Corporate guarantees does not involve any cost & therefore are out of the ambit of international transactions u/s 92B of the Act and thus not subject to assessment under Chapter-X. Reliance may be placed on Bharti Airtel Ltd. vs. Addl. CIT [TS-76] ITAT-2014 (Del) (P. no. 483-497 of Case Law Compilation)

8. Ld. Departmental Representative relied on impugned order.

9. From examination of record in light of aforesaid rival contentions, it is crystal clear that the assessee had charged corporate guarantee fee @ 0.25% from its Associated Enterprises (wholly owned subsidiaries) for providing such guarantees, the assessee has obtained the quotation from HDFC Bank and Yes Bank in F.Y 2020-21 [P. no. 126 of Appeal Set] @ 0.25%-P. no. 545-550 of P. B]

9.1. Further, the assessee had selected the other method as most appropriate method (P. no. 248 & 254-256 of PB).

9.2. Pricing policy & party wise details of CG (P. no. 276 of PB) charged from AE’s (P. no. 512-520 of PB) and invoice wise details of transaction with AE’s along with debit notes (P. no. 521-544 of PB). (Submission dated 05.04.2023 at P. no. 322-329 of PB) /(Submission dated 19.07.2023 at P. no. 353-360 of PB)

9.3. Ld. TPO had used other method for benchmarking the transaction. Relying on the directions of the Hon’ble DRP in previous years @ 0.50%. [Р. nо. 130 of Appeal Set/P.no. 7 of TPO order]

9.4 Ld. DRP had upheld the TPO’s action of imputing the corporate guarantee rate @ 0.50% for the year under consideration [P. no. 81 of Appeal Set] [P. no. 6 of DRP’s Order].

9.5. The assessee has submitted that the issue is fully covered by the orders of the Hon’ble Jurisdictional ITAT in the assessee’s own case is different years i.e., A.Y 2010-11 A.Y 2012-13 & A.Y 2014-15, and recently in A.Y 2016-17 wherein the Hon’ble Delhi ITAT upheld the corporate guarantee rate @ 0.25% as Arm’s Length Price.

9.6. In view of above material facts by following above said decisions in assessee’s own case the corporate guarantee rate @ 0.25% as Arm’s Length Price. The adjustment of Rs. 2,74,15,890/- made is deleted. Ground of appeal No. 3.1 to 4.3 are accepted.

10. Regarding ground of appeal Nos. 4.1 to 4.5, are regarding allocation of software cost to AE adjustment of Rs. 15,04,002/-. Ld. Authorized Representative for the appellant/assessee submitted that the allocation of software cost are fully covered by decision of order of ITAT in assessee’s own case for Assessment Year 2014-15, 2016-17, 2017-18, 2018-19 and 2021-22.11.

11. Ld. Departmental Representative submitted that the impugned order is as per order of DRP directions.

12. From perusal of record in light of aforesaid rival submissions, it is
crystal clear that the assessee had applied the other method as most appropriate method to take the Allocation of software cost on cost to cost basis with finance cost charged @ 10% on deferred payments (P. no. 258-259 of PB).

12.1 Pricing policy of the allocation of software cost to AE’s and reimbursement of expenses at P. no. 793-795 of PB & copies of invoice/debit notes at P. no. 796-1002 of PB. (Submission dated 05.04.2023 at P. no. 321­322 of PB) (Submission dated 19.07.2023 at P. no. 360-363 of PB)

12.2 Ld. TPO re-characterised the transaction in the nature of allocation of software cost into intra-group services. The Id. TPO had used TNMM Method for the benchmarking of transaction and fresh search process is carried out by the Id. TPO and proposed a mark-up of @ 10.89% based on fresh search process conducted by selecting the 5 comparable companies and made an adjustment of Rs. 16,31,333/- (P. no. 7-8 of Ld. TPO’s order) / (P. no. 130-131 of Appeal Set)

12.3 The Hon’ble DRP upheld the action of the Ld. TPO. However, Honour that the Hon’ble DRP had directed the Ld. TPO to verify & re-compute the correct margins of the assessee on the basis of respective annual accounts of the comparable and determine the quantum of adjustment accordingly. (P. no. 84 of Appeal Set)! (P.no. 9 of the DRP’s direction)

12.4 TPO’s order giving effect of the DRP’s direction and the same has been taken into the consideration by the Ld. AO. As directed by the Id. DRP, The ld. TPO had recomputed the margins and determines the quantum of adjustment by taking the weighted Average (OP!OC) @ 10.04% of respective annual accounts of the comparable and made an adjustment of Rs. 15,04,002!-(P. no. 59 of Appeal Set). Further, the Ld. AO had considered the same in its final order (P.no. 44 of the Appeal set!P.no. 22 of the AO’s Final order).

12.5. The assessee submitted that in identical issue ITAT has decided in favour of the assessee the Hon’ble ITAT, Delhi for A.Y 2016-17 in which the Hon’ble ITAT referred to the case of Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (Pg No. 516-517 of CLC) and deleted the adjustment. The relevant para no. 6 is reproduced before for your reference: –

“6. Respectfully following the above decisions and further it is noted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (supra) had also upheld the reference to OECD guidelines being persuasive in nature. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO/TPO to delete adjustments of Rs. 16,68,574/- in respect of reimbursement received. Accordingly, Ground Nos.7 to 11 are allowed.”

12.6. Therefore, the Ld. DRP and consequently the Ld. TPO/Ld. AO have erred in applying the search process / comparable and their PLI’s solely based on directions given by the Ld. DRP in the assessee’s case for the A.Y. 2016­17 which in turn are based on the Id. DRP directions of A.Y. 2014-15. The Ld. DRP has without application of mind and completely ignoring that such comparables which are being used are of manufacturing companies and applying their margins for benchmarking the transaction of pure cost allocation is highly unjustified, erroneous and prejudicial to the assessee.

12.7. In view of above material facts and judicial precedent addition of Rs. 15,04,002/- in respect of allocation of software cost being unjust, unfair illegal is deleted. Therefore, ground of appeal No. 4.1 to 4.5 are accepted.

13. Grounds of appeal Nos. 5.1 to 5.4, 6.1 to 6.5, 7.1 to 7.3 and 8.1 to 8.6 are qua additions/disallowance of Rs. 18,69,10,815/- (Transfer of Power (Electricity) by Captive Power Plant (CPP) unit at Bhiwadi, Rajasthan); Rs. 1,57,48,098/- (Transfer of Power by Captive Power Plant (CPP) unit at Bagdoon, Madhya Pradesh); Rs. Nil (Transfer of Power by Captive Power Plant (CPP) unit at Pithampur, Madhya Pradesh) and Rs. 4,15,90,549/- (Sale of Electricity by Wind Power Mill (WPP) unit at Tamilnadu). All the grounds are fully covered by order of ITAT in assessee’s case and Hon’ble High Court of Delhi in case of DCM Shriram Ltd vide order dated 21.01.2025 (ITA No. 566/2023) (Page No. 550-557 of CLC and Hon’ble Supreme Court in case of Jindal Steel & Others [TS-731-SC-2023] (Page No. 565-567 of case law compilation)

14. Ld. Departmental Representative relied on impugned order.

15. From examination of record, it is amply clear that ground of appeal No. 5.1 to 5.4 to 8.1 to 8.6 are regarding additions. For Transfer of Power (Electricity) by Captive Power Plant (CPP) unit at Bhiwadi, Rajasthan, Badoon, Madhya Pradesh and Pittampur Madhya Pradesh as well as sale of electricity by Wind Power Mill Unit at Tamilnadu.

15.1. TPO rejected assessee’s internal CUP & applied an external CUP method i.e average price being taken by exercising power u/s 133(6) of the Act.

15.2 The TPO rejected assessee’s internal CUP & applied an external CUP method i.e. average of price data in form of Indian Energy Exchange (IEX) Rates & assessee’s rate charged to non-eligible units based on SEB rates.

15.3 The TPO rejected assessee’s internal CUP method & applied an external CUP method i.e. price data in form of Indian Energy Exchange (IEX) Rates & assessee’s rate charged to non-eligible units based on SEB rates. Ld. TPO rejected assessee’s internal CUP method & applied an external CUP method.

15.4 The ld. DRP upheld the decision made by the Ld. TPO and it did not consider the ruling made by the Hon’ble SC in case of Jindal Steel by stating that the such ruling does not applicable in this case due to coming of new regime of specified domestic transaction that require determination of ALP.

15.5 The issue under consideration is fully covered by the recent judgment of jurisdictional High Court in case of DCM Shriram Ltd for AY 2014-15 vide order dated 21.01.2025 (ITA No. 566/2023) (Pg. No. 550-557 of CLC) and Hon’ble Supreme Court in case of Jindal Steel & Others [TS-731-SC-2023] (Page No. 565-567 of case law compilation) holding the SEB rates as the appropriate benchmark for determining the ALP of transfer of power. Hon’ble High Court of Delhi in ITA No. 566/2023 titled as Pr. Commissioner of Income Tax-1, New Delhi vs. DCM SHRIRAM LTD. decided on 21.01.2025 in para No. 51 to 61 held as under:

“51. We find considerable merit in the Assessee’s contention that the transactions of sale and purchase of power on the IEX is not comparable to the regular supply of power by the SEB or the power distribution companies. Undisputedly, IEX is not a source for uninterrupted power on the basis of which any power consumer can set up its unit. It is also not disputed that there is a wide fluctuation in the IEX rates. The Revenue has also not controverted the assertion that rates for power quoted on IEX are for power purchased and not for power consumed. Thus, if an entity bids for certain quantity of power on IEX and is successful, it is required to pay for the same. However, the electricity supplied by power distribution companies is charged on the basis of the power consumed, which is recorded in the metering devices.

52. It is also clear that the said material differences between the electricity supplied by SEBs or power distribution companies and those secured by bidding on IEX would have a significant bearing on the price of power.

53. As noted above, the CUP method is an appropriate method only in cases where there is sufficient degree of identity between the tested transactions and comparable uncontrolled transactions. The CUP method cannot be applied where there is significant dissimilarity between the comparable transactions and it is not feasible to determine an adjustment to eliminate the impact of the said differences on the prices of comparable transactions.

54. In the present case, the Assessee had supplied excess power to UPPCL in UP region at the rate of ₹4.39 per kWh. Thus, the said transaction was accepted by the learned DRP as well as the learned ITAT as an internal uncontrolled transaction. The rate at which such electricity was supplied by the Assessee being ₹4.39 per kWh, was rightly accepted as an ALP.

55. As noted above, the learned ITAT also accepted the rates at which electricity was supplied by the SEBs/power distribution companies to the Assessee in Gujarat and Rajasthan regions as the said rates was considered as an external CUP.

56. Undoubtedly, there is a degree of similarity between the transaction of supply of electricity by SEBs to the Assessee and the supply of electricity by the Assessee’s eligible units. However, there is a difference between the transactions being benchmarked, which is supply of electricity by captive units, and the transaction of supply of electricity by distribution companies/corporations. The power distribution companies enjoy a near monopoly status. The tariff charged by such companies are regulated tariffs. However, we accept that there is a sufficient degree of similarity between the said transaction for reasonably determining the ALP by using the CUP method.

57. We also consider it apposite to refer to the recent decision of the Supreme Court in Commissioner of Income Tax v. Jindal Steel and Power Limited’. The principal issue involved in the said decision was the determination of market value of goods and services. In terms of Clause (i) of Explanation to Sub-section (8) of Section 80IA of the Act, the market value in relation to goods and services would mean the price that such goods or services would ordinarily fetch in the open market. In the aforesaid context, the Supreme Court had considered the question of what would constitute an open market in the context of determining the market value of electricity supplied by captive power units of the assessee in that case. In that case, the assessee had entered into an agreement with the SEB of State of Madhya Pradesh to supply surplus electricity at the rate of ₹2.32 per unit. However, the Assessee had computed the revenue from supply of electricity to its own unit at the rate of ₹3.72 per unit. It was the Assessee’s case that the market value of the electricity was ₹3.72 per unit as that was the rate charged by the SEB for supply of electricity to industrial consumers including the Assessee. The learned ITAT had accepted the assessee’s stand and had set aside the order passed by the CIT(A) rejecting the assessee’s appeal in that regard. The High Court had also rejected the Revenue’s appeal by referring to its earlier decision where the question of law had been answered against the Revenue and in favour of the Assessee.

58. The Revenue had approached the Supreme Court assailing the orders passed by the learned ITAT and the High Court. In the aforesaid context, the Supreme Court had held as under:

“23. This brings to the fore as to what do we mean by the expression “open market” which is not a defined expression.

24. Black’s Law Dictionary, 10th Edition, defines the expression “open market” to mean a market in which any buyer or seller may trade and in which prices and product availability are determined by free competition. P. Ramanatha Aiyer’s Advanced Law Lexicon has also defined the expression “open market” to mean a market in which goods are available to be bought and sold by anyone who cares to. Prices in an open market are determined by the laws of supply and demand.

25. Therefore, the expression “market value” in relation to any goods as defined by the Explanation below the proviso to sub-section (8) of section 80 IA would mean the price of such goods determined in an environment of free trade or competition. “Market value” is an expression which denotes the price of a good arrived at between a buyer and a seller in the open market i.e., where the transaction takes place in the normal course of trading. Such pricing is unfettered by any control or regulation; rather, it is determined by the economics of demand and supply.

26. Under the electricity regime in force, an industrial consumer could purchase electricity from the State Electricity Board or avail electricity produced by its own captive power generating unit. No other entity could supply electricity to any consumer. A private person could set up a power generating unit having restrictions on the use of power generated and at the same time, the tariff at which the said power plant could supply surplus power to the State Electricity Board was also liable to be determined in accordance with the statutory requirements. In the present case, as the electricity from the State Electricity Board was inadequate to meet power requirements of the industrial units of the assessee, it set up captive power plants to supply electricity to its industrial units. However, the captive power plants of the assessee could sell or supply the surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State Electricity Board and in terms of Sections 43 and 43A of the 1948 Act, contract was entered into between the assessee and the State Electricity Board for supply of the surplus electricity by the former to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract. This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition.

27. Another way of looking at the issue is, if the industrial units of the assessee did not have the option of obtaining power from the captive power plants of the assessee, then in that case it would have had to purchase electricity from the State Electricity Board. In such a scenario, the industrial units of the assessee would have had to purchase power from the State Electricity Board at the same rate at which the State Electricity Board supplied to the industrial consumers i.e., Rs. 3.72 per unit.

28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under Section 80 IA of the Act.”

[emphasis added]

59. As is apparent from the above, the Supreme Court had accepted the rates at which electricity was supplied by the SEBs to industrial consumers as being the market value of the said supplies for the purposes of Sub-section (8) of Section 80IA of the Act.

60. In view of the above, the questions of law are answered in favour of the Assessee and against the Revenue.

61. The appeal is dismissed in the aforesaid terms.”

15.6 In view of the above material facts and well settled principle of law, the additions/ disallowance made by ld. AO are set aside and the matter is restored to the file of Ld. AO for verification and fresh decision in accordance with law after affording fair opportunity of hearing to the Assessee. Therefore, ground No. 5.1 to 5.4 to 8.1 to 8.6 are allowed in above terms.

16. Grounds of appeal No. 9.1 to 9.3 are regarding addition/disallowance of 18,69,10,815/- u/s 80-IA of the Act with regard to CCP Unit Bhiwadi Rajasthan.

17. Authorized Representative for appellant/assessee submitted that Ld. AO has failed to correctly appreciate the Hon’ble DRP directions for A.Y 2016-17 which have held vide Para no. 13.21 & 19.3 at p. no. 55 & 81 of directions (P. no. 449 & 475 of Case Law Compilation) that transfer pricing adjustment, if any, in respect of eligible unit should be restricted. He further submitted that the A.Y 2017-18, similar double disallowance u/s 80-IA was deleted by the ld. AO on account of Rectification Order dated 16.06.2023 (P. no. 644 of Case Law Compilation) passed u/s 154 of the Act allowing the entire Deduction u/s 80-IA of the Act amounting to Rs. 54,91,48,703/- in respect to CPP units at Bhiwadi & at Dahej after filing the rectification application dated 21.01.2023.

18. Ld. Departmental Representative relied on the impugned order.

19. On consideration of the record, it is clear that the assessee has claimed deduction u/s 80-IA of the Act amounting to Rs. 46,09,62,482/- (P. no. 1012­1016 of PB) w.r.t Captive Power Plant (‘CPP’) unit at Bhiwadi Rajasthan.

19.1 Ld. AO has disallowed deduction on account of observation of ld. TPO that there is no generation of electricity by CPP unit and as production/generation of electricity is a pre-requisite to claim for deduction u/s 80-IA of the Act.

19.2 The DRP upholds the action of the ld. AO by following their directions in the assessee’s own case for the A.Y 2018-19. However, the ld. DRP has allowed the deduction w.r.t transfer of steam and restricted the adjustment w.r.t transfer of power.

19.3 Ld. AO has failed to correctly appreciate the Hon’ble DRP directions for A.Y 2016-17 which have held vide Para no. 13.21 & 19.3 at p. no. 55 & 81 of directions (P. no. 449 & 475 of Case Law Compilation) that transfer pricing adjustment, if any, in respect of eligible unit should be restricted.

19.4 For the A.Y 2017-18, similar double disallowance u/s 80-IA was deleted by the ld. AO on account of Rectification Order dated 16.06.2023 (P. no. 644 of Case Law Compilation) passed u/s 154 of the Act allowing the entire Deduction u/s 80-IA of the Act amounting to Rs. 54,91,48,703/- in respect to CPP units at Bhiwadi & at Dahej after filing the rectification application dated 21.01.2023.

19.5 The assessee has further furnished all justification along with documentary evidences.

19.6 The claim of assessee has duly reported/certified by the tax auditor while issuing the tax audit report.

19.7 The ld. AO is statutory bound under law to verify claim of assessee with documentary evidences and shall compute correct total income-MIT Mohan Singh Kahlon [2013] 39 taxman.com 145 (Chandigarh-Trib).

19.8 Ld. AO is duty bound to grant exemption or deduction even where assessee failed to claim the same. In view of above facts, the double addition/disallowance u/s 80-IA of the Act of Rs. 18,69,10,815/- is unsustainable. The Ld. A.O. is directed to verify and delete double disallowance u/s 80IA of the Act. Therefore, grounds of appeal No. 9.1 to 9.3 are allowed in manner indicated above.

20. Grounds of appeal Nos. 10.1 to 10.2 are regarding addition/disallowance ITA No.4289/Del/2024 SRF Limited (AY 2020-21)

21 Ld. Authorized Representative submitted that the issues is fully covered by the orders of Hon’ble Jurisdictional ITAT, Ld. DRP and Ld. CIT(A) in the assessee’s own case in different years ie., in A.Y. 2006-07, Α.Υ. 2007-08, Α.Υ. 2008-09, Α.Υ. 2009-10, Α.Υ. 2010-11, A.Y. 2012-13 and in the recent judgement held for A.Y. 2016-17 wherein the appellate forum had deleted the additions made u/r 8D2(ii) of the Rules. Also, by the ld. DRP in A.Y 2014-15 and Ld. CIT(A) in A.Y 2015-16.

22. From perusal of record, it is apparent on record that assessee has not received /earned any exempt / tax-free income on investments made by assessee (Submission dated 10.08.2023 P. no. 455-457of PB) & (Submission dated 22.09.2023 Р. nо. 506-408 of PB). Although, the Ld. AO had also correctly recorded this fact in his draft order P. no. 11 of Ld. AO’s draft order)/ (P. no. 114 of Appeal Set). The assessee have made investments out of own surplus fund & amount of average investment related to tax free income is Rs. 8.16 Crores (P. no. 36-37 of PB) and total amount of reserves & surplus as on 31.3.2020 is Rs. 4,625.75 Crores (P. no. 14 of PB). Therefore, assessee’s reserves & surplus are 566.89 times of investments. Even during the year consideration, the assessee has earned cash profit of Rs. 1,315.80 Crores [calculated as (PBT + Depreciation+ Finance cost)] as is evident from the assessee’s audited financial statements (P. no. 15 of PB). (Submission dated 10.08.2023 P. no. 455-457of PB) & (Submission dated 22.09.2023 P. no. 506-508 of PB).

23.1 Ld. AO has imputed a disallowance of Rs. 6,13,500/- being 1% of average value of investments of Rs. 6,13,50,000/- u/r 8D(2)(iii) of the Rules. (P. nо. 18-19 of Ld. AO’s draft order) / (P. no. 121-122 of Appeal Set).

23.2 The Ld. DRP upheld the Ld. AO’s order & held that the Ld. AO has made computation as per method prescribed u/r 8D. Accordingly, DRP is not inclined to interfere and objection is dismissed (P. no. 25 of Ld. DRP’s directions) (P.no. 100 of appeal Set).

23.3 From examination of record, it is evident that the issues is fully covered by the orders of Hon’ble Jurisdictional ITAT, Ld. DRP and Ld. CIT(A) in the assessee’s own case in different years ie., in A.Y. 2006-07, Α.Υ. 2007-08, Α.Υ. 2008-09, Α.Υ. 2009-10, Α.Υ. 2010-11, A.Y. 2012-13 and in the recent judgement held for A.Y. 2016-17 wherein the appellate forum had deleted the additions made u/r 8D2(ii) of the Rules. Also, by the ld. DRP in A.Y 2014-15 and Ld. CIT(A) in A.Y 2015-16. As such addition/disallowance of Rs. 6,13,500/-being unsustainable is deleted. Therefore, ground of appeal No. 10.1 to 10.2 are accepted.

24. Grounds of appeal No. 11.1 to 11.2 are regarding disallowance of Rs. 2,31,61,053/-.

25. Ld. AR for appellant/assessee submitted that the assessee has claimed the education cess of Rs. 2,31,61,053/- as an expenditure u/s 37 of the Act in its computation of income prepared on the basis of normal provision of the Act for the AY 2020-21 viz. but not in the MAT computation prepared u/s 115JB of the Act.

26. Ld. DR submitted that matter may be got verified.

27. From perusal of record, it is evident that ld. AO has perhaps inadvertently made an addition on account of ‘education cess’ amounting to Rs. 2,31,61,053/- while computing the book profits u/s 115JB of the Act without appreciating the fact that assessee had not claimed any deduction of the same in computation of book profits u/s 115JB of the Act. (P.no. 45 of the Appeal set). So, the disallowance of Rs. 2,31,61,053/- is deleted and the matter is restored to the file of Ld. AO for verification and adjudication afresh in accordance with law after affording fair opportunity of hearing to the Assessee. Therefore, ground of appeal Nos. 11.1 to 11.2 are allowed in above terms.

28. Regarding ground of appeal No. 12.1 of disallowance of Rs. 1,61,864/­. Ld. AR for appellant/assessee submitted that the assessee has furnished its original income tax return u/s 139(1) of the Act, on 15th Jan, 2021 (Page no. 92 of P.B), that is well within the due date extended, by the Ministry of Finance by issuing the press release on 30th Dec, 2020 (Page no. 73-74 of WS), to 15 Feb, 2021 for the taxpayer, who are required to furnish the report with respect to the international/specified transaction [for whom the original due date u/s 139(1) of the Act, was 30th Nov, 2020]. Ld. AO has inadvertently charged the interest of Rs. 1,61,864/- u/s 234A of the Act. (Page no. 48-49 of AS).

29. Ld. DR relied on impugned order.

30. From examination of record, it is evident that charging of interest of Rs. 1,61,864/- u/s 234A while computing the tax payable vide order passed u/s 143(3) r.w.s. 144C(3) of the Act (Page no. 48-49 of AS). The said levy is untenable, as the assessee had duly complied with and furnished its return of income u/s 139(1) of the Act well within the due date as extended by the Ministry of Finance vide press release issued on 30th Dec, 2020.

30.1 The issue is fully covered by the orders of Hon’ble Jurisdictional ITAT in the assessee’s own case for the A.Y. 2021-22 (ITA no. 5618/Del/2024) [Page no. 909 of CLC), the relevant extract of the order has been reproduced below:

“207. Considered the rival submissions and the material available on record, and the applicable legal principles. The DR itself accepted if the return has been filed within the extended timeline, there should not be any levy the interest ws 234A of the Act for the year under consideration. Therefore deem it appropriate to restore the matter to the file of the AO for a fresh examination. The AO shall verify the assessee’s claim in line with the circular issued by the CBDT and in accordance with law, after granting due opportunity of being heard.

208. Accordingly, the issue relating to the Interest Charged u/s 234A of the Act of Rs. 1,31,40,992/- is remitted back to the AO for necessary adjudication. 209. The ground of appeal no.14.1 is allowed for statistical purposes”.

In view of above facts by following judicial precedent the issue of interest charged u/s 234A of Rs. 1,61,864/- is remitted to the AO for adjudication after affording fair opportunity of hearing to the assessee. Therefore, ground of appeal No. 12.1 is partly allowed for statistical purposes.

31. In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 08.05.2026