ACME Cleantech Solutions Private Limoted Vs JCIT (ITAT Delhi)
LIBOR Rate Applicable to Foreign Currency Loans Because Repayment Was in US Dollars; Section 14A Disallowance To Be Recomputed Based Only on Investments Yielding Exempt Income; ITAT Upholds TNMM Because AE and Non-AE Segments Were Not Properly Comparable; Transfer Pricing Adjustment on Receivables Deleted Because Working Capital Impact Was Already Factored.
The ITAT Delhi decided cross appeals filed by the assessee and the Revenue for AY 2012-13 arising from assessment proceedings under Section 143(3) of the Income Tax Act. The assessee company had declared income of Rs.1.95 crore. During scrutiny, the Assessing Officer made additions relating to disallowance under Section 14A read with Rule 8D, notional interest on advances, and transfer pricing adjustments concerning loans to associated enterprises (AEs), sales to AEs, and interest on receivables.
The AO disallowed Rs.53.33 lakh under Section 14A after observing that the assessee had substantial investments generating exempt income. The assessee contended that no expenditure had been incurred for earning dividend income and that the AO had not recorded satisfaction under Section 14A(2) before invoking Rule 8D. Referring to earlier decisions in the assessee’s own case and judicial precedents including ACB India Ltd. and Vireet Investment Pvt. Ltd., the Tribunal directed the AO to recompute the disallowance by considering only investments that yielded exempt income. The grounds raised by both the assessee and Revenue on this issue were partly allowed for statistical purposes.
