ACIT Vs Acme Cleantech Solutions Pvt. Ltd. (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal dismissed both the assessee’s and Revenue’s cross appeals for Assessment Year 2013-14 in a common order concerning transfer-pricing adjustments and disallowance under section 14A of the Income-tax Act, 1961. The Tribunal noted that the facts in both appeals were common and therefore disposed of them together.
The assessee had filed its return on 30.11.2013 declaring total income of INR 23,85,28,970/-. Since it had international transactions with Associated Enterprises (AEs), the matter was referred to the Transfer Pricing Officer (TPO). The TPO determined adjustments aggregating to INR 60,57,12,301/- comprising INR 47,52,09,333/- for loan, INR 11,02,91,500/- for the manufacturing segment and INR 2,02,11,468/- for receivables. The Assessing Officer subsequently made the entire transfer-pricing adjustment and a further addition of INR 3,14,18,961/- under section 14A, assessing total income at INR 87,56,60,232/-. The CIT(A) partly allowed the assessee’s appeal.
On the assessee’s appeal concerning interest on foreign-currency loans, the TPO had benchmarked interest at SBI PLR of 12.6%, against interest actually charged at 6.5% to 9.5%. The CIT(A) directed benchmarking at LIBOR plus 300 basis points. The assessee relied upon CIT Vs M/s Cotton Naturals (I) Pvt. Ltd.. The Tribunal followed its own decisions for AYs 2011-12 and 2012-13, where the loans were found repayable in US dollars and the appropriate benchmark was held to be LIBOR with the applicable markup. Since both parties accepted that the facts were identical, the Tribunal upheld the CIT(A)’s direction to use LIBOR + 300 basis points and dismissed the assessee’s appeal.
