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31-10-2019, Tega Industries, Section 92CA(3), 14A, 8D, Tribunal Kolkata

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1 week 3 days ago #11304 by amit
Section - 92CA(3), 14A, 8D, 92B, 147, 152, 153
Order Date - 31-10.2019
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - DCIT
Respondent - Tega Industries Ltd.
Justice - A.T. VARKEY, JM & DR. A. L.SAINI, AM
Citation - 1119Taxpundit47
Appeal No. - IT A Nos. 1047,1048 & 1049/Kol/2017
Asstt. Year - 2009-10, 2010-11 & 2011-12

Order

PER : Dr. Arjun Lal Saini, AM:

The captioned three appeals filed by the Revenue and three Cross Objections filed by the assessee pertaining to Assessment Years 2009-10, 2010-11 & 2011-12, are directed against separate orders passed by ld. Commissioner of Income Tax (Appeals)- 22, Kolkata in Appeal No.212/CIT(A)-22/09-10/14-15/Kol, 52/CIT(A)-22/10-11/14- 15/Kol & 55/CIT(A)-22/11-12/15-16/Kol; respectively, which in turn arise out of separate fair assessment orders passed by the Assessing Officer, which incorporate the findings of the Transfer Pricing Officer under section 92CA(3) of the Income Tax Act 1961 (hereinafter referred to as the ‘Act’).

2. Although, these appeals filed by the Revenue for Assessment Year 2009-10 (in ITA No.1047/Kol/2017), for Assessment Year 2010-11 (in ITA No.1048/Kol/2017), for Assessment Year 2011-12 (in ITA No.1049/Kol/2017) and Cross Objections filed by the assessee in C.O No.31/Kol/2019, C.O.No.32/Kol/2019 and C.O. No.33/Kol/2019; respectively, contain multiple grounds of appeal. However, at the time of hearing, we have carefully perused all the grounds raised by the Revenue as well as cross-objections raised by the assessee in respective years. We find that most of the grounds raised by the Revenue, as well as assessee are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and impugned grievance of the Revenue and the assessee as well. With this background, we summarize and concise the grounds raised by the Revenue as well assessee as follows: Transfer Pricing Grounds

(i). Disallowance/addition on account of Corporate Guarantee fee (vide Ground No.3 to 5 raised by the Revenue in Assessment Year 2009-10 and Ground No.2 to 4 raised by the Revenue in Assessment Year 2010-11 and Ground Nos.2 to 4 raised by the Revenue in Assessment Year 2011-12.

(ii).Transfer Pricing Adjustment on account of interest on loan given to subsidiary company. This covers Ground No.6 and 7 raised by the Revenue in Assessment Year 2009-10 and Ground No.5 and 6 raised by the Revenue for Assessment Year 2010-11, and Ground No.5 raised by the Revenue in Assessment Year 2011-12. Other grounds

(i). Disallowance under section 14A r.w.r. 8D of Rs.4,51,190/-. This ground is raised by the Revenue in Assessment Year 2009-10 only.

(ii).Addition made by AO regarding loss from option contracts in foreign currency with banks held as “Speculative loss”. This covers Ground No.2 raised by the Revenue for Assessment Year 2009-10, Ground No.1 raised by the Revenue in Assessment Year 2010-11 and Ground No.1 raised by the Revenue in Assessment Year 2011-12.

3. First we shall take grounds relating to transfer pricing. Common and concise Ground No.1 raised by the Revenue is reproduced below for ready reference:

“(i). Disallowance/addition on account of Corporate Guarantee fee (vide Ground No.3 to 5 raised by the Revenue in Assessment Year 2009-10 and Ground No.2 to 4 raised by the Revenue in Assessment Year 2010-11 and Ground Nos.2 to 4 raised by the Revenue in Assessment Year 2011-12.”

4. When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the order dated 21.09.2016, passed by the Division Bench of thisTribunal in assessee’s own case in ITA No 1912/Kol/2012, for the Assessment Year 2008-09 whereby the issue relating to “Corporate Guarantee Fee” has been discussed and adjudicated in favour of assessee. Learn d Counsel for the assessee submitted before the Bench that the present issue, relating to ‘corporate guarantee fee’ is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench.

5. Learned Departmental Representative relied upon the orders of the TPO/AO.

6. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of this Tribunal in assessee’s own case vide order dated 21.09.2016. In this order, the Tribunal has inter alia observed as follows:

“5.Issue No.2:Corporate Guarantee (Grounds of appeal Nos. 1 to 5 relate to corporate guarantee provided by the assessee for loans taken from ICICI bank, U.K.). The facts of this issue are stated in brief. During the financial year 2006-07, the Tega Industries Ltd.( Assessee), set up Tega Investment Ltd-Bahamas, an associate enterprise (AE), as a special purpose vehicle in the Bahamas for undertaking an acquisition of companies based in South Africa i.e. 1) Beruc Equipment Pty Limited and 2) Bentod Manufacturing Limited. These two companies were merged to form Tega Beruc South Africa Pty Ltd. The assessee provided a shareholder loan to Tega Bahamas and a corporate guarantee to ICICI bank UK, to fund Tega Bahamas for acquiring the two south African entities. The TPO made transfer pricing adjustment in respect corporate guarantee @ 2.5% and created additional charge in connection with the corporate guarantee at Rs.9,00,979/-, observing the following:

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