TECHNIMONT P.LTD, MUMBAI V. ASST CIT 13(3)(2), MUMBAI

ITA 1238/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9260 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAL RAJ SINGH
• Keywords: Depreciation; Transfer pricing; International transaction; Notional interest; TDS
• Section: 244A; 234B; 115JB; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH, JM ITA NO. 1238 & 5427/MUM/2017 ( ASSESSMENT YEAR: 2012-13 & 2013-14) TECNIMONT PRIVATE LIMITED, TECNIMONT HOUSE, CHINCHOLI BUN DER, 504, LINK ROAD, MALAD WEST, MUMBAI-400064. VS. A.C.I.T.-13(3)(2), ROOM NO. 229, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI- 400020. PAN/GIR NO. AAACI 2628 B (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI M.P. LOHIA (AR) REVENUE BY SHRI UDAL RAJ SINGH (DR) DATE OF HEARING 06/01/2020 DATE OF PRONOUNCEMENT 08/ 01/2020 / O R D E R PER: R.C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL-2, MUMBA I (IN SHORT, THE DRP) DATED 18/11/2016 AND 20/03/2017 FOR THE A.Y. 2 012-13 AND 2013-14 RESPECTIVELY WHICH WERE GIVEN EFFECT BY THE ORDER PASSED U/S 143(3)/144C(5) OF THE INCOME TAX ACT, 1961 (IN SHOR T, THE ACT). 2. AT THE OUTSET, THE LD AR OF THE ASSESSEE PLACED ON RECORD ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 20 09-10 IN ITA NO. 487/MUM/2014 WHEREIN MAIN ISSUE WITH REGARD TO CHAR GING OF NOTIONAL INTEREST PERTAINING TO OUTSTANDING BALANCE OF RECEI VABLES FROM AES OF ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 2 THE ASSESSEE WAS DECIDED IN FAVOUR OF ASSESSEE VIDE ORDER DATED 08/07/2015. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT ONE OF THE COMMON ISSUE IN BOTH THE YEARS PERTAIN TO CHARG ING OF NOTIONAL INTEREST ON THE OUTSTANDING BALANCE OF RECEIVABLES OF THE ASSESSEE FROM ITS AES. FROM THE RECORD WE FOUND THAT THE TPO HAS COMPUTED ADJUSTMENT ON THE INTEREST THAT SHOULD HAVE BEEN CH ARGED TO THE AE ON RECEIVABLES THAT REMAINED UNPAID EVEN THE PERIOD OF 90 DAYS. THE TPO HAS APPLIED LIBOR OF 4.8% IN MAKING THE ADJUSTMENT WHICH WAS CONFIRMED BY THE DRP. GROUNDS NO. 1 TO 10 IN THE A. Y. 2012-13 PERTAINS TO THE SAID ADDITION. 4. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE ISSUE UNDER CONSIDERATION IS COVERED BY THE ORDER OF THE TRIBUN AL IN ASSESSEES OWN CASE FOR THE A.Y. 2009-10. HE HAS FURTHER CONTENDED THAT NO ADJUSTMENT WAS MADE ON ACCOUNT OF NOTIONAL INTEREST ON AE RECEIVABLE FOR AY 2010-11 AND AY 2011-12. COPY OF THE TPO ORDE R ARE ENCLOSED AT PAGES 237 TO 244 AND PAGE 245 OF THE PAPER BOOK RES PECTIVELY. AS PER THE LD AR, THE INTEREST IS ALREADY FACTORED IN WHIL E PRICING THE CONTRACTS UNDERTAKEN WITH AES. FURTHER, SINCE THE ASSESSEES MARGIN FROM ITS AE TRANSACTIONS IS HIGHER VIS A VIS NON-AES AS WELL AS SINGLE YEAR WORKING ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 3 CAPITAL ADJUSTMENT MARGIN OF INDEPENDENT COMPARABLE S, INTEREST ELEMENT FOR DELAYED PAYMENT IS SUBSUMED IN HIGHER M ARK UP CHARGED. 5. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDERS OF THE LOWR AUTHORITIES. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE DATED 08/07/2015 FOR THE A.Y. 2009-10 WHEREIN THE TRIBUNAL HAVE GIVE N CERTAIN DIRECTIONS TO THE TPO WITH REGARD TO INTEREST TO BE CHARGED ON OUTSTANDING RECEIVABLES. THE PRECISE OBSERVATION OF THE TRIBUNA L WAS AS UNDER: 7. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DELIB ERATED ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR BY LD. AR AND LD. DR IN THE FACTUAL MATRIX OF INSTANT CASE. FROM THE RECORD WE FOUND TH AT THE ASSESSEE COMPANY HAD PROVIDED EPC SERVICES TO ITS AES, AND A S THE CONCERNED AES WERE GOING THROUGH FINANCIAL DIFFICULTIES CERTA IN PAYMENTS BY THE AES TO THE ASSESSEE COMPANY WERE DELAYED BEYOND THE NORMAL CREDIT PERIOD. SIMILARLY, THE ASSESSEE COMPANY HAD INCURRE D CERTAIN EXPENSES ON BEHALF OF ITS AES. THESE WERE RECOVERED FROM THE AES. SOME SUCH EXPENSES WERE RECOVERED BEYOND THE NORMAL CREDIT PE RIOD. THE TPO, ON THESE FACTS, COMPUTED THE INTEREST CHARGEABLE BY ADOPTING THE SBI PLR RATE OF 12.25% AS THE BENCH MARK RATE FOR DELAY IN RECEIPT OF EXPORT RECEIVABLES BEYOND THE NORMAL CREDIT PERIOD OF 60 DAYS AND THE SIMILAR INTEREST WAS CHARGED ON DELAYED RECOVERY OF EXPENSES. THUS, A TOTAL ADJUSTMENT OF RS.10,36,49,646/- WAS PROPOSED BY THE TPO AND INCORPORATED IN THE ASSESSMENT ORDER. ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 4 8. FROM THE RECORD WE FOUND THAT ASSESSEE HAS NOT CHARGED INTEREST IN RESPECT OF SERVICES RENDERED TO NON-AES, PAYMENT OF WHICH WAS RECEIVED BEYOND NORMAL CREDIT PERIOD OF 60DAYS. WE ALSO FOUND THAT ASSESSEE WAS HAVING ADVANCES FROM AE. CHARGING OF I NTEREST BY TPO IN RESPECT OF AMOUNT RECEIVED BEYOND 60 DAYS IS CORREC T AS PER THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2012 IN SE CTION 92B(2) RETROSPECTIVELY. HOWEVER, WE FOUND THAT THE AE WAS HAVING ADVANCES WITH THE ASSESSEE, THEREFORE, WHILE COMPUTING INTER EST ON REALIZED AMOUNT BEYOND 60 DAYS, THE AO SHOULD REDUCE THE PRO PORTIONATE ADVANCE RELATING TO THE TRANSACTION UNDER CONSIDERA TION. WE ALSO FOUND THAT THE TPO HAS DIRECTED FOR CHARGING OF INT EREST EVEN BEYOND THE END OF THE FINANCIAL YEAR I.E. 31.3.2009. ACCOR DINGLY, WE DIRECT THE AO TO CHARGE INTEREST ONLY UPTIL THE END OF THE FIN ANCIAL YEAR INSOFAR AS SECTION 92(1) OF THE ACT SPECIFICALLY PROVIDES TO T AX NOT INCOME ARISING FROM ANY INTERNATIONAL TRANSACTION WHICH IS TO BE C OMPUTED WITH REGARD TO THE ARMS LENGTH PRICE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF AO TO RECOMPUTE THE INTEREST IN TERMS OF THE ABOVE DIRECTION. 9. IT WAS ALSO BROUGHT TO OUR NOTICE THAT WHILE FI XING THE SALE PRICE THE ASSESSEE HAS ALREADY CONSIDERED THE DELAY, IF ANY, IN RECOVERY OF THE PRICE. ACCORDINGLY, WHILE RECOMPUTING THE INTEREST, THE AO SHOULD ALSO TAKE INTO ACCOUNT THE PRICE FIXED BY THE ASSESSEE W ITH RESPECT TO THE TRANSACTION ENTERED WITH NON-AE VIS--VIS AE AND IF HE FINDS THAT PRICE SO CHARGED HAS ALREADY TAKEN CARE OF THE DELAYED PE RIOD OF PAYMENT, THE SAME SHOULD BE TAKEN INTO ACCOUNT WHILE COMPUTI NG THE INTEREST CHARGEABLE. 10. WE ALSO FOUND THAT OPERATING MARGIN EARNED BY THE ASSESSEE ON PROVISION OF EPC SERVICES (17.03% OP/ OC) FROM ITS AES TRANSACTIONS IS HIGHER THAN THE MARGIN EARNED ON ITS NON-AE TRANSAC TIONS. SINCE THE TRANSACTIONS ARE INTRINSICALLY LINKED AND THE ASSES SEE UNDER THE TNMM ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 5 FITS WITHIN THE ARM'S LENGTH, THE ASSESSEE SHOULD B E GIVEN DUE CREDIT FOR THE SAME WHILE COMPUTING CHARGEABLE INTEREST FO R DELAYED PAYMENT. 11. THE MUMBAI TRIBUNAL IN THE CASE OF GOLDSTAR JE WELLERY LIMITED VS JCIT (ITA NO 6570/MUM/2012) HELD THAT SINCE SALE PRICE O F THE PRODUCT OR SERVICE WAS ALWAYS INFLUENCED BY THE CREDIT PERIOD ALLOWED BY THE SELLER, THE TRANSACTION OF SALE TO THE AE AND CREDI T PERIOD ALLOWED IN REALIZATION OF SALE PROCEEDS ARE CLOSELY LINKED AND THE PRICE DETERMINED FOR SUCH SALE IS AFTER CONSIDERATION OF THE CREDIT PERIOD PROVIDED BY THE SELLER. FURTHER, IT WAS ALSO HELD T HAT FOR THE PURPOSE OF DETERMINING THE ALP OF SALE TRANSACTION, THE TRANSA CTION OF EXCESS CREDIT PERIOD PROVIDED BY THE SELLER TO THE AE IS R EQUIRED TO BE AGGREGATED WITH THE SALE TRANSACTION BY THE SELLER TO THE AE AND CANNOT BE BENCHMARKED SEPARATELY. THE DELHI TRIBUNA L HAS PRONOUNCED A RULING DATED 31 MARCH 2015, IN THE CAS E OF KUSUM HEA CARE PVT LTD (ITA NO 6814/DEI/2014) (DELHI TRIBUNAL ), ON SIMILAR FACTS. THE TRIBUNAL THEREIN FOLLOWED THE RATIO LAID DOWN B Y SONY ERICSSON (SUPRA) AND HELD AS UNDER: '(14) .... THE DIFFERENTIAL IMPACT OF THE WORKING C APITAL OF THE ASSESSEE VIS-A-VIS ITS COMPARABLES HAS ALREADY BEEN FACTORED IN THE PRICING! PROFITABILITY OF THE ASSESSEE AND THER EFORE, ANY FURTHER ADJUSTMENT TO THE MARGINS OF THE ASSESSEE O N THE PRETEXT OF OUTSTANDING RECEIVABLES IS UNWARRANTED AND WHOLL Y UNJUSTIFIED. (17) ... IT IS CLEAR THAT ASSESSEE HAD EARNED SIGNI FICANTLY HIGHER MARGIN THAN THE COMPARABLE COMPANIES (WHICH HAVE BE EN ACCEPTED BY THE TPO) WHICH MORE THAN COMPENSATES FO R THE CREDIT PERIOD EXTENDED TO THE AES. THUS, THE APPROA CH BY THE ASSESSEE OF AGGREGATING THE INTERNATIONAL TRANSACTI ONS PERTAINING TO SALE OF GOODS TO AE AND RECEIVABLES A RISING FROM SUCH TRANSACTIONS WHICH IS UNDOUBTEDLY INEXTRICABLE CONNECTED IS IN ACCORDANCE WITH ESTABLISHED TRANSFER PRICING PRI NCIPLES ... ' ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 6 12. THE ADDITION ON ACCOUNT OF INTEREST SHOULD BE COMPUTED ONLY TILL THE END OF FINANCIAL YEAR (I.E. TILL 31 MARCH 2009 AND NOT TILL THE DATE OF PASSING OF TRANSFER PRICING ORDER (I.E. 28 JANUARY 2013). IT IS TRITE LAW THAT INCOME TAX HAS TO BE COMPUTED WITH REFERENCE T O PREVIOUS YEAR AND AS PER SECTION 5 OF THE ACT EXPLAINS THE SCOPE OF TOTAL INCOME TO BE CONSIDERED EARNED BY ANY PERSON DURING THE PREVIOUS YEAR. IN THE PRESENT CASE, THE TPO HAS MADE ADDITION OF NOTIONAL INTEREST TILL THE DATE OF PASSING OF ORDER (I.E. 28 JANUARY 2013) WHI CH IS INCORRECT AND AGAINST THE BASIC PRINCIPLE OF TAXATION AS LAID DOW N BY INCOME TAX ACT. HENCE, INTEREST ADJUSTMENT ON DELAYED ACCOUNTS RECE IVABLES, IF ANY, SHOULD BE COMPUTED ONLY UPTO 31 MARCH 2009. 13. WE ALSO FOUND THAT DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAS RECEIVED ADVANCES FROM AE'S FOR THE PURPOSE OF EXPORT, THEREFORE COMPUTATION OF INTEREST, IF ANY, ON DELAYED RECOVER Y OF EXPORT RECEIVABLES SHOULD BE AFTER REDUCING THE ADVANCES R ECEIVED FROM AE'S FOR THE PURPOSE OF EXPORT. RELIANCE IS PLACED ON TH E MUMBAI TRIBUNAL RULING IN THE CASE OF BOSTON SCIENTIFIC INTERNATION AL BV INDIA (40 SOT 11) (2010) WHEREIN IT HAS BEEN HELD THAT INTEREST I NCOME ON ACCOUNTS RECEIVABLES OF AN ASSESSEE FROM ITS AE SHOULD BE EX AMINED AFTER CONSIDERING THE OUTSTANDING PAYABLES FROM THAT AE. 14. FROM THE RECORD, WE FOUND THAT SO CALLED DELAY REPATRIATION FROM FOREIGN AE'S, TPO/ AO, WHILE WORKING OUT DEEMED NOT IONAL INTEREST HAS CONSIDERED INTEREST RATE OF 12.25% P.A. (SBI PLR). AS PER OUR CONSIDERED VIEW THE NOTIONAL INTEREST HAS TO BE WOR KED OUT FOR SO CALLED AMOUNT RECEIVABLE FROM AE, BY APPLYING LIBOR INTEREST RATE FOR THE PURPOSE OF COMPUTATION OF TRANSFER PRICING ADJU STMENT, IF ANY. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING DE CISIONS, WHEREIN THE HON'BLE TRIBUNALS HAS UPHELD USE OF LIBOR FOR THE P URPOSE OF BENCHMARKING LOAN/ADVANCE GIVEN TO FOREIGN AE'S: ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 7 I. EVEREST KANTO CYLINDER LTD VS ACIT (L TU) (ITA NO 7073/MUM/2012) (MUMBAI TRIBUNAL) II. M/S PMP AUTO COMPONENTS P. LTD, (ITA NO.1484/M UM/2014) DATED 22 AUGUST 2014 III. HINDUJA GLOBAL SOLUTIONS LTD VS ACIT (145 ITD 361) (2013) (MUMBAI TRIBUNAL) IV. TATA AUTOCOMP SYSTEMS LTD VS ACIT (52 SOT 48) (2012) (MUMBAI TRIBUNAL) V. TATA AUTOCOMP SYSTEMS LTD VS ACIT (ITA NO 1320 OF 2012) (APPROVED BY BOMBAY HIGH COURT) VI. FOUR SOFT LTD VS DCIT (142 TT J 358) (2011) ( HYDERABAD TRIBUNAL) VII. EVEREST KANTO CYLINDER LTD VS ACIT (L TU) (I TA NO 550/MUM/2014) (MUMBAI TRIBUNAL) 15. IN VIEW OF ABOVE DISCUSSION, COMPUTATION OF IN TEREST IS RESTORED BACK TO THE FILE OF AO FOR RECOMPUTING THE INTEREST ON D ELAYED PAYMENT OF RECEIVABLES, KEEPING IN VIEW OUR ABOVE OBSERVATION. 7. FROM THE RECORD WE OBSERVE THAT AFTER THE MATTER WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O., THE A .O. HAS PASSED ORDER DATED 29/09/2016 WHEREIN NO ADJUSTMENT WAS MADE IN TERMS OF THE DIRECTION OF THE TRIBUNAL. IT WAS ALSO POINTED OUT BY THE LD AR THAT THE DEPARTMENT HAS NOT GONE IN FURTHER APPEAL AGAINST T HE ABOVE FINDINGS OF THE TRIBUNAL IN ITS ORDER DATED 08/07/2015 AND T HE SAME HAS BEEN FINALIZED NOW. 8. WE FOUND THAT THE FACTS AND CIRCUMSTANCES IN BOT H THE YEARS UNDER CONSIDERATION I.E. A.Y. 2012-13 AND 2013-14 A RE SAME WHEREIN ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 8 UNDER SIMILAR FACTS, THE ADDITION WAS MADE BY THE A .O. ON ACCOUNT OF INTEREST PERTAINING TO OUTSTANDING RECEIVABLES FROM AES. IN ALL FAIRNESS, WE RESTORE THE MATTER BACK TO THE FILE OF THE TPO/A O FOR DECIDING THE ISSUE AFRESH IN TERMS OF THE DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 08/07/2015 IN SO FAR AS FACTS AND CIRCUMSTANC ES FOR THE A.Y. 2009-10 ARE PARI MATERIA TO THE FACTS AND CIRCUMSTA NCES WHICH ARE BEFORE THE LOWER AUTHORITIES FOR THE A.Y. 2012-13 A ND 2013-14. 9. GROUND NO. 11 OF THE APPEAL FOR THE A.Y. 2012-13 PERTAINS TO INCORRECT COMPUTATION OF THE INCOME TAX PAYABLE BY THE ASSESSEE AND UTILIZATION AND CARRY FORWARD OF MAT CREDIT BY THE ASSESSEE. 10. IT WAS STATED BY THE LD AR THAT THE MAT CREDIT WAS NOT CORRECTLY GIVEN BY THE A.O., THEREFORE, IN ALL FAIRNESS, WE R ESTORE THE MATTER BACK TO THE FILE OF THE TPO/AO AND DIRECT TO REVERIFY TH E CARRY FORWARD AND MAT CREDIT. WE DIRECT ACCORDINGLY. 11. GROUND NO. 12 OF THE APPEAL IS WITH REGARD TO N ON GRANT OF FULL TDS/TCS CREDIT AND NON CONSIDERATION OF TDS AND ADV ANCE TAX PAYABLE BY ERSTWHILE SUBSIDIARY. IT IS JUST A MATTER OF VER IFICATION, THEREFORE, IN ALL FAIRNESS, WE RESTORE THE MATTER BACK TO THE FIL E OF THE TPO/AO AND DIRECT TO VERIFY ACTUAL AMOUNT OF TCS CREDIT WHICH IS ALLEGED TO BE RS. 15,94,56,254/- IN PLACE OF CREDIT GIVE BY THE A.O. OF RS. 15,74,61,198/-. IT APPEARS THAT THE TDS CREDIT AND ADVANCE TAX PAYA BLE BY ERSTWHILE ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 9 SUBSIDIARY OF THE ASSESSEE AMOUNT GO RS. 1,72,79,04 1/- WAS NOT GIVEN WHICH WAS MERGED WITH THE ASSESSEE W.E.F. 01/04/201 1. IT WAS ALSO POINTED OUT BY THE LD AR THAT THE A.O. HAS NOT GIVE N CREDIT OF ADVANCE TAX PAID BY THE ERSTWHILE SUBSIDIARY OF THE ASSESSE E WHICH WAS MERGED WITH THE ASSESSEE W.E.F. 01/04/2011. WE DIRECT THE A.O. TO VERIFY THE FACTUAL POSITION OF TDS AND ADVANCE TAX AND TO GIVE PROPER CREDIT AS PER LAW. WE DIRECT ACCORDINGLY. 12. GROUND NO. 15 OF THE APPEAL FOR THE A.Y. 2012- 13 IS WITH REGARD TO INCORRECT COMPUTATION OF INTEREST U/S 234B/234C DUE TO NON- CREDITS/SHORT CREDITS GRANTED TO THE ASSESSEE. WE D IRECT THE A.O. TO VERIFY THE COMPUTATION OF INTEREST U/S 234B OF THE ACT. WITH REGARD TO INTEREST U/S 234C, WE DIRECT THE A.O. TO CHARGE THE SAME ON RETURNED INCOME AND NOT ON THE ASSESSED INCOME. 13. IN THE APPEAL FOR THE A.Y. 2013-14, SIMILAR GRO UNDS HAVE BEEN TAKEN. 14. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 15. GROUNDS NO. 2 TO 11 OF THE APPEAL ARE WITH REGA RD TO NOTIONAL INTEREST. AS OBSERVED IN THE A.Y. 2012-13, WE RESTO RE THE MATTER BACK ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 10 TO THE FILE OF THE A.O. WITH THE SAME DIRECTION FOR DECIDING AS PER THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2009-10. 16. GROUND NO. 12 OF THE APPEAL IS WITH REGARD TO C OMPUTATION OF INTEREST U/S 244A OF THE ACT. IT WAS ARGUED BY THE LD AR THAT ON PERUSAL OF THE REFUND ORDER AND INCOME TAX COMPUTAT ION SHEET, IT IS OBSERVED THAT THE AO HAS GRANTED REFUND OF RS. 10,4 1,05,950/- ALONGWITH INTEREST U/S 244A OF RS. 1,62,52,824/-. H E FURTHER SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE REFUND CHEQUE ON 7 TH JULY 2017. ACCORDINGLY, THE ASSESSEE WAS ENTITLED TO INTEREST TILL JULY 2017 (I.E. FOR 52 MONTHS I.E. FROM APRIL 2013 TO JULY 2017). HOWEV ER, THE A.O. HAS GRANTED INTEREST U/S 244A OF THE ACT ONLY FOR 37 MO NTHS. 17. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 18. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE PROVISIONS OF SECTION 244A OF THE ACT, INTEREST ON REFUND IS TO B E ALLOWED @ 0.50% PER MONTH FROM THE 1 ST DAY OF APRIL OF THE ASSESSMENT YEAR TO BE DATE ON WHICH THE REFUND IS GRANTED. ACCORDINGLY, THE AS SESSEE IS ENTITLED FOR INTEREST U/S 244A OF THE ACT UP TO THE DATE ON WHIC H THE REFUND IS GRANTED. THE A.O. IS DIRECTED TO VERIFY THE CORRECT NESS OF INTEREST AND GRANT NECESSARY REFUND AS PER LAW. ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 11 19. GROUND NO. 13 OF THE APPEAL IS WITH REGARD TO A DJUSTING BOOK PROFIT U/S 115JB OF THE ACT BY ADDING THE DISALLOWA NCE ON ACCOUNT OF DEPRECIATION ON OFFICE PREMISES. 20. DURING THE YEAR UNDER CONSIDERATION, THE AO HAS MADE DISALLOWANCE OF TAX DEPRECIATION OF RS. 4,29,332/- ON THE COST OF THE OFFICE PREMISES. FURTHER, THE A.O. HAS ALSO MADE TH IS DISALLOWANCE TO THE BOOK PROFITS AS PER SECTION 115JB OF THE ACT. T HE CONTENTION OF THE ASSESSEE WAS THAT FOR THE PURPOSES OF COMPUTATION O F BOOK PROFITS AS PER EXPLANATION 1 TO SECTION 115JB(2) OF THE ACT, T HE PROFIT/LOSS IN THE PROFIT AND LOSS ACCOUNT IS INCREASED BY AMOUNT OF D EPRECIATION AS PER THE BOOKS AND SHALL BE REDUCED BY AMOUNT OF DEPRECI ATION DEBITED TO THE BOOKS (EXCLUDING DEPRECIATION ON ACCOUNT OF REV ALUATION OF ASSETS). ACCORDINGLY, DEPRECIATION AS COMPUTED UNDER THE INC OME TAX ACT, 1961 IS NOT RELEVANT FOR BOOK PROFIT COMPUTATION. 21. IN THIS REGARD WE OBSERVE THAT THE HONBLE SUPR EME COURT IN THE CASE OF APOLLO TYRES LTD. VS CIT (2002) 255 ITR 273 (SC) HAVE OBSERVED THAT WHILE COMPUTING INCOME U/S 115J, THE A.O. HAS ONLY POWER OF EXAMINING WHETHER BOOKS OF ACCOUNT ARE CER TIFIED BY AUTHORITIES UNDER COMPANIES ACT AS HAVING BEEN PROP ERLY MAINTAINED IN ACCORDANCE WITH COMPANIES ACT AND THEREAFTER, HE HA S LIMITED POWER OF MAKING ADDITIONS AND REDUCTIONS AS PROVIDED FOR IN EXPLANATION TO SAID ITA NO. 1238 & 5427/MUM/2017 TECHNIMONT PVT. LTD. VS ACIT 12 SECTION. IT WAS FURTHER HELD THAT THE A.O. DOES NOT HAVE JURISDICTION TO GO BEHIND NET PROFIT SHOWN IN THE P&L ACCOUNT EXCEP T TO EXTENT PROVIDED IN EXPLANATION TO SECTION 115J OF THE ACT. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT , WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF THE TPO/A.O. FOR MAKING ADDITION OF THE DEPRECIATION WHILE COMPUTING BOOK PROFIT. 22. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH JANUARY, 2020. SD/- (PAWAN SINGH) SD/- (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 08/ 01/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//