TATA MOTORS LTD, MUMBAI V. DCIT RG 2(3), MUMBAI

ITA 5600/MUM/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7733 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 13-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBASHISH CHANDA
• Keywords: Transfer pricing; Opportunity of being heard; Earning of tax free income; Bad and doubtful debts; Revised return; Revenue expenditure; TDS; Rule 8D
• Section: 143(3); 14A; 115JB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 5600 / MUM . /2011 ( ASSESSMENT YEAR : 20 07 08 ) TATA MOTORS LTD. BOMBAY HOUSE, 24, HOMI STREET HUTATMA CHOWK, MUMBAI 400 001 PAN AAACT2727Q . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX RANG E 2 ( 3 ), MUMBAI . RESPONDENT ASSESSEE BY : SHRI RAJAN VORA A/W SHRI NIKHIL TIWARI REVENUE BY : SHRI DEBASHISH CHANDA DATE OF HEARING 30 .0 1 .2019 DATE OF ORDER 25.04.2019 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE FINAL ASSESSMENT ORDER DATED 26 TH MAY 2011, PASSED UNDER SECTION 143(3) R/W SECTION 144C OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2007 08 IN PURSUANCE TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL II (DRP), MUMBAI. 2 . IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED DISALLOWA NCE OF EXPENDITURE UNDER SECTION 14A R/W RULE 8D. 2 TATA MOTORS LTD. 3 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CHASSIS AND VEHICLES INCLUDING MOTORCAR AND ITS SPARES FOR TRANSPORTATION OF GOODS AND PASSENGERS. BESIDES, THE ASSESSE E IS ALSO ENGAGED IN THE BUSINESS OF HIRE PURCHASE AND LEASING OF THE VEHICLES MANUFACTURED BY IT. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME ORIGINALLY ON 30 TH OCTOBER 2007, DECLARING TOTAL INCOME OF ` 1284,54,70,964 UNDER T HE NORMAL PROVISIONS OF THE ACT AND ` 2188,13,41,552, UNDER SECTION 115JB OF THE ACT. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 30 TH MARCH 2009, DECLARING INCOME OF ` 1287,08,04,652, UNDER THE NORMAL PROVISIONS OF THE ACT AND ` 2188,13,41,552, UNDER SECTION 115JB OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD EARNED DIVIDEND INCOME OF ` 198,90,32,804, AND CLAIM ED IT AS EXEMPT FROM TAX UNDER SECTION 10(34) OF THE ACT. SIMILARLY, IT HAD EARNED INTEREST INCOME OF ` 2,43,50,578, AND CLAIMED IT AS EXEMPT UNDER SECTION 10(35) OF THE ACT. FROM THE ANNUAL REPORT OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT IT HA D INCURRED INTEREST EXPENDITURE OF ` 313.07 LAKH. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE OF EXPENDITURE FOR EARNING EXEMPT INCOME SHOULD NOT BE MADE UNDER SECTION 14A R/W RULE 8D. THROUGH LETTER DATED 27 TH NOVEMBER 2009, 3 TATA MOTORS LTD. THOUGH , THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE OF EXPENDITURE, HOWEVER, THE ASSESSING OFFICER REJECTING THE SUBMISSIONS OF THE ASSESSEE DISALLOWED 5% OF THE EXEMPT INCOME TOWARDS EXPENDITURE FOR EARNING SUCH INCOME. THE AFORESAID DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ALSO UPHELD BY LEARNED DRP. 4 . SHRI RAJAN VORA, LEARNED AUTHORISED REPRESENTATIVE APPEARING FOR THE ASSESSEE SUBMITTED , WHILE DEALING WITH IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 07 THE TRIBUNAL HAS REST RICTED THE DISALLOWANCE UNDER SECTION 14A TO 1% OF THE EXEMPT INCOME EARNED DURING THE YEAR. THEREFORE, HE SUBMITTED , THE DISALLOWANCE IN THE IMPUGNED ASSESSMENT YEAR SHOULD ALSO BE RESTRICTED TO 1% OF THE EXEMPT INCOME EARNED. 5 . SHRI DEBASHISH CHANDA, THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH, AGREED THAT IN ASSESSMENT YEAR 2006 07 THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE TO 1% OF THE EXEMPT INCOME, HOWEVER, HE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED DRP. 6 . WE HAVE CONSIDE RED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN, THE ASSESSING OFFICER ON AN AD HOC BASIS HAS DISALLOWED 5% OUT OF THE EXEMPT INCOME EARNED TOWARDS EXPENDITURE ATTRIBUTABLE TO EARNING SUCH INCOME. LEARNED DRP HAS UPHELD SUCH 4 TATA MOTORS LTD. DISALLOW ANCE FOLLOWING ITS ORDER PASSED IN THE ASSESSMENT YEAR 2006 07. NOTABLY, WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 07 IN ITA NO.8926/MUM./2010, DATED 28 TH JANUARY 2019, THE TRIBUNAL HAS RESTRICTED SUCH DISALLOWANCE TO 1 % OF THE EXEMPT INCOME EARNED DURING THE YEAR WITH THE FOLLOWING OBSERVATIONS: WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS LEGALLY ACCEPTED POSITION THAT THE PROVISIONS OF RULE 8D IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR. THEREFORE, WHAT IS NECESSARY TO EXAMINE IS, WHETHER THE DISALLOWANCE MADE @ 5% OF THE EXEMPT INCOME EARNED DURING THE YEAR IS REASONABLE. NOTABLY, WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999 2000 TO 2002 03, IN ITA NO.3329/MUM./2011 & ORS., DATED 31ST AUGUST 2017, THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE UNDER SECTION 14A OF THE ACT TO 1% OF THE EXEMPT INCOME EARNED DURING THE YEAR. THE SAME VIEW WAS REITERATED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005 06 IN ITA NO.3336/MUM./ 2011, DATED 13TH APRIL 2018. CONSISTENT WITH THE AFORESAID VIEW OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE, AS REFERRED TO ABOVE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE UNDE R SECTION 14A OF THE ACT @ 1% OF THE EXEMPT INCOME EARNED DURING THE PREVIOUS YEAR. THIS GROUND IS PARTLY ALLOWED. 7 . FACTS BEING IDENTICAL, FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL ON THE DISPUTED ISSUE, AS REFERRED TO ABOVE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A TO 1% OF THE EXEMPT INCOME EARNED DURING THE YEAR. THIS GROUND IS PARTLY ALLOWED. 8 . IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEDUCTION CLAIMED ON ACCOUNT OF PRO RATA AMOUNT OF LEASE HOLD LAND. 5 TATA MOTORS LTD. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE VERIFYING THE COMPUTATION INCOME NOTICED THAT IN NOTE NO.4, THE ASSESSEE HAS CLAIMED DEDUCTION OF ` 41,13,103, ON ACCOUNT OF AMORTIZATION OF UPFRONT PAYMENT MADE FOR LEASE HOLD LAND. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NOT CLAIMED THIS DEDUCTION EITHER IN THE ORIGINAL RETURN OF INCOME NOR IN THE REVISED RETURN OF INCOME. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DEDUCTION. LEARNED DRP ALSO UPHELD THE DECISI ON OF THE ASSESSING OFFICER RELYING UPON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN GOETZE ( INDIA ) LTD . VS. CIT , [2006] 284 ITR 323 ( SC ) . 9 . LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, T HOUGH, THE ASSESSEE MAY NOT HAVE CLAIMED THE DEDUCTION EITHER IN THE ORIGINAL OR IN THE REVISED RETURN OF INCOME, HOWEVER, THE ASSESSEE CAN RAISE SUCH CLAIM NOT ONLY IN THE COURSE OF ASSESSMENT PROCEEDINGS, BUT BEFORE THE APPELLATE AUTHORITIES ALSO. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING D ECISIONS: I ) CIT V/S PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD., [2012] 349 ITR 336 (BOM.); AND II ) JUTE CORPORATION OF INDIA LTD. V/S CIT, [1991] 187 ITR 688 (SC) . 10 . HE SUBMITTED , IN THE ASSESSMENT YEAR 2006 07 ALSO , THOUGH , THE ASSESSEE HAD CLAIMED SIMILAR DEDUCTION IN THE COMPUTATION OF INCOME 6 TATA MOTORS LTD. WITHOUT HAVING DONE SO IN THE RETURN OF INCOME, HOWEVER, THE ASSESSING OFFICER HAS ALLOWED ASSESSEES CLAIM. HE SUBMITTED , THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF AMORTIZA TION OF UPFRONT PAYMENT MADE TOWARDS LEASE HOLD LAND IS AN ALLOWABLE DEDUCTION. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: I ) DCIT V/S SUN PHARMACEUTICALS LTD., [2010] 329 ITR 479 (GUJ.); AND II ) ACIT V/S DELHI INTERNATIONAL AIRPORT PVT. LTD., [2018] 89 TAXMANN.COM 326 (DEL.). 11 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN SUN PHARMACEUTICALS LTD. (SUPRA) HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT WHILE DISMISSING THE SLP FILED BY THE REVEN UE. THUS, HE SUBMITTED, THE ASSESSING OFFICER MAY BE DIRECTED TO CONSIDER ASSESSEES CLAIM ON MERIT. 12 . TH E LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE DRP. 13 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED MATERIAL ON RECORD. IT IS EVIDENT , THE ASSESSEES CLAIM OF DEDUCTION ON ACCOUNT OF AMORTIZATION OF UPF RONT PAYMENT MADE TOWARDS LEASE HOLD LAND WAS REJECTED BOTH BY THE ASSESSING OFFICER AND LEARNED DRP ONLY FOR THE REASON THAT SUCH DEDUCTION WAS NOT CLAIMED EITHER IN THE ORIGINAL OR IN THE REVISED RETURN OF INCOME. HOWEVER, IT IS A FACT ON RECORD THAT IN THE 7 TATA MOTORS LTD. COMPUTATION OF INCOME THE ASSESSEE HAS CLAIMED SUCH DEDUCTION. MOREOVER, THOUGH, THE RATIO L AID DOWN IN GOETZ INDIA LTD. (SUPRA) IS APPLICABLE TO THE ASSESSING OFFICER, HOWEVER, IT IS NOT APPLICABLE TO THE APPELLATE AUTHORITIES. THEREFORE, ASSESSEES CLAIM OF DEDUCTION SHOULD HAVE BEEN EXAMINED ON MERIT BY LEARNED DRP INSTEAD OF REJECTING IT ON T ECHNICAL GROUND. BE THAT AS IT MAY, IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (SUPRA), WE RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR DECIDING AFRESH ASSESSEES CLAIM OF DEDUCTION . WHILE DOING SO, THE ASSESSING OFFICER SHOULD ALSO TAKE NOTE OF ASSESSEES CONTENTION THAT SIMILAR DEDUCTION CLAIMED BY THE ASSESSEE IN PRECEDING ASSESSMENT YEAR WAS ALLOWED. FURTHER, THE ASSESSING OFFICER IS ALSO DIRECTED TO DECIDE THE ISSUE ON MERIT KEE PING IN VIEW THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN SUN PHARMACEUTICALS INDIA LTD. (SUPRA) AND THAT OF THE TRIBUNAL IN DELHI INTERNATIONAL AIRPORT PVT. LTD. (SUPRA) AND ANY OTHER DECISION WHICH MAY BE CITED BY THE ASSESSEE. WITH THE AFORESAID OB SERVATIONS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 14 . IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF ASSESSEES CLAIM FOR EXCLUDING WRITE BACK OF PROVISIONS FOR DOUBTFUL DEBTS / ADVANCES. 15 . BRIEF FACTS ARE, IN THE C OURSE OF ASSESSME NT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT IN NOTE NO.9 TO COMPUTA TION OF INCOME, 8 TATA MOTORS LTD. THE ASSESSEE HAD CLAIMED THAT IN THE ASSESSMENT YEAR 2004 05 AND 2005 06, TATA FINANCE LTD., WHICH GOT AMALGAMATED WITH THE ASSESSEE IN ASSESSMENT YEAR 2006 07, HAD CLAI MED DEDUCTION IN RESPECT OF PROVISIONS OF DOUBTFUL DEBTS / ADVANCES. IT WAS STATED THAT IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD REVERSED THE PROVISIONS MADE IN ASSESSMENT YEAR S 2004 05 AND 2005 06 AND OFFERED IT TO TAX. IT WAS SUBMITTED , THOUGH T HE ACTUAL REVERS AL OF PROVISION DURING THE YEAR WAS ` 7,17,70,032, H OWEVER, IN THE RETURN OF INCOME THE ASSESSEE HAD INADVERTENTLY OFFERED AN AMOUNT OF ` 11,03,04,467. IN THIS CONTEXT, THE ASSESSEE FURNISHED A YEAR WISE BREAK UP OF PROVISIONS MADE TOWARDS DOUBTFUL DEBTS / ADVANCES. FURTHER, IT WAS SUBMITTED THAT DEDUCTION CLAIMED TOWARDS PROVISION FOR DOUBTFUL DEBT AND ADVANCE S IN THE ASSESSMENT YEAR 2004 05 WAS DISALLOWED BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF R/W SECT ION 147 OF THE ACT. THEREFORE, IT AMOUNTS TO DOUBLE ADDITION OF THE SAME INCOME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT SINCE THE DEDUCTION CLAIMED BY THE ASSESSEE WAS NOT MADE EITHER IN THE RETURN OF INCOME OR I N THE REVISED RETURN OF INCOME, IT CANNOT BE ACCEPTED. 16 . LEARNED DRP ALSO UPHELD THE DECISION OF THE ASSESSING OFFICER. 17 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , AS PER THE BOOKS OF ACCOUNT THE ACTUAL REVERSAL OF PROVISION CLAIMED DURING THE 9 TATA MOTORS LTD. YEAR WAS ` 7,17,70,032. HOWEVER, IN THE RETURN OF INCOME, THE ASSESSEE HAS WRONGLY OFFERED THE AMOUNT OF ` 11,03,04,467. THUS, HE SUBMITTED , THE EXCESS AMOUNT OFFERED OF ` 3,85,34,435, SHOULD BE EXCLUDED. FURTHER, HE SUBMITTED , THE PROVISION MADE TOWARDS DOUBTFUL DEBTS / ADVANCES IN ASSESSMENT YEAR 2004 05 AMOUNTING TO ` 3,04,06,099, WAS DISALLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT FOR THAT ASSESSMENT YEAR. H E SUBMITTED , THIS AMOUNT WAS AGAIN OFFERED BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR. HE SUBMITTED , EITHER IT HAS TO BE ALLOWED IN ASSESSMENT YEAR 2004 05 OR IN THE IMPUGNED ASSESSMENT YEAR. HE SUBMITTED , SINCE ASSESSEES APPEAL CHALLENGING THE AFORE SAID DISALLOWANCE IS STILL PENDING BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT, THE ASSESSING OFFICER MAY BE DIRECTED TO DECIDE THE ISSUE ON THE BASIS OF HONBLE HIGH COURTS DECISION. 18 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED DRP. 19 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN, IN THE COMPUTATION OF TOTAL INCOME THE ASSESSEE HAD CLAIMED THAT, THOU GH, AS PER THE BOOKS OF ACCOUNT THE PROVISION FOR DOUBTF UL DEBTS / ADVANCES RELATING TO ASSESSMENT YEAR 2004 05 AND 2005 06, WAS REVERSED TO THE EXTENT OF ` 7,17,70,032, HOWEVER, THE ASSESSEE HAS WRONGLY OFFERED AN AMOUNT OF ` 10 TATA MOTORS LTD. 11,03,04,467, AS INCOME ON ACCOUNT OF SUCH REVERSAL. HOWEVER, THE ASSESSING OFFICER H AD REJECTED THE AFORESAID CLAIM OF THE ASSESSEE MERELY BECAUSE SUCH CLAIM WAS NOT MADE IN THE RETURN OF INCOME. IN OUR VIEW, THE CLAIM OF THE ASSESSEE , AT LEAST , SHOULD HAVE BEEN CONSIDERED BY LEARNED DRP ON MERIT , KEEPING IN VIEW THE SETTLED LEGAL PRINCIP LE REFERRED TO EARLIER , RATHER THAN REJECTING IT ON TECHNICAL GROUND . SINCE ASSESSEES CLAIM WAS NOT CONSIDERED ON MERITS E ITHER BY THE ASSESSING OFFICER OR BY LEARNED DRP AND WAS REJECTED ON TECHNICAL GROUND, WE RESTORE THE ISSUE BACK TO THE ASSESSING OFFICER FOR EXAMINING ASSESSEES CLAIM ON MERIT. WHILE DOING SO, THE ASSESSING OFFICER SHOULD ALSO CONSIDER ASSESSEES CLAIM OF DOUBLE ADDITION IN RESPECT OF THE PROVISIO N FOR BAD DEBT PERTAINING TO THE ASSESSMENT YEAR 2004 05 AND DECIDE THE ISSUE ON THE BASIS OF THE DECISION OF THE HONBLE HIGH COURT ON THE SAID ISSUE. IT GOES WITHOUT SAYING , THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE BEFORE DECIDING THE ISSUE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 20 . GROUND NO.4, IS NOT PRESSED, HENCE, DISMISSED. 21 . IN GROUND NO.5, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF PROFESSIONAL AND LEGAL FEES AMOUNTING TO ` 1,84,62,440. 11 TATA MOTORS LTD. 22 . BRIEF FACTS ARE, DURING THE YEAR, THE ASSESSEE HAD INCURRED EXPENDITURE TOWARDS PROFESSIONAL AND LEGAL FEE IN CONNECTION WITH PROPOSED FUND RAISING BY WAY OF DIVESTMENT OF ITS STAKE IN SUBSIDIARY. THIS EXPENDITURE, THOUGH, WAS ADDED BACK IN THE COMPUTATION OF IN COME, HOWEVER, IN NOTE NO.22 TO THE COMPUTATION OF INCOME, THE ASSESSEE HAD RESERVED ITS RIGHT TO CLAIM IT AS DEDUCTION DURING THE ASSESSMENT PROCEEDINGS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THE AFORESAID AMOUNT AS DEDUCTION. HOWE VER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FIRSTLY; ON THE REASONING THAT IT WAS NOT CLAIMED IN THE RETURN OF INCOME AND SECONDLY; THE EXPENDITURE IS CAPITAL IN NATURE. 23 . LEARNED DRP ALSO UPHELD THE AFORESAID DECISION OF THE ASSESSING OFF ICER. 24 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE DEDUCTION CLAIMED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS EVEN IF NOT CLAIMED IN THE RETURN OF INCOME SHOULD HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER. FURTHER, HE SUBMITTED , T HE DEDUCTION CLAIMED BY THE ASSESSEE IS ALLOWABLE AS REVENUE EXPENDITURE. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: I ) CIT V/S BOMBAY DYEING AND MANUFACTURING CO. LTD., [1996] 219 ITR 521 (SC); AND 12 TATA MOTORS LTD. II ) NYK LINE (INDIA) LTD. V/S ACIT, ITA NO.8549/MUM./2011, DATED 23.09.2015; 25 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IN OUR VIEW, THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN REJECTING ASSESSEES CLAIM PURELY ON THE TECHNICAL GROUND OF HAVING NOT RAISED SUCH C LAIM IN THE RETURN OF INCOME. THEREFORE, FOLLOWING THE SETTLED LEGAL PRINCIPLE REFERRED TO EARLIER IN THIS ORDER, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. WHILE DO ING SO, THE ASSESSING OFFICER MUST DECIDE THE ISSUE ON MERIT KEEPING IN VIEW THE DECISIONS TO BE CITED BY THE ASSESSEE. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND IS ALLOWED FOR STAT ISTICAL PURPOSES. 26 . IN G ROUND NO.6, THE ASSESSEE HAS CHALLENGED THE ADDITION OF ` 35,76,072, ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT MADE TO THE INTER EST ON LOAN TO THE A E. 27 . BRIEF FACTS ARE, IN THE COURSE OF TRANSFER PRICING PROCEEDINGS THE TRANSFER PRICI NG OFFICER NOTICING THAT THE ASSE SSEE HAD ADVANCED LOAN TO ITS AES WITHOUT CHARGING ANY INTEREST PROCEEDED TO DETERMINE THE ARM'S LENGTH PRICE OF INTEREST CHARGEABLE ON SUCH LOAN S @ 14% PER ANNUM. THIS RESULTED IN AN ADJUSTMENT OF ` 4,44,68,152, WHICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE IN THE DRAFT ASSESSMENT 13 TATA MOTORS LTD. ORDER. WHILE CONSIDERING ASSESSEES OBJECTION ON THE ISSUE, LEARNED DRP DIRECTED TO COMPUTE THE ARM'S LENGTH PRICE OF THE INTEREST AT LIBOR PLUS 200 BASIS POINTS , WHICH REDUCED THE ADDITION T O ` 35,76,072. 28 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , DURING THE YEAR ASSESSEE HAD RECEIVED INT EREST ON LOAN ADVANCED TO ITS AE IN U.K. WHICH WAS BENCH MARKED BY USING COMPARABLE UNCONTROLLED PRICE METHOD AT LIBOR PLUS 50 BASIS POINTS . HE SUBMITTED, INTEREST ON LOAN RECEIVED BY THE AE FROM A THIRD PARTY IN U.K WAS AT LIBOR PLUS 30 BASIS POINTS. THUS, HE SUBMITTED , THE INTEREST RATE AT W HICH LOAN WAS RECEIVED BY THE AE IN THE COUNTRY WHERE LOAN IS GIVEN SHOULD BE APPLIED AS A CUP FOR DETERM INING THE ARM'S LENGTH PRICE OF INTEREST. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , WHILE DECIDING SIMILAR ISSUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2006 07, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR EXAMINING ASSESSEES CLAIM OF APPLYING INTERNAL CUP. THUS, HE SUBMITTED , THE ISSUE MAY BE RESTORED TO THE ASSESSING OFFICER. 29 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED DRP. 30 . WE HAVE CONSIDERED RIVAL SUBMISSIONS A ND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN, THE DISPUTE IS CONFINED TO THE RATE OF INTEREST 14 TATA MOTORS LTD. APPLICABL E TO THE LOAN ADVANCED TO THE AES. WHILE THE DRP HAS DIRECTED THE ASSESSING OFFICER TO COMPUTE INTEREST AT LIBOR PLUS 200 BASIS POINTS, IT IS THE CONT ENTION OF THE ASSESSEE THAT AS PER INTERNAL CUP AVAILABLE, INTEREST RATE CANNOT EXCEED LIBOR PLUS 50 BASIS POINTS. IN THIS CONTEXT, IT HAS BEEN SUBMITTED BY T HE ASSESSEE THAT THE OVERSEAS AE IN U.K. HAS TAKEN A LOAN FROM THIRD PARTY IN U.K. AT LIBOR PLUS 3 0 BASIS POINTS. SIMILARLY, HE HAD SUBMITTED THAT THE AE IN SPAIN HAS TAKEN LOAN FROM AN UNRELATED PARTY IN THE SAME PERIOD AT THE INTEREST RATE OF EURIBOR PLUS 127.79 BASIS POINTS. 31 . HAVING CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD, WE ARE OF THE VIEW THAT ASSESSEES CONTENTION REGARDING AVAILABILITY OF INTERNAL CUP REQUIRES EXAMINATION. MOREOVER, WHILE DECIDING SIMILAR ISSUE IN ASSESSMENT YEAR 2006 07, IN ITA NO.8926/ MUM./2010, DATED 28 TH JANUARY 2019, WE HAVE RESTORED THE ISSUE TO THE AS SESSING OFFICER FOR CONSIDERING VARIOUS SUBMISSIONS MADE BY THE ASSESSEE WITH REGARD TO THE RATE OF INTEREST. IN VIEW OF THE AFORESAID, WE RESTORE THE ISSUE TO THE ASSESSING OFFICER / TRANSFER PRICING OFFICER FOR DE NOVO ADJUDICATION AFTER CONSIDERING ASSE SSEES CLAIM OF AVAILABILITY OF INTERNAL CUP. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 32 . IN GROUND NO.7, THE ASSESSEE HAS RAISED THE ISSUE OF SHORT TDS CREDIT. 15 TATA MOTORS LTD. 33 . HAVING CONSIDERED RIVAL SUBMISSIONS, WE DIRECT THE ASSESSING OFFICER TO ALLOW ACTUAL CREDIT FOR TDS AFTER VERIFYING ASSESSEES CLAIM. 34 . IN GROUND NO.8, THE ASSESSEE HAS CHALLENGE LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. 35 . THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT INTEREST UNDER SECTION 234C OF THE ACT CAN BE CHARGED ONLY ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. IN THIS CONTEXT, HE HAS RELIED UPON THE FOLLOWING DECISIONS: I ) BOMBAY GYMKHANA LTD. V/S ITO, [2009] 27 SOT 58 (MUM.) (URO); II ) WIPRO INFORMATION TECHNOLOGY LTD. V/S DCIT, [2004] 88 TTJ 778 (BANG.) ; III ) CIT V/S SMT. PREMLATA JALANI, [2003] 264 ITR 744 (RAJ.) ; IV ) MRS. PRABHA LAL V/S CIT, [2004] 269 ITR 212 (PATNA) . 36 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ASSESSMENT ORDER. 37 . HAVING CONSIDERED RIVAL SUBMISSIONS AND EXAMINED THE PROVISIONS OF S ECTION 234C OF THE ACT IN THE LIGHT OF THE DECISIONS CITED BEFORE US, WE ARE OF THE VIEW THAT INTEREST UNDER SECTION 234C OF THE ACT HAS TO BE CHARGED ON THE INCOME RETURNED BY THE ASSESSEE AND NOT ON THE ASSESSED INCOME. ACCORDINGLY, WE DIRECT THE ASSESSI NG OFFICER TO 16 TATA MOTORS LTD. COMPUTE INTEREST UNDER SECTION 234C OF THE ACT ON THE INCOME RETURNED BY THE ASSESSEE. THIS GROUND IS ALLOWED. 38 . G ROUND NO.9, IS CONSEQUENTIAL IN NATURE, HENCE, DOES NOT REQUIRE ADJUDICATION. 39 . BESIDES THE ABOVE GROUNDS, THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS NO.10, 11 AND 12, CHALLENGING THE VALIDITY OF THE ORDER PASSED UNDER SECTION 92CA(3) OF THE ACT. 40 . THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE ADDL. CIT IS NOT AUTHORISED / EMPOWERED TO PASS THE ORDE R UNDER THE AFORESAID PROVISION . HOWEVER, THE LEARNED AUTHORISED REPRESENTATIVE FAIRLY SUBMITTED THAT THIS ISSUE IS BEING RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. HE SUBMITTED , WHILE DECIDING ADDITIONAL GROUNDS ON IDENTICAL ISSUE IN ASSESSMENT YEAR 2006 07, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, HE SUBMITTED , THE ISSUE MAY BE RESTORED TO THE ASSESSING OFFICER FOR CONSIDERING ASSESSEES CLAIM AND CONTENTIONS. 41 . WE HAVE CONSIDE RED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS NOT CHALLENGED THE VALIDITY OF THE ORDER PASSED UNDER SECTION 92CA(3) OF THE ACT EITHER IN THE COURSE OF TRANSFER PRICING PROCEEDINGS OR EVEN BEFORE LEARNED DRP. FOR THE 17 TATA MOTORS LTD. F IRST TIME, THE ASSESSEE HAS RAISED THE ISSUE BEFORE THE TRIBUNAL. THOUGH, THE ISSUE RAISED IN THE ADDITIONAL GROUND IS A PURELY JURISDICTIONAL ISSUE GOING TO THE ROOT OF THE MATTER, HENCE, REQUIRES TO BE ADMITTED, HOWEVER, FOLLOWING OUR DECISION IN ASSESSM ENT YEAR 2006 07 (SUPRA), WE RESTORE THE ISSUE TO THE ASSESSING OFFICER TO DECIDE THE SAME AFTER CONSIDERING ASSESSEES SUBMISSIONS. THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 42 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED I N THE OPEN COURT ON 25.04.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.04.20 1 9 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI