DCIT, New Delhi V. M/s. Jindal Stainless Ltd., Hisar

ITA 6539/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5830 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL
• Keywords: Transfer pricing; International transaction; Earning of tax free income; Wholly owned subsidiary; Commercial expediency; Revised return; TDS; Rule 8D; Set aside
• Section: 92C; 14A; 133(6); 201; 72; 13(2); 13; 22; 27

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 B ENCH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL M EMBER ITA NO. 6517/DEL/2016 [ASSESSMENT YEAR: 2009-10] ITA NO. 6518/DEL/2016 [ASSESSMENT YEAR: 2010-11] M/S JINDAL STAINLESS LTD VS. DY. C.I.T O.P. JINDAL MARG, HISAR CIRCLE 13(2) HARYANA NEW DELHI PAN: AABCJ 1969 M ITA NO. 5095/DEL/2016 [ASSESSMENT YEAR: 2007-08] ITA NO. 6130/DEL/2016 [ASSESSMENT YEAR: 2009-10] ITA NO. 6380/DEL/2016 [ASSESSMENT YEAR: 2009-10] ITA NO. 6539/DEL/2016 [ASSESSMENT YEAR: 2010-11] DY. C.I.T VS. M/S JINDAL STAINLESS LTD CIRCLE 13(2) O.P. JINDAL MARG, HISAR NEW DELHI HARYANA PAN: AABCJ 1969 M [APPELLANT] [RESPONDENT] 2 DATE OF HEARING : 29.09.2020 DATE OF PRONOUNCEMENT : 30.09.2020 ASSESSEE BY : SHRI AJAY VOHRA, ADV SHRI NEERAJ JAIN, ADV SHRI RAMIT KATYAL, ADV REVENUE BY : SHRI M. BARNWAL, SR. DR ORDER PER BENCH THIS IS A BUNCH OF APPEAL AND CROSS APPEALS PREFERR ED BY THE ASSESSEE AND REVENUE. SINCE COMMON ISSUES ARE INVOL VED IN ALL THE ABOVE APPEALS PERTAINING TO SAME ASSESSEE, THESE AR E BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E AND BREVITY. ITA NO. 5095/DEL/2016 [REVENUES APPEAL] 2. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 37, NEW DELHI DATED 29.07.2016 PERTAINING TO A.Y. 2007-08. 3. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE RE VENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY ON TP ADJUSTMENT ON 3 ACCOUNT OF DIFFERENCE IN INTEREST ON LOAN CHARGED F ROM ASSOCIATED ENTERPRISE [AE] AND DISALLOWANCE MADE U/S 14A OF TH E INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T] R.W.R. 8D OF THE INCOME TAX RULES. 4. AT THE VERY OUTSET, IT WAS BROUGHT TO OUR NOTICE THAT THE QUANTUM ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL IN ITA NO. 4249/DEL/2013. IT WAS FURTHER BROUGHT TO OUR NOTICE THAT ONLY ADDI TION OF RS. 25,000/- U/S 14A OF THE ACT WAS SUSTAINED ON ESTIMATED BASIS . 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE TRIB UNAL IN ITA NO. 4249/DEL/2013. WE FIND THAT THE TP ADJUSTMENTS WER E MADE ON TWO COUNTS. FIRSTLY, THE ADDITION WAS ON ACCOUNT OF DI FFERENCE IN INTEREST ON LOAN CHARGED FROM AE AND SECONDLY, ADDITION ON A CCOUNT OF ADJUSTMENT OF CORPORATE GUARANTEE. WE FIND THAT THE SE TP ADJUSTMENTS WERE DELETED BY THE TRIBUNAL AT PARAS 58, 60, 67 AN D 68 OF ITS ORDER. WE FURTHER FIND THAT THE DISALLOWANCE MADE U/S 14A OF THE ACT HAS BEEN RESTRICTED ON ESTIMATED BASIS AT RS. 25,000/- AND FINDINGS CAN BE FOUND AT PARA 72 OF THE ORDER OF THE TRIBUNAL. 4 6. SINCE THE FOUNDATION HAS BEEN REMOVED, THE SUPER STRUCTURE MUST FALL. THEREFORE, WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE FINDINGS OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO. 6380/DEL/2016 [REVENUES APPEAL] 8. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 37, NEW DELHI DATED 21.10.2016 PERTAINING TO A.Y. 2009-10. 9. AT THE VERY OUTSET, THE LD. DR POINTED OUT THAT INADVERTENTLY, THIS APPEAL WAS FILED AND THE SAME MAY BE TREATED AS INF RUCTUOUS BECAUSE A SEPARATE APPEAL HAS BEEN FILED BY THE REVENUE IN IT A NO. 6130/DEL/2016. 10. ON SUCH CONCESSION, THIS APPEAL IS DISMISSED AS HAVING BECOME INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 5 ITA NO. 6517/DEL/2016 [ ASSESSEES APPEAL] ITA NO. 6130/DEL/2016 [REVENUES APPEAL] 12. THE ABOVE CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE PREFERRED AGAINST THE ORDER OF THE CIT(A) - 37, NEW DELHI DATED 21.10.2016 PERTAINING TO A.Y. 2009-10. 13. FIRST WE WILL TAKE UP ASSESSEES APPEAL IN ITA NO. 6517/DEL/2016. 14. FIRST GROUND RELATES TO TP ADJUSTMENT OF RS. 26 ,10,077/- MADE IN ARMS LENGTH PRICE [ALP] OF EXPORT OF GOODS. 15. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGH T ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF IT AT RULES AND HAVE ALSO PERUSED THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES. 16. FACTS ON RECORD SHOW THAT THE APPELLANT IN THE RELEVANT A.Y HAS EXPORTED VARIOUS GRADES OF STAINLESS STEEL PRODUCTS TO THE AES, NAMELY, PT JINDAL STAINLESS, INDONESIA AGGREGATING TO RS. 7 4.43 CRORES AS UNDER: 6 PRODUCT QUANTITY EXPORTED (MT) AVERAGE RATE VALUE INR HR SS PLATE GRADE J4 241.695 78,289 1,89,21,994 HR SS COILS GRADE J4 HRAP 1,978.979 66,508 13,16,17,635 HR SS COILS GRADE J4 BLACK 4,817.835 62,273 30,00,20,597 HR SS COILS GRADE J4L HRAP 29.510 57,354 16,92,517 HR SS COILS GRADE J4L BLACK 29.400 57,304 16,84,738 HR SS COILS GRADE 204CU BLACK 321.805 70,853 2,28,00,925 HR SS COIL JSL TUBE BLACK 154.185 59,760 92,14,026 HR SS COILS GRADE 304 HRAP 33.485 1,04,265 34,91,314 HR SS COILS GRADE 304 BLACK 253.480 80,580 2,04,25,418 HR SS COILS GRADE 430 BLACK 1,436.035 49,777 7,14,80,951 HR SS COILS GRADE 409L BLACK 51.600 42,660 22,01,256 HR SS COILS GRADE 410S BLACK 88.255 42,660 37,64,958 HR SS COILS GRADE JSL AUS BLACK 1,645.490 1,07,587 17,70,33,571 TOTAL 11,081.754 76,43,49,899 17. SINCE SIMILAR GOODS WERE SOLD BY THE APPELLANT TO UNRELATED THIRD PARTIES, THE APPELLANT, IN ITS TRANSFER PRICING STU DY HAS APPLIED COMPARABLE UNCONTROLLED PRICE (CUP) FOR BENCHMARK ING THE AFORESAID TRANSACTION. IT WAS ALSO SUBMITTED THAT SINCE THE G OODS EXPORTED BY THE APPELLANT, NAMELY, HOT ROLLED AND COLD ROLLED STAIN LESS STEEL COILS CONTAINS METAL COMPONENTS SUCH AS NICKEL AND IRON, AND THE PRICE OF SUCH METALS VARIES ON DAY TO DAY BASIS, AN APPROPRI ATE COMPARISON WOULD BE AVERAGE OF MONTHLY PRICES OF EACH VARIETY OF GOODS. (PAGE 73- 74 OF THE PAPER BOOK). 7 18. ACCORDINGLY, IN TRANSFER PRICING DOCUMENT, THE APPELLANT HAD BENCHMARKED THE INTERNATIONAL TRANSACTIONS OF EXPOR T OF GOODS OF VARIOUS GRADES OF STEEL BY COMPARING THE AVERAGE MO NTHLY PRICES OF GOODS SOLD TO ASSOCIATED ENTERPRISE WITH AVERAGE MO NTHLY PRICES OF GOODS SOLD TO UNCONTROLLED ENTERPRISES OF SAME GRAD ES, APPLYING CUP METHOD. COMPARISON OF PRICE OF GOODS ON MONTHLY AVE RAGE PRICES IS ENCLOSED AT PAGES 73-74 OF THE PAPER BOOK. 19. THE TPO, IN THE IMPUGNED ORDER, DISREGARDED THE COMPARISON OF AVERAGE PRICE OF GOODS EXPORTED BY THE ASSESSEE TO ITS AES AND SOUGHT TO CARRY OUT A DETAILED COMPARISON ON DAY TO DAY BA SIS CONSIDERING DATE OF ORDER ACCEPTANCE AS THE BASIS FOR THE PURPOSE OF BENCHMARKING THE EXPORT OF STAINLESS STEEL PRODUCTS MADE TO ASSOCIAT ED ENTERPRISE. DETAILED COMPARISON OF THE PRICE OF GOODS ON THE BA SIS OF DATE OF ACCEPTANCE OF ORDER IS ENCLOSED AT PAGES 245 OF THE PAPER BOOK. 20. THE TPO, OUT OF THE TOTAL TRANSACTIONS OF SALE OF GOODS, PICKED UP THE FOLLOWING TRANSACTIONS, WHEREIN, THE PRICE OF G OODS SOLD TO ASSOCIATED ENTERPRISE WAS FOUND TO BE LOWER THAN TH E PRICE OF GOODS SOLD TO UNRELATED PARTIES, ON THE BASIS OF DATE OF ACCEPTANCE AND ACCORDINGLY, MADE AN ADDITION OF RS. 26,10,077/- IN THE ARMS LENGTH 8 PRICE OF INTERNATIONAL TRANSACTIONS OF EXPORT OF GO ODS TO ASSOCIATED ENTERPRISES. 21. ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION M ADE BY THE TPO/ASSESSING OFFICER. 22. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CHA LLENGED THE ADJUSTMENT VEHEMENTLY STATING THAT THE COMPARISON O N THE BASIS OF DATE OF ORDER OF ACCEPTANCE CANNOT BE APPLIED. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PARA 3.9 OF THE REVISED OECD G UIDELINES AND FURTHER DREW OUR ATTENTION TO THE DECISION OF THE H ON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE SONY ERISCSSON MOBI LE COMMUNICATIONS INDIA PVT LTD 374 ITR 118. FURTHER RELIANCE WAS PL ACED ON THE DECISION OF THE CO-ORDINATE BENCH AT MUMBAI IN THE CASE OF E SSAR STEEL LTD ITA NO. 3727/MUM/2011. 23. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE LOWER AUTHORITIES AND POINTED OUT THAT A SIMILAR IS SUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS 2007-0 8 AND 2008-09. 9 24. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE F ACTUAL MATRIX DISCUSSED ELSEWHERE AND JUDICIAL DECISIONS RELIED U PON BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT ALL THE CON TENTIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE WERE DULY CONSIDERED B Y THE TRIBUNAL WHILE DECIDING THE APPEALS OF THE ASSESSEE FOR A.YS 2007- 08 AND 2008-09 IN ITA NO. 4249/DEL/2013 AND 6337/DEL/2012 RESPECTIVEL Y. 25. WE FURTHER FIND THAT ON PRINCIPLE, THE CO-ORDIN ATE BENCH ALLOWED THE APPELLANT TO MAKE COMPARISON OF PRICES ON MONTH LY AVERAGE BASIS. HOWEVER, SET ASIDE THE ISSUE TO THE TPO. THE RELEV ANT FINDINGS READ AS UNDER: 42. THE THIRD CONTENTION OF THE ASSESSEE THAT PRIC ES BASED ON THE DATE OF ORDER ACCEPTANCE CANNOT BE APPLIED IN THE P RESENT CASE. THE CLAIM OF THE ASSESSEE IS THAT THE PRODUCTS SOLD BY THE ASSESSEE CONTAINS METAL COMPONENTS SUCH AS NICKEL , THE PRICES OF THE GOODS SOLD BY THE APPELLANT IS DETERMINED CONSI DERING THE PRICES PREVAILING IN LONDON METAL EXCHANGE ON THE R ESPECTIVE DATES. IT WAS FURTHER STATED THAT THERE WERE HUGE PRICE VA RIATION IN THE PRICE OF NICKEL IN A PARTICULAR YEAR WHERE IT HAS F LUCTUATED 33 TIMES THE BASE PRICE. IT WAS THEREFORE STATED THAT THE PR ICE OF THE PRODUCT SOLD ON ONE SPECIFIC DATE CANNOT BE COMPARE D WITH THE PRICE OF GOODS SOLD ON ANY PRECEDING OR SUBSEQUENT DATE AND THEREFORE IT WAS STATED THAT MONTHLY AVERAGE PRICES SHOULD BE TAKEN. FOR THIS PROPOSITION PARA NUMBER 3.9 OF THE REVISED OECD 10 GUIDELINES ON TRANSFER PRICING WAS ALSO RELIED UPON ALONG WITH THE DECISION OF THE HONOURABLE DELHI HIGH COURT IN CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PRIVATE LIMITE D VERSUS CIT 374 ITR 118. THE ASSESSEE HAS ALSO RELIED UPON SEVE RAL OTHER DECISIONS, WHICH ARE ALREADY REPRODUCED BY US EARLI ER. THE LEARNED AR VEHEMENTLY RELIED UPON THE DECISION OF THE COORD INATE BENCH IN CASE OF ACIT VERSUS ESSAR STEEL LIMITED IN ITA NUMB ER 3727/ MUM/ 2011 WHERE THE ASSESSEE HAS COMPARED THE AVERA GE PRICE OF EIGHT TRANSACTIONS OF EXPORT OF GOODS MADE TO ASSOC IATED ENTERPRISE APPLYING CUP METHOD WAS UPHELD. WE HAVE CAREFULLY CONSIDERED THE ARGUMENT OF THE LEARNED AUTHORISED R EPRESENTATIVE AND THE DECISION OF THE COORDINATE BENCH IN CIT VER SUS ESSAR STEELS LTD (SUPRA). THE FACTS IN THAT PARTICULAR CA SES WERE THAT THE APPELLANT HAD CONSIDERED ALL THE TRANSACTION WI TH ITS ASSOCIATED ENTERPRISE IN TOTALITY BY AGGREGATING THE SAME. THE TRANSFER PRICING OFFICER PICKED UP ONLY TWO TRANSACTIONS WHE RE THE PRICE CHARGED WAS LESS THAN THE AVERAGE MARKET PRICE AND ALSO BEYOND 5% PERMISSIBLE BAND WIDTH TO MAKE THE ADDITION IGNO RING OTHER TRANSACTIONS WHERE THE AVERAGE PRICE CHARGED WAS MO RE. ON CAREFUL CONSIDERATION OF THE ABOVE DECISION, IT IS APPARENT THAT IF THE TRANSACTIONS ARE THE INTERLINKED TRANSACTIONS THEN THE ALP SHOULD BE CONSIDERED OF EXPORT OF GOODS ON AGGREGATE BASIS . IT CAN BE ESTABLISHED IN MANY WAYS THAT TRANSACTIONS ARE INTE RLINKED, ONE OF THE ILLUSTRATIVE WAY IS SUPPLY OF GOODS BILLED SEPA RATELY BUT THE PURCHASE ORDER IS COMMON AND THE RATES ARE ALSO PRE DETERMINED WITH ADJUSTMENTS ON ACCOUNT OF MATERIAL PRICES. BEF ORE US, NO SUCH DATA IS AVAILABLE OR ANY OTHER INFORMATION BY WHICH WE CAN SAY THAT THE TRANSACTIONS OF EXPORT TO ASSOCIATED ENTERPRISE ARE INTERLINKED 11 TRANSACTIONS. IT IS ALSO CLEAR THAT MERELY BECAUSE THEY ARE THE EXPORT OF THE SAME GOODS OVER A PERIOD TO THE ASSOC IATED ENTERPRISES, THEY DO NOT BECOME INTERLINKED. THERE HAS TO BE A BINDING ELEMENT BEHIND ALL THE TRANSACTIONS TO MAKE THEM ONE AND CONNECTED. SUCH DATA WAS ALSO NOT AVAILABLE BEFORE THE LEARNED TRANSFER PRICING OFFICER OR LEARNED DISPUTE RESOLUT ION PANEL. IF THIS FACT IS ESTABLISHED BY THE ASSESSEE THEN THE I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE ON THIS POINT BY THE DECISION OF THE COORDINATE BENCH . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE ALSO DIRECT TH E AO TO COMPUTE THE ALP CONSIDERING THE TRANSACTIONS OF EXPORT TO A SSOCIATED ENTERPRISE ON AGGREGATE BASIS AFTER ASSESSEE ESTABL ISHES BEFORE HIM THAT ALL THESE EXPORT TRANSACTIONS OF THE ASSOC IATED ENTERPRISE ARE INTERLINKED. TO THIS EXTENT, THIS ISSUE IS SENT BACK TO THE FILE OF THE LEARNED AO/TPO WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE THE ARGUMENT THAT THE TRANSACTION OF E XPORT OF GOODS TO ASSOCIATED ENTERPRISE ARE INTERLINKED. 26. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH, WE DIRECT ACCORDINGLY. 27. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUED THAT BENEFIT OF TOLERANCE RANGE OF +/- 5% IN THE PRICE CHARGED FROM THE AE VIS A VIS ALP SHOULD BE GIVEN. FOR THIS PROPOSITION, RELIANCE WA S PLACED ON THE DECISION OF THE CO-ORDINATE MUMBAI BENCH IN THE CAS E OF DEVELOPMENT BANK OF SINGAPORE, 155 TTJ 265. IT WAS POINTED OUT THAT THE TRIBUNAL 12 HELD THAT THE BENEFIT OF RANGE OF +/-5% IS AVAILABL E NOT ONLY TO A SITUATION WHERE MORE THAN ONE PRICE IS DETERMINED A S ALP BY THE MOST APPROPRIATE METHOD BUT ALSO WHERE ONLY ONE PRICE IS DETERMINED AS ALP. 28. WE FIND THAT THE TRIBUNAL, IN ASSESSEES OWN CA SE, FOR A.YS 2007- 08 AND 2008-09 [SUPRA] HAS ALLOWED THIS CLAIM OF TH E ASSESSEE HOLDING AS UNDER: 45. THE SIXTH ARGUMENT OF THE ASSESSEE IS WITH RESP ECT TO, WITHOUT PREJUDICE, THAT THE DIFFERENCE IN THE ARMS LENGTH PRICE OF GOODS EXPORTED BY THE APPELLANT TO ITS ASSOCIATED E NTERPRISE FALL WITHIN THE RANGE OF 5% OF THE TRANSACTED PRICE AS P ROVIDED UNDER THE SECOND PROVISO TO SECTION 92C (2) DEVELOPMENT B ANK OF SINGAPORE [155 TTJ 265] WHEREIN THE TRIBUNAL HELD T HAT THE BENEFIT OF RANGE OF 5% IS AVAILABLE NOT ONLY TO A S ITUATION WHERE MORE THAN ONE PRICE IS DETERMINED AS ARMS LENGTH P RICE BY THE MOST APPROPRIATE METHOD BUT ALSO WHERE ONLY ONE PRI CE IS DETERMINED AS ARMS LENGTH PRICE. THE IDENTICAL ISS UE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN APPELLANTS O WN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NUMBER 4111 AND 4248 /DEL/2013 WHEREIN PARA NUMBER 23 30 THIS ISSUE HAS BEEN CON SIDERED. IN PARA NUMBER 30 THE COORDINATE BENCH HAS HELD THAT : 30. THE FINE FROM THE SUBMISSIONS THAT THE DETAILS ARE NOT COMING OUT CLEARLY WHICH REQUIRES A REVISIT TO THE FILE OF THE TPO FOR PROPER APPRECIATION OF THE FACTS. WE THEREF ORE IN THE INTEREST OF JUSTICE, DEED IT PROPER TO RESTORE THE 13 GROUND RAISED BY THE ASSESSEE RELATING TO TP ADJUST MENT TO THE FILE OF THE TPO FOR FRESH ADJUDICATION OF THE I SSUE IN THE LIGHT OF THE SUBMISSION DETAILS FILED BY THE AS SESSEE IN THE PAPER BOOK THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE COORDINATE BENCH IN THE ASSESSEES OWN CASE, WE SET ASIDE THIS ARGUMENT OF THE ASSESSEE TO THE FILE OF THE LEARNED ASSESSING OFFIC ER/TRANSFER PRICING OFFICER, WITH A DIRECTION THAT IF THERE ARE MORE THAN ONE PRICES, THE LEARNED TRANSFER PRICING OFFICER IS DIR ECTED TO CONSIDER THE 5 PERCENT AS IN THE CASE FOR ASSESSMENT YEAR 2006-07. ACCORDINGLY THIS ARGUMENT OF THE ASSESSEE IS ACCEPT ED. 29. IN LIGHT OF THE AFOREMENTIONED DIRECTIONS OF TH E C-ORDINATE BENCH, WE DIRECT THE ASSESSEE TO FURNISH NECESSARY COMPUTA TION AND THE TPO IS DIRECTED TO EXAMINE THE SAME AND DECIDE THIS ISSUE AFRESH. 30. SECOND GRIEVANCE OF THE ASSESSEE IS THAT THE CR EDIT OF TDS AMOUNTING TO RS. 14,27,213/- HAS NOT BEEN ALLOWED. 31. WE FIND THAT THE ASSESSING OFFICER DENIED CREDI T OF TDS/TCS ON THE GROUND THAT THE SAME PERTAINED TO PRECEDING YEA RS, I.E. RS. A.Y. 2007-08 AND 2008-09. ACCORDINGLY, IN TERMS OF SECT ION 199 READ WITH RULE 37BA(3), THE CREDIT OF TAX DEDUCTED AT SOURCE WAS DENIED. 14 32. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FI NDINGS OF THE ASSESSING OFFICER. BUT, AT THE SAME TIME, THE REVE NUE SHOULD NOT BE BENEFITTED UNJUSTLY. WE, ACCORDINGLY, DIRECT THE A SSESSING OFFICER TO ALLOW THE CREDIT OF TDS/TCS AS PER PROVISIONS OF LA W IN PRECEDING A.YS. WE HOLD ACCORDINGLY. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART FOR STATISTICAL PURPOSES. ITA NO. 6130/DEL/2016 [REVENUES APPEAL] 34. FIRST GRIEVANCE RELATES TO DELETION OF ADDITION OF RS. 7,63,15,464/- ON ACCOUNT OF ADJUSTMENT IN TP. 35. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGH T ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF IT AT RULES AND HAVE ALSO PERUSED THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES. 15 36. THIS ADJUSTMENT CAN BE BIFURCATED INTO TWO PART S. FIRSTLY, THE ADJUSTMENT RELATES TO INTEREST ON LOAN RECEIVED FRO M AE AMOUNTING TO RS. 1,45,49,640/- AND SECONDLY, THE ISSUE OF CORPOR ATE GUARANTEE AMOUNTING TO RS. 6,17,65,824/-. 37. DURING THE FINANCIAL YEAR 2005 - 06, THE APPELLANT RECEIVED INTEREST OF RS. 56,68,570 ON LOAN AMOUNTING TO USD 25,00,000 GRANTED TO PT JINDAL STAINLESS, INDONESIA. INTEREST IS CHARGED ON THE LOAN AT THE RATE OF 3 MOTHS LIBOR PLUS 200 BASIS POINT. 38. IN CASE OF APPELLANT, COMPARABLE TRANSACTIO N IS AVAILABLE WHERE APPELLANT JSL HAS AVAILED LOAN FROM FINANCIAL INSTI TUTIONS, VIZ., STATE BANK OF INDIA, AT THE RATE OF 3 MONTHS LIBOR + 170 BASIS POINT AND FROM ICICI AT 3 MONTHS LIBOR + 140 BASIS POINT. JSL HAD PROVIDED THE LOAN TO PT JINDAL STAINLESS, INDONESIA AT HIGHER RATE, I.E. , 3 MONTHS LIBOR + 200 BASIS POINTS. COPY OF LOAN AGREEMENT ENTERED WITH S BI AND ICIC BANK IS PLACED AT PAGES 100-102 OF THE PAPER BOOK. 39. ALSO, THE ASSOCIATED ENTERPRISE, VIZ., PT JIND AL STAINLESS, INDONESIA HAS OBTAINED EXTERNAL COMMERCIAL BORROWINGS FROM UN RELATED PARTIES FOR MEETING ITS WORKING CAPITAL REQUIREMENTS AT LIBOR + 200 BASIS POINT. CONSIDERING THAT THE INTERNATIONAL TRANSACTION OF R ECEIPT OF INTEREST BY 16 JSL AT LIB OR + 200 BASIS POINTS WAS HIGHER OR COMPARABLE TO C OMPARABLE UNCONTROLLED PRICES FOR SIMILAR UNCONTROLLED TRANSA CTIONS, THE INTERNATIONAL TRANSACTION OF INTEREST RECEIVED IS CONSIDERED AS BEING AT ARMS LENGTH APPLYING COMPARABLE UNCONTROLLED PRICE METHOD. 40. THE TRANSFER PRICING OFFICER, HOWEVER, IN T HE IMPUGNED ORDER HAS DISREGARDED THE BENCHMARKING ANALYSIS UNDERTAKEN BY THE APPELLANT AND DETERMINED THE ARMS LENGTH PRICE OF INTEREST ON LO AN AT 17.24% ON THE BASIS OF INFORMATION PROVIDED BY THE CRISIL, SOUGHT UNDER SECTION 133(6) OF THE ACT AND ACCORDINGLY, MADE AN ADJUSTMENT OF R S. 1,45,49,640/-. 41. ON APPEAL, FOLLOWING THE DECISION OF THE JU RISDICTIONAL HIGH COURT IN THE CASE OF CIT VS COTTON NATURALS [ITA 233 OF 2 014], WHEREIN, THE HIGH COURT HAS NEGATED THE USE OF DOMESTIC LENDING RATES SUCH AS PLR FOR COMPARING INTEREST CHARGED ON FOREIGN CURRENCY DENO MINATED LOANS, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE TPO/ AO . 42. WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE T RIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007-08 AND 2008-09 IN ITA NO. 4249/DEL/2013 AND 6337/DEL/2012 RESPECTIVELY, WHERE IN THE CO- ORDINATE BENCH FOLLOWED THE ORDER OF THE HON'BLE JU RISDICTIONAL HIGH COURT IN THE CASE OF COTTON NATURALS ITA 233 OF 201 4 AND HAS DELETED 17 SIMILAR ADJUSTMENT S. THE RELEVANT FINDINGS READ AS UNDER: 58. IN THE ABOVE DECISION, THE HONOURABLE HIGH COU RT HAS HELD THAT PLR RATES ARE NOT APPLICABLE TO LOANS TO BE REPAID IN FOREIGN CURRENCY AND THE INTEREST RATES ARE DEPENDENT ON THE FOREIGN CURRENCY IN WHICH THE REPAYMENT IS TO BE MADE. IT IS ALSO NOT D EPENDENT ON THE RESIDENCE OF EITHER PARTY. THEREFORE, THE INTEREST RATE SHOULD BE APPLIED BASED ON THE CURRENCY IN WHICH THE REPAYMEN T IS TO BE MADE. THEREFORE, IN THE PRESENT CASE THE LIBOR SHOULD BE THE BASIS AND NOT THE PRIME LENDING RATE. THE ASSESSEE HAS BENCHM ARK THE INTEREST BY APPLYING LIBOR +200 BASIS POINTS APPLYING THE CU P METHOD. THE LEARNED TRANSFER PRICING OFFICER HAS ADOPTED THE LI BOR+ 400 THE INFORMATION AVAILABLE IN PUBLIC DOMAIN ON VARIOUS W EBSITES OF INDIAN BANKS AND VARIOUS FREE PUBLIC REPORTS WHERE THE LEN DING RATES ARE RANGING FROM LIBOR+ 350 BASIS POINTS TO 650 POINTS FOR FY 2006 07. THE ASSESSEE HAS GRANTED LOAN TO ITS SUBSIDIARY COM PANY. THEREFORE, ECONOMIC PURPOSE AND SUBSTANCE OF THE DEBT CLAIM OR DEBT FOR WHICH GRANTING OF CREDIT CALLS FOR THE LENDING RATE WOULD BE DETERMINATIVE. THE COMMERCIAL EXPEDIENCY AND RELATED BENEFITS OF C LOSE CONNECTIONS 18 WITH THE ABOVE TRANSACTION, OF COURSE, WOULD HAVE A MARGINAL SIGNIFICANCE AND EFFECT. THE LENDING RATES SHOWN BY THE BANKERS AS ADOPTED BY THE LEARNED TRANSFER PRICING OFFICER WIL L NOT HAVE ANY FACTORING OF THAT CONSIDERATION. FURTHERMORE, THE C REDIT RATING WOULD ALSO BE AN ISSUE WHEN THE BANKS ARE LENDING TO A FO REIGN PARTY. THE LEARNED ASSESSING OFFICER HAS ALSO STATED THAT ADJU STMENT FOR SECURITIES ALSO REQUIRED TO BE MADE AND THE BANKERS EXTENDING LOAN IN FOREIGN CURRENCY WOULD BE INSISTING ON SUFFICIENT S ECURITY WHICH LOOKING AT THE FINANCIAL HEALTH OF THE SUBSIDIARY I S NOT POSSIBLE AND THEREFORE INTEREST RATES ARE REQUIRED TO BE IMPUTED WHICH WILL TAKE CARE OF THIS ASPECT ALSO. IN THE PRESENT CASE, THE BORROWER IS THE SUBSIDIARY OF THE LENDER COMPANY AND THEREFORE WE DO NOT FIND IT NECESSARY TO INCLUDE THE SAME IN THE INTEREST COST. THEREFORE, THE INTEREST RATE ADOPTED BY THE LEARNED TRANSFER PRICI NG OFFICER IS FURTHER REQUIRED TO BE REDUCED BY THIS FACTOR. IN V IEW OF THESE FACTS, WE DO NOT FIND ANY REASON THAT INTEREST CHAR GED BY THE ASSESSEE AT LIBOR +200 IS NOT AT ARMS-LENGTH. NOW WE COME TO THE OTHER ISSUE WHERE THERE SHOULD B E AN ADJUSTMENT OF THE TRANSACTION COST AND ADJUSTMENT F OR SECURITY. THE LEARNED TRANSFER PRICING OFFICER HAS MADE ADDIT ION OF 300 BASIS POINTS ON ACCOUNT OF TRANSACTION COST. LEARNE D TRANSFER PRICING OFFICER HAS MADE AN ADJUSTMENT AT THE RATE OF 3% ON ACCOUNT OF TRANSACTION COST, SECURITY, AND SINGLE C USTOMER RISK ON INTEREST RATE. CONTESTING THIS ADJUSTMENT THE LEARN ED AUTHORISED REPRESENTATIVE HAS RELIED UPON THE DECISION OF THE COORDINATE BENCH IN CASE OF BHARTI AIRTEL LIMITED V ACIT [5816 /DEL/2012] WHEREIN IT HAS BEEN HELD THAT THAT WHEN THE TRANSFE R PRICING OFFICER HAS TAKEN THE LENDER AS THE TESTED PARTY AN D YET MADE 19 ADJUSTMENT FOR HIGHER RISK ON ACCOUNT OF ASSUMED LA CK OF SECURITY AND INCREASED RISK OF SINGLE PARTY DEALING IS NOT B ASED ON ANY RATIONAL FOR ADJUSTMENT ON ACCOUNT OF HIGHER RISK. APPARENTLY, IN THIS CASE THE ASSESSEE, LENDER IS A TESTED PARTY AN D FURTHER THE LOAN IS ADVANCED TO 100% WHOLLY OWNED SUBSIDIARY IN INDONESIA THE FACTS OF THE CASE ARE CLEARLY COVERED BY THE DECISI ON OF COORDINATE BENCH. THE HONOURABLE DELHI HIGH COURT IN CIT VS CO TTON NATURALS (SUPRA) HAS ALREADY HELD THAT THE TRANSACTION COST OF HEDGING COST IS BORNE AND PAID BY THE BORROWER THEREFORE TRANSAC TION COST IS NOT APPLICABLE IN CASE IN QUESTION THE LOAN HAD TO BE R EPAID IN THE FOREIGN CURRENCY. EVEN OTHERWISE ACCORDING TO US TH E MARKUP TOWARDS THE TRANSACTION COST IS EXORBITANT AND COMP ARISON WITH THE BANK IS ALSO UNTENABLE. IN VIEW OF THIS, WE DO NOT SEE ANY RATIONAL IN THE IMPUGNED IN FURTHER COST AND RISK PREMIUM ON TH E RATE DIRECTED BY THE LEARNED DISPUTE RESOLUTION PANEL. ACCORDINGL Y WE DIRECT THE LEARNED TRANSFER PRICING OFFICER TO NOT TO CHARGE A NY RISK PREMIUM FOLLOWING THE DECISION OF THE COORDINATE BENCH. IN VIEW OF THIS, THE TRANSACTION COST IMPUTED OF 300 BASIS POINTS CANNOT BE SUSTAINED. 60. IN VIEW OF OUR ABOVE DISCUSSION, WE FIND THAT T HE LEARNED TRANSFER PRICING OFFICER SHOULD HAVE CONSIDERED FOR BOTH THE YEARS THE LIBOR +200 BASIS POINTS IN BOTH THE FINAN CIAL YEAR FINANCIAL YEAR FOR THE BENCHMARKING FOR THE INTERES T INCOME OF THE ASSESSEE. 61. IN VIEW OF THIS GROUND NUMBER 3 OF THE APPEAL F OR ASSESSMENT YEAR 2007 08 AND GROUND NUMBER 4 OF APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 09 IS PARTLY ALLOWED. 20 43. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH [SUPRA], WE HOLD ACCORDINGLY. 44. IN SO FAR AS THE ADJUSTMENT ON ACCOUNT OF CORPO RATE GUARANTEE IS CONCERNED, WE FIND THAT THIS ISSUE WAS ALSO CONSIDE RED AND DECIDED BY THE CO-ORDINATE BENCH IN A.YS 2007-08 AND 2008-09 [ SUPRA]. THE RELEVANT FINDINGS OF THE ORDER READ AS UNDER: 67. THE SECOND CONTENTION RAISED BEFORE US IS THAT BENCHMARKING BY THE ASSESSEE SHOULD BE ACCEPTED. THE ASSESSEE HA S CHARGED GUARANTEE COMMISSION FROM AE @ 1.5 %. THE LD TPO HA S BENCH MARKED IT AFTER OBTAINING THE QUOTATION FROM VARIOU S BANKS, WHICH ARE 2.68 %. HE FURTHER ADDED 2 % AS MARK UP BECAUSE OF SECURITY AND MARGIN ADJUSTMENTS. THE ASSESSE SUBSTANTIATED T HE ALP STATING THAT ING VASYA BANK HAS GIVEN A QUOTE OF 1.5 % FURT HER SIMILAR IS STATED TO BE THE QUOTE OF INDUSIND BANK. THE TPO HA S ALSO TAKEN THE QUOTES OF AXIS BANK, CANARA BANK, PNB, AND ICIC I BANK, BANK OF BARODA, HDFC BANK, AND SBI. HE ARRIVED AT ARITHM ETIC MEAN OF 2.68 %. IN THE PRESENT CASE THE LD TPO HAS BENCHMAR KED THE TRANSACTION BY OBTAINING THE QUOTE FROM BANKERS AND HON BOMBAY HIGH COURT IN CASE OF [2015-TII-16-HC-MUM-TP] THE COMMISSIONER OF INCOME TAX, MUMBAI VS. M/S EVEREST KENTO CYLINDERS LTD AS RELIED BY THE AR HAS HELD A S UNDER :- .. .. . 68. EVEN OTHERWISE THE COMMISSION CHARGED BY THE AS SESSEE ALSO IN CONFORMITY WITH THE RATES QUOTED BY INDUSIN D BANK AND ING VASYA BANK. FURTHER, THE REASONS GIVEN BY U S WITH 21 RESPECT TO RISK ADJUSTMENTS AND MARGINS WHILE DECID ING THE ISSUE OF INTEREST RECEIPT RELYING ON THE DECISION O F BHARTI AIRTEL DECISION (SUPRA) ARE EQUALLY APPLICABLE FOR THIS TRANSACTION TOO. IN VIEW OF THIS GROUND NO 5 FOR AY 2008- 09 AND GROUND NO 4 FOR AY 2007-08 ARE PARTLY ALLOWE D. ACCORDINGLY, SINCE THE REASON PROVIDED BY THE CIT(A ) IN DELETING THE ADJUSTMENT STANDS APPROVED BY THE HONBLE TRIBU NAL IN ORDER PASSED FOR PRECEDING YEARS, THE ORDER OF THE CIT(A) OUGHT TO BE UPHELD. 45. RESPECTFULLY FOLLOWING THE SAME, THIS ADJUSTMEN T IS ALSO DELETED. 46. SECOND GRIEVANCE RELATES TO DELETION OF ADDITIO N OF RS. 16224643/- MADE U/S 14A R.W.R 8D. 47. FACTS ON RECORD SHOW THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 2,37 ,000/-. THOUGH THIS DIVIDEND WAS INCLUDED BY THE ASSESSEE IN ITS TOTAL INCOME, THE SAME WAS TREATED EXEMPT BY THE ASSESSING OFFICER WHILE F RAMING THE ASSESSMENT ORDER. INVOKING PROVISIONS OF SECTION 1 4A OF THE ACT BY 22 R.W.R. RULE 8D, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE OF RS. 1,62,24,643/-. 48. WITHOUT GOING INTO THE LEGAL JARGON IN RESPECT OF RELEVANT PROVISIONS OF THE ACT, WE ARE OF THE CONSIDERED OPI NION THAT THE DISALLOWANCE SHOULD NOT EXCEED EXEMPT INCOME OF RS. 2,37,000/-. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JOINT INVE STMENT PVT LTD 372 ITR 694 WHEREIN IT HAS BEEN HELD AS UNDER: BY NO STRETCH OF IMAGINATION CAN SECTION 14A OR RU LE 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMP T INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDIC ATED IN SECTION 14A, AND IS ONLY TO THE EXTENT OF DISALLOWING EXPEN DITURE 'INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOM E'. THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURE LY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. 49. IN LIGHT OF THIS DECISION OF THE HON'BLE HIGH C OURT [SUPRA], WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALL OWANCE TO RS. 2,37,000/-. THIS GROUND IS PARTLY ALLOWED. 50. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. 23 ITA NO. 6518/DEL/2016 [ ASSESSEES APPEAL] ITA NO. 6539/DEL/2016 [REVENUES APPEAL] 51. THE ABOVE CROSS APPEALS BY THE ASSESSEE AND REV ENUE ARE PREFERRED AGAINST THE ORDER OF THE CIT(A) - 37, NEW DELHI DATED 21.10.2016 PERTAINING TO A.Y. 2010-11. 52. FIRST WE WILL TAKE UP ASSESSEES APPEAL. 53. FIRST GRIEVANCE RELATES TO TP ADJUSTMENT OF RS. 16,65,766/- ON ACCOUNT OF ALLEGED DIFFERENCE IN ALP OF INTERNATION AL TRANSACTION ON EXPORT OF GOODS. 54. IN ADDITION TO THE CHALLENGE TO THIS TP ADJUSTM ENT, THE ASSESSEE HAS ALSO CLAIMED BENEFIT OF +/- 5% RANGE AS PROVIDE D UNDER THE PROVISO TO SECTION 92C(2) OF THE ACT. 55. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US HE REINABOVE IN ITA NO. 6517/DEL/2016 [SUPRA]. FOR OUR DETAILED DISCUS SION THEREIN, WE HOLD ACCORDINGLY. 24 56. SECOND GRIEVANCE RELATED TO REJECTION OF SET OF F OF PRIOR PERIOD EXPENSES OF RS. 46.39 LAKHS FROM PRIOR PERIOD INCOM E. 57. FACTS ON RECORD SHOW THAT DURING THE YEAR UNDER CONSIDERATION, ADJUSTED EXPENSES RELATED TO EARLIER YEARS AMOUNTIN G TO RS.46.39 LAKHS WITH THE PRIOR PERIOD INCOME AMOUNTING TO RS.433.12 LAKHS, AND HAS SHOWN NET INCOME OF RS. 386.73 LAKHS IN THE PROFIT & LOSS A/C. 58. THE ASSESSING OFFICER, HOWEVER, DISALLOWED EXPE NSES RELATED TO PRIOR PERIOD AND MADE ADDITION OF RS. 46.39 LAKHS. 59. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT( A) BUT WITHOUT ANY SUCCESS. 60. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEH EMENTLY STATED THAT THE LIABILITY TO PAY THE SUM GOT CRYSTALLIZED ONLY IN THE YEAR UNDER CONSIDERATION. IT IS THE SAY OF THE LD. COUNSEL FO R THE ASSESSEE THAT THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE ASSE SSEE SHOULD HAVE ACCOUNTED FOR AND CLAIMED THE EXPENSES IN THE EARLI ER YEAR DOES NOT HOLD ANY WATER AS THE SAID EXPENSES WERE NEITHER DE TERMINED NOR HAD CRYSTALLIZED IN THE EARLIER YEAR. 25 61. RELIANCE WAS PLACED ON THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF NONSUCH TEA ESTATE LTD. 98 ITR 189 AND T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTR A CEMENT & CHEMICAL INDUSTRIES213 ITR 523 WHEREIN IT HAS BEEN HELD THAT MERELY BECAUSE AN EXPENSE RELATES TO A TRANSACTION OF AN E ARLIER YEAR IT DOES NOT BECOME A LIABILITY PAYABLE IN THE EARLIER YEAR UNLESS IT CAN BE SAID THAT THE LIABILITY WAS DETERMINED AND CRYSTALLIZED IN THE YEAR IN QUESTION. 62. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE ASSESSING OFFICER. 63. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. IN OUR CONSIDERED OPINION, IF TH E ASSESSING OFFICER WAS OF THE STRONG BELIEF THAT THE PRIOR PERIOD EXPE NSES CANNOT BE ALLOWED IN THE YEAR UNDER CONSIDERATION, THEN THE A SSESSING OFFICER SHOULD HAVE REALIZED THAT HE IS TAXING PRIOR PERIOD INCOME EARNED DURING THE YEAR UNDER CONSIDERATION. WE DO NOT FIN D ANY REASON WHY THE PRIOR PERIOD EXPENSES SHOULD NOT BE NETTED OFF AGAINST THE PRIOR PERIOD INCOME, WHICH IN OUR OPINION IS MOST LOGICAL WAY OF TREATING THE SAME. 26 64. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF EXXON MO BIL LUBRICANTS (P) LTD. 328 ITR 17, WHEREIN THE HIGH COURT OBSERVED TH AT EXPENSES PERTAINING TO PRIOR PERIOD WERE ALLOWABLE IN THE RE LEVANT YEAR IN WHICH THE SAME WERE CRYSTALLIZED. ON FACTS OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO ALLOW SET OFF OF PRIOR PERIOD EXPENSES WITH PRIOR PERIOD INCOME. THIS GROUND IS, ACCORDINGLY, ALLOWE D. 65. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART FOR STATISTICAL PURPOSES. ITA NO. 6539/DEL/2016 [REVENUES APPEAL] 66. FIRST GRIEVANCE RELATES TO DELETION OF ADDITION OF RS. 1,38,48,378/- ON ACCOUNT OF DIFFERENCE IN INTEREST CHARGED ON LOAN. 67. SIMILAR ISSUE HAS BEEN CONSIDERED AND DECIDED B Y US IN ITA NO. 6130/DEL/2016. FOR OUR DETAILED DISCUSSION THEREIN , THIS GROUND IS DISMISSED. 27 68. SECOND GRIEVANCE RELATES TO DELETION OF DISALLO WANCE OF RS. 2,27,65,934/- MADE U/S 14A OF THE ACT R.W.R 8D. 69. FACTS ON RECORD SHOW THAT THE ASSESSEE HAS EARN ED DIVIDEND INCOME OF RS. 1,77,000/-. THOUGHT THIS DIVIDEND WAS INCLUDED BY THE ASSESSEE IN ITS REVISED RETURN OF INCOME, BUT THE A SSESSING OFFICER, ALLOWED EXEMPTION WHILE FRAMING THE ASSESSMENT ORDE R. HOWEVER, INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R .W.R 8D, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 2,27,65,934/- WHIC H WAS DELETED BY THE LD. CIT(A). 70. WITHOUT GOING INTO THE LEGAL JARGON IN RESPECT OF RELEVANT PROVISIONS OF THE ACT, WE ARE OF THE CONSIDERED OPI NION THAT THE DISALLOWANCE SHOULD NOT EXCEED EXEMPT INCOME OF RS. 1,77,000/-. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RES TRICT THE DISALLOWANCE TO RS. 1,77,000/-. THIS GROUND IS PAR TLY ALLOWED. 71. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. 72. TO SUM UP: REVENUES APPEALS : 28 ITA NO. 5095/DEL/2016[A.Y : 2007-08] - DISMISSED ITA NO. 6130/DEL/2016 [A.Y : 2009-10] - PARTLY ALLO WED ITA NO. 6380/DEL/2016 [A.Y : 2009-10] - DISMISSED ITA NO. 6539/DEL/2016 [A.Y : 2010-11] - PARTLY ALLO WED ASSESSEES APPEALS : ITA NO. 6517/DEL/2016 [A.Y : 2009-10] - PARTLY ALLO WED FOR STATISTICAL PURPOSES ITA NO. 6518/DEL/2016 [A.Y : 2010-11] - PARTLY ALLO WED FOR STATISTICAL PURPOSES THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.09. 2020. SD/- SD/- [SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH SEPTEMBER, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 29 DATE OF DICTATION 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 3 0 . 0 9 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER