ABAN OFFSHORE LIMITED, CHENNAI V. ITO, DELHI

ITTPA 30/CHNY/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4860 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 13-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P.MURALI MOHANA RAO
• Keywords: Capital asset; Depreciation; Transfer pricing; Search and seizure; Double taxation relief; International transaction; Earning of tax free income; Services rendered outside India; Retrospective amendment; Question of law; Cost of acquisition; Wholly owned subsidiary; Reasonable cause; Commercial expediency; Condonation of delay; Revenue expenditure; Speculative transactions; TDS; Rule 8D; Set aside; FORM 26AS
• Section: 32; 92B; 43; 48; 13; 22; 20

Judgement Text

आयकर अपील सं./IT (TP) A No.30/Chny/2021 िनधा रण वष /Assessment Year: 2016-17 M/s.Aban Offshore Ltd., 113, Janpriya Crest, Pantheon Road, Egmore, Chennai. v. The Asst. Commissioner- of Income Tax, National e-Assessment Centre, Delhi. [PAN: AAACA 3012 H] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.P.Muralimohana Rao, CA यथ क ओर से /Respondent by : Dr.S.Palani Kumar, CIT सुनवाई क तारीख/Date of Hearing : 03.02.2022 घोषणा क तारीख /Date of Pronouncement : 06.04.2022 आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the final assessment order passed by the AO u/s.143(3) r.w.s.144C(13) of the Act, dated 31.03.2021, in pursuant to directions of the Dispute Resolution Panel-2, Bangalore, dated 05.02.2021 issued u/s.144C(5) of the Act, relevant to assessment year 2016-17. 2. The assessee has raised various grounds on additions made by the AO towards transfer pricing adjustment and other corporate issues, and confirmed by the Dispute Resolution Panel. Therefore, we deem it not आयकर अपीलीय अिधकरण, ’डी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI ी महावीर िसंह, माननीय उपा , एवं ी जी. मंजूनाथा, , माननीय लेखा सद के सम BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER IT (TP) A No.30/Chny/2021 :: 2 :: necessary to re-produce the grounds of appeal filed by the assessee, because it runs into number of pages. However, disposed off the appeal filed by the assessee on each issue with reference to the grounds of appeal filed by the assessee. 3. The assessee had also filed a petition for admission of additional grounds vide letter dated 28.01.2012 and has taken specific ground on the issue of computation of Dividend Distribution Tax (in short “DDT"), including interest u/s.115P of the Act and argued that additional grounds taken up by the assessee is a legal issue which can be taken at any time including the proceedings before the Tribunal in light of the decision of the Hon’ble Supreme Court in the case of M/s.National Thermal Power Co. Ltd. v. CIT reported in [1998] 229 ITR 383 (SC). The Ld.DR, on the other hand, although, opposed the petition filed by the assessee for filing additional grounds, but fairly agreed that the additional grounds of appeal filed by the assessee, may be admitted and the issue may be restored to the file of the AO for further verification. 3.1 We have heard both the parties, perused the materials available on record and considered the petition filed by the assessee for admission of additional grounds. We find that the assessee has taken a specific ground challenging levy of DDT on the ground that the assessee had already remitted DDT on 06.10.2015 and the payment is reflected in Form No.26AS. Therefore, considering the fact that the issue raised by the assessee is a legal issue and further, the question of computation of DDT IT (TP) A No.30/Chny/2021 :: 3 :: is purely depend upon taxes paid by the assessee on distribution of dividend and hence, by following the decision of the Hon’ble Supreme Court in the case of M/s.National Thermal Power Co. Ltd. v. CIT (supra), we admit additional grounds filed by the assessee. 4. We find that appeal filed by assessee is barred by limitation for which necessary petition for condonation of delay explaining the reasons for the delay has been filed. The learned counsel submitted that assessee could not file appeal within the time allowed under the Act, therefore, delay may be condoned. Having heard both sides and considered the petition filed by the assessee for condonation of delay, we are of the considered view that reasons given by assessee for not filing the appeal within the time allowed under the Act, comes under reasonable cause as provided under the Act for condonation of delay and thus, delay in filing of above appeal is condoned and appeal filed by the assessee is admitted for adjudication. 5. The brief facts of the case are that the assessee is a Public Ltd. Co. engaged in the business of providing offshore drilling and production services to companies engaged in exploration, development and production of oil and gas, both in domestic and international markets. The company is also engaged in the ownership and operation of wind turbines for generation of wind power in India. The assessee had filed the return of income for the AY 2016-17 on 28.11.2016 and declared taxable income of Rs.498,00,70,230/-. The case was taken up for scrutiny and during the course of assessment proceedings, a reference was made to Transfer IT (TP) A No.30/Chny/2021 :: 4 :: Pricing Officer (in short “TPO") for determining Arm’s Length Price (in short “ALP") with reference to the international transactions as well as specified domestic transactions reported in Form No.3CEB filed for the relevant AY. The TPO vide his order dated 31.10.2019 has suggested an upward adjustment of Rs.64,26,250/- towards Corporate Guarantee Fee @ 1% on corporate guarantee given by the assessee to their Associated Enterprises (in short “AEs"). 5.1 In pursuant to the TPO order, the AO has passed draft assessment order u/s.144C(1) of the Act and has proposed TP adjustment of Rs.64,26,250/- in respect of corporate guarantee given to their AEs. The AO had also proposed various other additions on corporate tax issues, including the disallowance at interest expenses u/s.36(1)(iii) of the Act, amounting to Rs.82,40,26,367/- for diversion of interest bearing funds to make investments in subsidiary company of the assessee, M/s.Aban Holdings Pvt. Ltd., Singapore. The AO had also proposed disallowance of technical services fee paid to non-residents u/s.40(a)(i) of the Act, for non- deduction of tax at source u/s.195 of the Act, for Rs.1,42,60,560/-. The AO had also disallowed payment made to a non-residents u/s.40(a)(i) of the Act, for non-deduction of TDS u/s.195 of the Act. Similarly, the AO denied credit for tax paid u/s.90 of the Act and further, disallowed loss on FOREX contracts, etc. 5.2 Aggrieved by the draft assessment order, the assessee filed their objection before the DRP-2, Bangalore. The DPR vide their directions dated IT (TP) A No.30/Chny/2021 :: 5 :: 05.02.2021 rejected the objections filed by the assessee and uphold the TP adjustment made by the AO and also various other additions in respect of corporate tax issues. The AO in pursuant to the directions of the DRP, had passed final assessment order u/s.143(3) r.w.s.144C(13) of the Act on 31.03.2021 and determined total income at Rs.595,95,58,345/- by making various additions, including the additions towards corporate guarantee fee. The AO had also re-computed the book profit u/s.115JB of the Act, by making additions towards disallowance u/s.14A r.w.r.8D of Income Tax Rules, 1962 and further, addition towards difference in receipts as per Form No.26AS. Aggrieved by the final assessment order, the assessee has filed present appeal before the Tribunal. 6. The first issue that came up for our consideration from Ground No.2 of the assessee’s appeal is upward adjustment of ALP of Rs.64,26,250/- towards corporate guarantee fee in respect of corporate guarantee given to their AEs. The AO has made TP adjustment of Rs.64,26,250/- towards corporate guarantee fee @ 1% on total corporate guarantee outstanding at the end of the year amounting to Rs.64,26,25,000/- on the ground that corporate guarantee given by the assessee to their AEs, is an international transaction, which needs to be bench marked to determine the ALP of the transaction. It was the submission of the assessee before the TPO that corporate guarantee given to their AEs is not resulting into any quantifiable IT (TP) A No.30/Chny/2021 :: 6 :: benefit to the AEs. Therefore, the same cannot be considered as international transaction to bench mark the ALP of the transaction. 6.1 The Ld.AR for the assessee submitted that the AO is erred in treating corporate guarantee as an international transaction u/s.92B of the Act, which needs to be bench marked to determine ALP of the transaction. He further submitted that this issue is covered in favour of the assessee by the decision of co-ordinate Bench in the assessee’s own case in IT (TP) A No.86/Chny/2019 for the AY 2015-16, wherein, under identical set of facts, the Tribunal held that the corporate guarantee given to their AEs, is an international transaction. However, while bench marking the rate of commission, which cannot be considered like a bank guarantee given by commercial banks and thus, directed the AO to determine corporate guarantee fee @ 0.5% of total corporate guarantee given to their AEs. 6.2 The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), fairly agreed that this issue is covered by the decision of the Tribunal for the AY 2015-16, wherein, the Tribunal has directed the AO to charge corporate guarantee fee @ 0.5% of total corporate guarantee given to their AEs. 6.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. In so far as the first arguments of the assessee that corporate guarantee per se is not an IT (TP) A No.30/Chny/2021 :: 7 :: international transaction, we find that as per the definition of international transaction u/s.92B of the Act, the definition includes lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises. Therefore, from the definition of international transaction, which is very clear that the transaction of lending or borrowing also considered as international transaction. Since, corporate guarantee given to their AEs is in the nature of lending of money, which is having a bearing on the profit of the assessee, the same needs to be considered as international transaction and thus, we reject the arguments of the assessee on corporate guarantee per se is not an international transaction. 6.4 Having said so, when it comes to the rate, on which, such guarantee commission needs to be computed, we find that the co-ordinate Bench of the Tribunal in the assessee’s own case for the AY 2015-16 had considered an identical issue and the Tribunal by following the decision of the Hon’ble Bombay High Court in the case of CIT v. Everest Kento Cylinders Ltd. [2015] reported in 58 taxmann.com 254, has directed the TPO to compute corporate guarantee commission @ 0.5% of total corporate guarantee given to their AEs and outstanding at the end of the relevant Financial Year. The relevant findings of the Tribunal are as under: 8. We have heard both the sides and considered the arguments and had gone through the orders of the lower authorities. 9. In so far as the issue that whether Corporate Guarantee issued by the Assessee to its AEs comes within the definition of International Transaction or not? The Finance Act, 2012 has inserted, an explanation to Section 92B with retrospective effect from 1st April, 2002 to include the term guarantee within the definition of international transaction. Therefore, the IT (TP) A No.30/Chny/2021 :: 8 :: Corporate Guarantee issued by an entity on behalf of its AEs is an international transaction as considered by the Bombay High Court in the case of the Commissioner of Income Tax Vs. Everest Kentor Cylinder Limited reported in [2015] 58 Taxmann.com 254 (Bom.). The Hon’ble High Court has considered the issue in the light of provision of Section 92B and explanation, to come to the conclusion that guarantee issued by an entity on behalf of its AEs, a SUBSIDIARY is international transaction. However, while benchmarking the rate of commission, no comparison can be made between guarantee issued by the commercial bank as against corporate guarantee issued by holding company for benefit for its AE subsidiary company for computing ALP of guarantee commission. The relevant observation of the Hon’ble Bombay High Court (supra) is reproduced as under: “The adjustment made by the TPO was based on instances restricted to the commercial banks providing guarantees and did not contemplate the issue of corporate guarantee. No doubt, these are contracts of guarantee, however, when they are commercial banks that issue bank guarantees which are treated as the blood of commerce being easily encashable in the event of default and if the bank guarantee had to be obtained from commercial banks, the higher commission could have been justified. In the present case, it is assessee-company that is issuing corporate guarantee to the effect that if the subsidiary AE does not repay loan availed of it from ICICI, then in such event, the Assessee would make good the amount and repay the loan. The considerations which apply for issuance of a corporate guarantee are distinct and separate from that of bank guarantee are distinct and separate from that of bank guarantee and accordingly commission charged cannot be called in question, in the manner TPO has done. The comparison is not as between like transactions but the comparisons are between guarantees issued by the commercial banks as against a Corporate Guarantee issued by holding company for the benefit of its AE, a subsidiary company. In view of the above discussion, appeal does not raise any substantial question of law and it is dismissed.” 10. From the above decision of the Hon’ble Mumbai High Court, it is clear that Corporate Guarantee by an entity on behalf of its AEs a subsidiary company is an international transaction. However, while arriving at a rate, the Assessing Officer has taken comparables from commercial banks to at arrive at mean margin of 1.04% and adopted such rate to determine the ALP of corporate guarantee issued by the Assessee. The Hon’ble Mumbai High Court has confirmed the order of the Tribunal wherein the Tribunal estimated the guarantee commission at the rate of 0.50%. We therefore by considering the facts and circumstances of the case, we are of the opinion that we will fix the guarantee commission at the rate of 0.50%. 6.5 In this view of the matter and consistent with view taken by the co- ordinate Bench, we direct the AO/TPO to compute corporate guarantee fee @ 0.5% of total corporate guarantee given to their AEs. 7. The next issue that came up for our consideration from Ground No.3 of the assessee’s appeal is disallowance of interest expenditure u/s.36(1)(iii) of the Act, amounting to Rs.82,40,26,367/- on the ground that the assessee has diverted interest bearing funds for the purpose of investments made in subsidiary company M/s.Aban Holdings Pvt. Ltd., IT (TP) A No.30/Chny/2021 :: 9 :: Singapore. The AO has disregarded the arguments of the assessee that the investment made in share capitals of subsidiary company is for commercial expediency and the assessee derives business advantage in the nature of sharing Revenue from operations along with its subsidiary company. Therefore, when there is a commercial expediency, the question of disallowance of interest expenses does not arise. The AO, however, did not convince with the explanation furnished by the assessee and according to the AO, although, the assessee claims to have commercial expediency in making investments in subsidiary company, but on perusal of details filed by the assessee, the assessee failed to make out a case of commercial expediency. Therefore, he opined that the assessee has diverted interest bearing funds for non-business purpose of investment in share capital of subsidiary company, which is nothing but shareholders activity and thus, interest paid on borrowed capital, cannot be allowed as deduction. Hence, disallowed total interest expenses amounting to Rs.82,40,26,367/- u/s.36(1)(iii) of the Act. 7.1 The Ld.AR for the assessee submitted that the company is in the business of offshore drilling, for which, it has required to own assets in the form of rigs. Hence, as a commercial prudent decision, the assessee owns rigs under its wholly owned subsidiary. Further, for maintenance of rigs, the assessee requires huge capital and in order to meet the capital requirement, the assessee has funded the subsidiary company by way of advancing loans and contributions to their equity. Therefore, he submitted IT (TP) A No.30/Chny/2021 :: 10 :: that the investment made in the subsidiary company as an object to capture the business in the world market through the subsidiary company and thus, when the assessee has established commercial expediency, the question of disallowance of interest expenses does not arise. 7.2 The Ld.DR, on the other hand, supporting the order of the AO, submitted that the assessee has failed to make out a case of commercial expediency by bringing on record necessary evidences to prove that what is the business advantage derives by the assessee by investing in equity capital of subsidiary company in Singapore. The Ld.DR further submitted that the assessee had also failed to make out a case that investments made in Singapore company, will aid the business interest of the assessee. The AO after considering relevant facts has rightly disallowed interest expenses u/s.36(1)(iii) of the Act and his order should be upheld. 7.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that M/s.Aban Holdings Pvt. Ltd., Singapore, is a 100% subsidiary of assessee company. It was also not in dispute that the assessee company and subsidiary companies are in the business of rendering services in connection with exploration of oil and gas. The assessee had owned rigs required for carrying out its business activity in the name of subsidiary company in Singapore, for the sole purpose of getting financial advantage by arranging funds required for acquiring rigs. IT (TP) A No.30/Chny/2021 :: 11 :: The assessee has filed necessary evidences to prove that the investment made in subsidiary company is facilitated the subsidiary company to rise further capital from the Banks and Financial Institutions, to have a better debt equity ratio. We further noted that the assessee and the subsidiary company are in common business, having some business advantage in growing business in international market. Therefore, we are of the considered view that the assessee, as a businessman, has taken a prudent decision to make investments in subsidiary company to derive commercial advantage and thus, we are of the considered view that the AO as well as the DRP are erred in disallowing interest expenses u/s.36(1)(iii) of the Act, for diversion of interest bearing funds to make investment in subsidiary company. 7.4 We further noted that this issue is squarely covered in favour of the assessee by the decision of the Tribunal in the assessee’s own case for the AY 2012-13 in ITA No.450/Chny/2017 dated 19.06.2017, wherein, the Tribunal after considering the relevant facts and also by following its earlier decision for the AYs 2010-11 & 2011-12, has set aside the issue to the file of the AO. The relevant findings of the Tribunal are as under: 4. After hearing both the parties, we are of the opinion that the similar issue was considered by the Tribunal in assesse's own case in ITA Nos.585/Mds/2015 & 267/Mds/2016 for the assessment years 2010-11 and 2011-12 dated 14.9.2016 wherein Tribunal held that:- 31. We find that the reliance placed on by the ld. DR on the judgment of Madras High Court in the case of Trishul Investments (supra) is misplaced. The main contention of the ld. DR is that the interest expenditure on borrowings used for investment in wholly owned subsidiary cannot be allowed as deduction u/s.36(1)(iii) of the Act instead it should be added to the cost of investment, in view of the above judgment of the Madras High Court. In our opinion, when activity is under taken as an investment activity and interest incurred up to the acquisition of the shares of IT (TP) A No.30/Chny/2021 :: 12 :: subsidiary company could be considered as part of investment. Once it is acquired, then it will be a revenue expenditure. In the present case, it is an admitted fact that the wholly owned subsidiary company has already acquired shares and it is functioning. 31.2 In this case the assessee claimed the interest incurred on loan which was used for the purpose of purchase of shares as revenue expenditure, but it was not capitalized as part of the investment in shares. The contention of the DR was that it is to be added to the cost of the investment so as to increase the value of the capital asset. 31.3 In the present case, there is no dispute that the assessee has borrowed funds for the purpose of investment in shares and thereafter the assessee has incurred interest on it. In our opinion, the interest is to be considered as part of the cost of investment till date of acquisition and interest paid by the assessee commencing from the date of acquisition of shares till the date of sale would not form part of the cost of acquisition. 31.4 Further, it is a settled legal position that income of an assessee has to be computed under various heads specified under section 14 of the Act. Therefore, the deductions are to be allowed in computing the income under various heads only to the extent it is provided by the Legislature under that very heads. The computation of capital gain is provided in section 48 of the Act. According to this section, the only deductions which are allowable are - (1) the cost of acquisition of the asset, (2) the cost of any improvement thereto and (3) expenditure incurred wholly and exclusively in connection with the transfer of the asset. The cost of acquisition, in our opinion, means the amount paid for acquiring the asset. Once the asset is acquired, then any expenditure incurred thereafter cannot be considered as the cost of acquisition, since such expenditure would not have any nexus with the acquisition of the asset. Wherever the Legislature intended to allow such expenditure as deduction, it had specifically provided so under various heads. For example, in computing the income from house property, the assessee is allowed deduction under section 24 of the Act on account of interest paid on the borrowed funds utilized for acquiring the immovable property. Similarly, when the income is to be computed under the head "Profits and gains from business or profession", the deduction account of interest on borrowed fund is provided under section 36(1)(iii) the Act, where the business assets are acquired out of borrowed funds. At this stage, it may be pertinent to note that depreciation is also allowable as deduction under section 32 in respect of business assets on the cost of acquisition. In determining the cost of acquisition, the interest component after bringing the asset into existence is not taken into consideration as Explanation 8 to section 43 of the Act. If the interest is to be added to cost of acquisition, then the assessee would be entitled to double deduction once under section 36(1)(iii) and the other under section 32 of Act, which is not permissible in view of the decision of the Supreme Court in the case of Escorts Ltd. v. UOI[1993] 199 ITR 43. 31.6 Similarly, when the shares are purchased by way of investment, and the dividend is received in respect of such shares, the interest paid on borrowed funds has been held to be allowable as deduction against dividend income. The Supreme Court has gone a step further in the case of CIT vs. Rajendra Prasad Moody [1978] 115 ITR 519, wherein it has been held that deduction on account of interest paid on borrowed funds is allowable as deduction in computing the income under the head ‘Income from other sources’, even where the dividend is not received in a particular year. If this is the legal position, then we are afraid, how the interest paid by the assessee can be considered as part of the cost of acquisition of the shares. If the contention of the assessee is accepted then it would amount to allowing double deduction i.e., under section 57 as well as under section 48 of the Act, which can never be the intention of the Legislature. As already stated, the double deduction is prohibited as laid down by the Supreme Court in the case of Escorts Ltd. (supra). The entire scheme of the Act, therefore, reveals that interest component after the date of acquisition and till the date of sale cannot be treated as the cost of acquisition. It is only allowable as a revenue deduction on year to year basis against IT (TP) A No.30/Chny/2021 :: 13 :: the income generated from such asset or likely to be generated to the extent provided by the Legislature under different heads. 31.6 The above view is also fortified by the decision of the coordinate Bench of the Tribunal in the case of Macintosh Finance Estates Ltd. vs. ACIT(12 SOT 324), wherein it has been held "once we find that interest expenses is an allowable expenditure under the head "Income from other sources”, it cannot be allowed to be added to the cost of investment only because in this year no deduction is allowable because the dividend income has been made exempt’’. The following observations of Supreme Court in the case of Saharanpur Electric Supply Co. Ltd vs. CIT (1992) 194 ITR 294 (SC) were relied on by the Court:- ‘’In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalized and added to the cost of the fixed assets’’. 31.7 A bare look at the above observations reveals that actual cost would include all expenditure necessary to bring the assets into existence and put them in working condition. Nowhere in the above observations, the Supreme Court held that the expenditure incurred after the acquisition of asset would be included in the cost of assets. The terminal point is the time when the asset is brought into existence or when the asset is put in a working condition. Therefore, on the basis of the Supreme Court judgment, it cannot be said that expenditure incurred after the asset brought into existence, i.e., after the acquisition of the asset would form part of the actual cost. The Supreme Court laid down the proposition that interest paid on monies borrowed for acquisition of capital asset and to meet expenses connected with its installation etc. and capitalized, has to be added to the cost of asset for the purpose of deprecation. 31.8 Thus in our opinion if the money was borrowed for purchase of shares of subsidiary company for the purpose of acquiring controlling interest and acquisition of such controlling interest was of the business of the assessee and it resulted in promote the business of the assessee as well as helpful to the assessee for having management control over said such subsidiary company, then the interest expenditure should be allowed u/s.36(1)(iii) of the Act. Further if the Assessing Officer found that investment in shares of subsidiary company not for maintaining controlling interest, then the Assessing Officer should see that there cannot be any disallowance in respect of investment of assessee‘s own fund. This is so because the borrowed funds and own funds are admittedly mixed up in such cases, the disallowance of interest has to be made on proportionate basis and benefit has to be given to the assessee towards investment of own fund. It is also to be noted that while computing disallowance if any u/s.36(1)(iii) of the Act, interest considered for disallowance u/s.14A of the Act was required to be excluded. With this observation, we restore the issue to the file of the Assessing Officer for fresh consideration after necessary examination and after allowing opportunity of hearing to the assessee. In the result, ITA No.585/Mds/2016 is partly allowed for statistical purpose. 5. Respectfully following the aforesaid order of the Tribunal we are inclined to remit the issue to the file of AO on similar direction. Further, we direct the AO to verify whether the investment is made in subsidiary to have a controlling interest, or to avoid the dilution of controlling interest, or to keep the controlling interest intact as per object clause of Memorandum of Association of the assessee company and to decide thereupon. Hence, this ground is partly allowed for statistical purposes. 7.5 In this view of the matter and consistent with view taken by the co- ordinate Bench, we set aside the issue to the file of the AO and direct the IT (TP) A No.30/Chny/2021 :: 14 :: AO to verify the issue in accordance with the directions given by the Tribunal for the AY 2012-13 and decide the issue for the impugned assessment year. 8. The next issue that came up for our consideration from Ground No.4 of the assessee’s appeal is disallowance of professional and consultancy fee paid to non-residents u/s.40(a)(i) of the Act, for non-deduction of TDS u/s.195 of the Act. The AO has disallowed the payment made to certain non-resident service providers for rendering professional and consultancy services u/s.40(a)(i) of the Act, for non-deduction of TDS u/s.195 of the Act, on the ground that the payment made to non-residents are in the nature of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. It was the explanation of the assessee before the AO that the payment made to non-residents for rendering professional and consultancy services, is for services rendered outside India. Since, the services were rendered outside India and the payments were also made outside India, the said payment does not come under the definition of fee for technical services as per the provisions of Sec.9(1)(vii) of the Act. 8.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The Ld.AR for the assessee submitted that this issue is covered in favour of the assessee by the decision of the co-ordinate Bench in the assessee’s own case for the AY 2015-16 in IT (TP) A No.86/Chny/2019, wherein, the Tribunal by following IT (TP) A No.30/Chny/2021 :: 15 :: its earlier order for the AY 2012-13, held that in order to bring the impugned payments under the definition of fee for technical services in light of the explanation inserted by the Finance Act with retrospective effect from 01.06.1976, the twin conditions of rendering services in India and utilization of such services in India, are necessary for deducting TDS on such payments. Since, the impugned payments are made outside India for rendering services outside India, the question of taxability of said payments in India in the hands of the service provider does not arise and consequently, the assessee is not required to deduct TDS on said payments. We find that an identical issue had been considered by the Tribunal, in the assessee’s own case for the AY 2015-16, wherein, the Tribunal by following its earlier decision for the AYs 2007-08 & 2012-13 held that the payment made by Branch Office of the assessee at Dubai to non-resident service provider does not come under the definition of fee for technical services and thus, remitted the matter back to the file of the AO to examine the issue afresh in light of the discussions and Article-7 of DTAA between India and UAE. The relevant findings of the Tribunal are as under: 30. We have heard both the parties sides, perused the material available on record and gone through the orders of the authorities below. 31. The similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2012-13 in ITA No.450/Mds/2017 dated 19.06.2017, wherein the Hon’ble Tribunal has remitted the matter back to the file of AO by observing as under: “12. We have heard both the parties and perused the material on record. The Explanation incorporated in Section 9 declares that “where the income is deemed to accrue or arise in India under clause (v), (vi) and (vii) and sub-sec.(1), such income shall be included in the total income of the non-resident, whether or not be resident as a residence or place of business or business connection in India”. The plain reading of the said provisions suggests that criterion of residence, place of business or business connection of a non-resident in India has been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilization of the service in India to attract tax liability u/s.9(i)(vii) remained untouched and unaffected by the Explanation to Section 9 of the Act and outside IT (TP) A No.30/Chny/2021 :: 16 :: India. Therefore, the twin criterion of rendering of services in India and utilization of services in India become evidently necessary condition to deduct tax. However, in respect of the said payments, the rendering of services being purely off shore and outside India, the whatever paid towards the said services does not attract tax liability. 12.1 In view of the above, we are inclined to remit the issue to the file of the Assessing Officer to examine the issue afresh in the light of the above order along with the concerned DTAA and decide thereupon. The issue is partly allowed for statistical purposes.” 32. In view of the above, we respectfully following the order of Co-ordinate Bench of the Tribunal, we set aside the order passed by the AO and remit the matter back to the AO and direct the AO to follow the above decision of the Co-ordinate Bench of the Tribunal in assessee’s own case and pass assessment order thereupon. 8.2 In this view of the matter and consistent with view taken by the co- ordinate Bench, we set aside the issue to the file of the AO and direct the AO to follow the directions of the Tribunal given in the assessee’s own case for the earlier assessment years, to decide the issue for the impugned assessment year in accordance with law. 9. The next issue that came up for our consideration from Ground No.5 of the assessee’s appeal is disallowance of drilling services & management fees paid to non-residents for failure to deduct TDS u/s.195 of the Act. “The AO has disallowed the payment made to M/s.Haledon International Corporation, towards drilling service and management fees amounting to Rs.10,87,63,665/- u/s.40(a)(i) of the Act, on the ground that the impugned payment comes under the definition of fee for technical services u/s.9(1)(vii) of the Act. It was the explanation of the assessee before the lower authorities that payment made to M/s.Haledon International Corporation, Dubai, was towards operation expenditure incurred in respect of operation of rigs in Iran and further, the services were rendered outside IT (TP) A No.30/Chny/2021 :: 17 :: India and the payments were also made outside India. Therefore, unless the impugned payment made to non-resident is taxable in India, the assessee does not require to deduct TDS u/s.195 of the Act and consequently, impugned payment cannot be disallowed u/s.40(a)(i) of the Act”. 9.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. An identical issue has been considered by the Tribunal, in the assessee’s own case for the AY 2015-16 in IT (TP) A No.86/Chny/2019, wherein, by following its earlier decision for the AY 2012-13, held that twin conditions of rendering services in India and utilization of such services in India are not satisfied to bring the impugned payment within the definition of fee for technical services as per Sec.9(1)(vii) of the Act read with explanation and thus, the question of deduction of TDS on said payments does not arise. The relevant findings of the Tribunal are as under: 31. The similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2012-13 in ITA No.450/Mds/2017 dated 19.06.2017, wherein the Hon’ble Tribunal has remitted the matter back to the file of AO by observing as under: “12. We have heard both the parties and perused the material on record. The Explanation incorporated in Section 9 declares that “where the income is deemed to accrue or arise in India under clause (v), (vi) and (vii) and sub-sec.(1), such income shall be included in the total income of the non-resident, whether or not be resident as a residence or place of business or business connection in India”. The plain reading of the said provisions suggests that criterion of residence, place of business or business connection of a non-resident in India has been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilization of the service in India to attract tax liability u/s.9(i)(vii) remained untouched and unaffected by the Explanation to Section 9 of the Act and outside India. Therefore, the twin criterion of rendering of services in India and utilization of services in India become evidently necessary condition to deduct tax. However, in respect of the said payments, the rendering of services being purely off shore and outside India, the whatever paid towards the said services does not attract tax liability. IT (TP) A No.30/Chny/2021 :: 18 :: 12.1 In view of the above, we are inclined to remit the issue to the file of the Assessing Officer to examine the issue afresh in the light of the above order along with the concerned DTAA and decide thereupon. The issue is partly allowed for statistical purposes.” 32. In view of the above, we respectfully following the order of Co-ordinate Bench of the Tribunal, we set aside the order passed by the AO and remit the matter back to the AO and direct the AO to follow the above decision of the Co-ordinate Bench of the Tribunal in assessee’s own case and pass assessment order thereupon. 9.2 In this view of the matter and consistent with view taken by the co- ordinate Bench, we set aside the issue to the file of the AO and direct the AO to re-consider the issue in light of the directions given by the Tribunal for the earlier years and decide the issue in accordance with law. 10. The next issue that came up for our consideration from Ground No.6 of the assessee’s appeal is denial of tax credit u/s.90 of the Act, amounting to Rs.5,97,27,171/- towards Income Tax paid in Singapore. During the course of assessment proceedings, the AO noticed that the assessee has claimed credit for an amount of Rs.5,97,27,171/- being withholding tax deducted by the Singapore Tax Authorities on interest income earned by the assessee from M/s.Aban Holdings Pvt. Ltd., Singapore, on the ground that the assessee could not furnish the return of income filed before the Singapore Tax Authorities and also if the interest payable and interest received in relation to loan, is taken into account, there is no real income offered in India. The AO discussed the issue in light of Article-11 of DTAA between India and Singapore and according to the AO, the benefit of credit of taxes paid to contracting state shall be available in the other contracting state, if such income in suffered tax in other contracting state. IT (TP) A No.30/Chny/2021 :: 19 :: 10.1 The Ld.AR for the assessee submitted that the AO erred in not appreciating the fact that as per the provisions of Sec.90 of the Act, the assessee is eligible to claim tax credit towards taxes paid on the foreign income if the same income is liable to tax in India. Since, the assessee has already offered interest income for taxes in India, the relevant taxes paid in contracting state (Singapore) should be allowed as credit. 10.2 The Ld.DR, on the other hand, supporting the order of the AO, submitted that the AO has brought out clear facts in light of Article-11 of DTAA between India and Singapore and observed that the assessee has not proved with evidence that they had received interest income in excess of the interest expenditure claimed in its P&L A/c and thus, relief u/s.90 of the Act, could not be provided. 10.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The issue of disallowance of withholding taxes u/s.90 of the Act, is squarely covered in favour of the assessee by the decision of co-ordinate Bench in the assessee’s own case for the AY 2015-16 in IT (TP) A No.86/Chny/2019, wherein, the Tribunal by following its earlier order for the AY 2012-13, remitted the issue back to the file of the AO and direct the AO to re-examine the issue in light of the directions given by the Tribunal for the earlier years. The relevant findings of the Tribunal are as under: 42. We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below. IT (TP) A No.30/Chny/2021 :: 20 :: 43. The assessee has earned the interest income of Rs.8,67,00,000/- from M/s. Aban Holdings Pvt. Ltd. which is Singapore registered company and withholding the tax equivalent to INR Rs.1,12,96,962/- has been deducted by M/s. Aban Holding Pvt. Ltd. under the Singapore Income Tax Act. The assessee has claimed credit of the same in his return of income. The AO has denied the claim made by the assessee. Before us, the assessee has submitted that since the income of the foreign country was offered for tax by the assessee, the assessee is entitled to get advance credit to the extent tax paid in foreign country. We find that this issue has been considered by the Co-ordinate Bench of this Tribunal in assessee’s own case in ITA No.450/Mds/2017 for AY 2012-13 vide order dated 19.06.2017, the issue is remitted back to the file of AO as per the directions given above. For the sake of convenience, the relevant portion of the order is extracted as under: “21. After hearing both the parties, we are of the opinion that the similar issue was considered by the Tribunal in assesse’s own case in ITA Nos.585/Mds/2015 & 267/Mds/2016 for the assessment years 2010-11 and 2011-12 dated 14.9.2016 wherein Tribunal held that:- “23. We have heard both the parties and perused the material on record. This issue came for consideration in assessee’s own case in I.T.A.No.1159/Mds/2012 challenging the action of the CIT(A) in restricting the assessee’s claim of relief u/s 90 of the Act of ₹ 224,67,411/- to the extent of tax payable in India on net income of ₹ 516,93,732/- i.e difference between interest earned from M/s AHPL and interest paid on borrowings made for advancing the loans to M/s AHPL. The Tribunal while adjudicating the grounds, placed reliance on the order of the Tribunal in the case of Bank of Baroda vs CIT in I.T.A.No.2927/Mds/2011 dated 25.7.2014 wherein the Tribunal has given a direction that the income of the branches of the assessee shall also taxable in India i.e it would be included in the return of income filed by the assessee in India and whatever taxes have been paid by the branches in the other contracting states i.e the source country, credit of such taxes shall be given. Thereafter, the Tribunal in this case remitted the issue to the file of the Assessing Officer to decide afresh in the light of the above order of the Tribunal in the case of Bank of Baroda in I.T.A.No.2927/Mum/2011 dated 25.7.2014. Later assessee filed MA in MA Nos. 95 & 96/Mds/2016 stating that the direction given by the Tribunal is not appropriate. Since the assessee has no income from any branches in Singapore, that decision cannot be applied to the assessee’s case. The Tribunal while adjudicating the said MA vide order dated 29.7.2016 held as follows: “We have heard the rival submissions and perused the material on record. In our opinion, the interpretation of the order of the Tribunal by the ld. AR is misconceived. The Tribunal was of the opinion that if the income from foreign country is offered to tax by the assessee by whatever means, the assessee has to get tax credit to the extent the tax was paid in foreign country. In other words, once the income is included either in the Profit & Loss Account or in the return of income, the corresponding tax credit on the same income has to be given. Accordingly, we are of the opinion that there is no need of apprehension for the assessee that the Assessing Officer will misinterpret the order of the Tribunal. Therefore, we do not find any merit in the argument of the ld. AR. Accordingly, the miscellaneous petition is dismissed.” In view of the above, following the above order of the Tribunal, we are inclined to hold that once the interest income subject to tax in any manner in the hands of the assessee, the corresponding tax credit to be given. Accordingly, this ground is remitted to the AO to examine the issue in the light of our above findings.” Respectfully following the aforesaid order of the Tribunal, this issue is remitted to the file of ld. Assessing Officer and decide accordingly. Hence, this ground of appeal is partly allowed.” We therefore respectfully following the order of the Co-ordinate Bench of this Tribunal, we set aside the order passed by the AO and remit the matter back to the file of AO. We direct the AO to follow the order passed by the Tribunal for AY 2012-13 and pass order thereupon. IT (TP) A No.30/Chny/2021 :: 21 :: Thus the ground of appeal filed by the assessee is allowed for statistical purposes. 10.4 In this view of the matter and consistent with view taken by the co- ordinate Bench in the assessee’s own case, we restore the issue to the file of the AO and direct the AO to decide the issue in accordance with the directions given by the Tribunal for the AY 2015-16 while deciding the issue for the impugned assessment year. 11. The next issue that came up for our consideration from Ground No.7 of the assessee’s appeal is disallowance of loss of forward contracts amounting to Rs.2,47,21,356/-. The AO disallowed loss on forward contracts on the ground that the transactions are in the nature of speculative transactions as per the provisions of Sec.43(5) of the Act and thus, the same cannot be allowed as deduction u/s.37(1) of the Act. It was the explanation of the assessee before the AO that the assessee had entered into forward contracts to hedge the possible loss on account of fluctuation in foreign currency in the course of import of various equipments and thus, Forex loss on forward contracts needs to be allowed as Revenue expenditure. 11.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO has disallowed Forex loss claimed by the assessee on the ground that the transactions are in the nature of speculative transactions as per the provisions of Sec.43(5) of the Act and further, the assessee has failed to IT (TP) A No.30/Chny/2021 :: 22 :: file necessary evidences to prove that the import/export obligation is in excess of value of forward contracts entered into by the assessee. We find that an identical issue had been considered by the Tribunal in the assessee’s own case for the AY 2015-16 in IT (TP) A No.86/Chny/2019, wherein, the Tribunal by following its earlier decision for the AY 2012-13, set aside the issue to the file of the and direct the AO to re-consider the issue in light of the decision of the ITAT Bangalore Benches in the case of M/s.Essilor India Pvt. Ltd. v. DCIT. The relevant findings are as follows: 53. We have heard both the sides and perused the materials available on records and had gone through the orders of the authorities below. 54. The Assessing Officer has disallowed the Forex loss of the Assessee mainly on the ground that the Assessee need not enter into such a contract for the nature of the business of the Assessee. Secondly, the Assessing Officer had denied the Forex loss of the Assessee on the ground that the Assessee has not furnished the risk analysis statement identifying the exposure and also had not filed the contract notes and analysis statement submitted to the Banks while applying for the Forex contracts. 55. So far as the first objection raised by the Assessee is concerned, we find that the line of the business of the Assessee is charter-hiring of offshore drilling rigs to oil companies like ONGC, Hardy Exploration, etc. The revenue is in the nature of charter-hire income from drilling and production services. All payments under these agreements for provision of the rigs on charter-hire and drilling services are in foreign currency, predominantly in USD. Therefore, the Assessee has taken a business decision to protect his interest and had entered into a Forex contract with Banks and subsequently he has claimed loss on the Forex contracts. 56. From the above, we find that when the Assessee has taken a business decision for the purpose to carry out his business, the Assessing Officer cannot say that for the nature of the business of the Assessee should not enter into a Forex contract. In our opinion, the Assessing Officer is not correct. 57. In so far as the second objection raised by the AO, non furnishing of details i.e, risk analysis statement submitted to the banks, we are setting aside the order passed by the Assessing Officer and we direct the Assessing Officer to consider the details and pass the order thereupon, keeping in view the decision of the Hon’ble ITAT of Bangalore Bench in the case of M/s. Essilor India Private Limited Vs. The Deputy Commissioner of Income Tax (supra). Thus the ground of appeal filed by the Assessee is allowed for statistical purposes. 11.2 The facts being identical for the impugned AY, we are of the considered view that the issue needs to be set aside to the file of the AO IT (TP) A No.30/Chny/2021 :: 23 :: and thus, we set aside the issue to the file of the AO and direct the AO to re-consider the issue in light of the findings of the Tribunal for earlier assessment years while deciding the issue for the impugned assessment year. 12. The next issue that came up for our consideration from Ground No.8 of the assessee’s appeal is disallowance u/s.14A r.w.r.8D of Income Tax Rules, 1962. The assessee has earned dividend from mutual funds amounting to Rs.6,37,992/- and claimed the same as exempt income u/s.10(34) of the Act. However, the assessee has not made suo moto disallowance of any expenditure relatable to exempt income. Therefore, the AO has determined the disallowance of expenses by invoking provisions of Sec.14A r.w.r.8D of Income Tax Rules, 1962 and determined the disallowance of Rs.6,11,500/- under normal provisions of the Income Tax Act, as well as the book profit computed u/s.115JB of the Act. 12.1 The Ld.AR for the assessee submitted that the AO erred in not appreciating the fact that the assessee has sufficient own funds to make investments in mutual funds/shares and thus, the question of disallowance of any expenditure does not arise. 12.2 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. We find that there is no merit in the arguments of the assessee that it has sufficient own funds IT (TP) A No.30/Chny/2021 :: 24 :: to make investments in shares/mutual funds which yielded exempt income, because, the AO has made disallowance under third limb of Rule 8D @ 0.5% of average value of investment in respect of other expenses, but not towards interest expenses under the second limb of Rule 8D of Income Tax Rules, 1962. Therefore, the arguments of the assessee that it has sufficient own funds devoid of merits. As regards disallowance computed by the AO @ 0.5% of average value of investment, it is an admitted fact that the assessee has earned exempt income however, not made any suo moto disallowance of expenses in relation to exempt income, even though, the assessee has debited various expenses into the P&L A/c. It is logical to conclude that when the assessee has common expenses for taxable and exempt income, then the possibility of certain expenses attributable towards exempt income, cannot be ruled out. Therefore, we are of the considered view that there is no error in the reasons given by the AO to determine the disallowance u/s.14A r.w.r.8D of Income Tax Rules. Further, the AO has considered only those investments, which yielded exempt income for the impugned assessment years. Therefore, we are of the considered view that there is no error in the findings given by the AO to make addition towards disallowance u/s.14A of the Act. Hence, we are inclined to uphold the findings of the lower authorities and reject the ground taken by the assessee. 12.3 As regards addition of disallowance u/s.14A r.w.r.8D of Income Tax Rules, 1962, to book profit computed u/s.115JB of the Act, we find that the IT (TP) A No.30/Chny/2021 :: 25 :: ITAT Special Bench in the case of M/s.Vireet Investments Pvt. Ltd. v. JCIT reported in 82 taxmann.com 45 held that computation under Clause (f) of Explanation-1 to Sec.115JB(2) of the Act, is to be made without resorting the computation as contemplated u/s.14A r.w.r.8D of Income Tax Rules, 1962, which means, disallowance made u/s.14A r.w.r.8D of Income Tax Rules, 1962, cannot be added to book profit computed u/s.115JB of the Act. Hence, we direct the AO to delete the additions made towards disallowance u/s.14A r.w.r.8D of Income Tax Rules, 1962, to book profit computed u/s.115JB of the Act. 13. The next issue that came up for our consideration from Ground No.9 of the assessee’s appeal is addition towards interest receipts amounting to Rs.8,52,000/- on the basis of Form 26AS. The AO has made additions towards interest receipts on the basis of Form 26AS on the ground that the assessee could not file reconciliation explaining the difference between interest received from M/s.Aban Green Power Pvt. Ltd., as per the books of accounts, when compared to Form 26AS. It was the explanation of the assessee before the AO that the assessee has filed reconciliation explaining the difference between interest income accounted for the books of accounts of the assessee and the interest income reported in Form 26AS. The assessee further explained that amount reported in Form 26AS includes interest income from M/s.Aban Green Power Pvt. Ltd., and lease rental income and the assessee has accounted interest income as income in the books of accounts of the assessee. However, in respect of lease rental, the IT (TP) A No.30/Chny/2021 :: 26 :: assessee has recognized income including service tax element paid by the party. 13.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. We find that the AO has made addition towards interest income on the basis of Form 26AS by observing that there is a difference between interest income reported in Form 26AS and interest income as per the books of accounts. It was the explanation of the assessee that it has filed a reconcile explaining the difference and according to the assessee, the difference amounting to Rs.8,52,000/- represents lease rental received by the assessee from the very same company, which includes service tax portion. Further, the assessee has accounted lease rental and service tax separately which resulted in difference in income as per the books of accounts when compared to Form 26AS. The said difference has been explained to the AO by filing a detailed reconciliation statement. Facts are contradictory. The AO claims that the assessee has not filed reconciliation, whereas, the assessee claims that it has filed reconciliation. Therefore, we are of the considered view that the issue needs to be remitted back to the file of the AO for further verification. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the claim in light of submissions of the assessee in accordance with law. IT (TP) A No.30/Chny/2021 :: 27 :: 14. The next issue that came up for our consideration from Ground No.10 of the assessee’s appeal is disallowance of expenses amounting to Rs.43,755/- u/s.37(1) of the Act. The AO disallowed a sum of Rs.43,755/- on the basis of Audit Report issued by the Auditors, as per which, the sum referred to a penalty paid with respect to delayed reversal of service tax credit availed by the assessee. It was the explanation of the assessee before the AO that expenses debited by the assessee towards delayed reversal of service tax credit availed is not a penalty, but interest levied as per Sec.75 of the Finance Act, 1994 and thus, the same is allowable deduction. 14.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The assessee claims that expenses reported by the Tax Auditor in Clause 21(a) of Form 3CD pertains to interest paid on delayed reversal of service tax credit, whereas, the AO noted that the assessee has paid penalty for delayed reversal of service tax credit. Facts need to be verified by the AO. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the issue in light of claim of the assessee in accordance with law. 15. The next issue that came up for our consideration from Ground No.11 of the assessee’s appeal is disallowance of MAT credit amounting to Rs.53,38,21,021/- for the AYs 2014-15 & 2015-16. The assessee was asked to submit the details working of the MAT credit available as per IT (TP) A No.30/Chny/2021 :: 28 :: Income Tax calculation. The AO has rejected credit for MAT on the ground that the tax payable by the assessee for the AY 2014-15 as per the normal provisions of the Act is higher than tax payable u/s.115JB of the Act. Similarly, the AO noted that for the AY 2015-16, tax payable under normal provisions is higher than the tax payable u/s.115JB of the Act and thus, opined that the assessee is not entitled for MAT credit. It was the explanation of the assessee before the AO that the assessee is eligible to take credit arising out of taxes paid u/s.115JB of the Act and such credit shall be carry forward for a period of 10 AYs succeeding to the year in which tax credit becomes allowable. Further, various additions made by the AO for the AY 2015-16 has been deleted by the Tribunal and if the AO gives credit for relief allowed by the Tribunal, then tax payable under normal provisions of the Act, would be less than the tax payable under book profit. Therefore, the assessee is entitled for MAT credit. 15.1 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO has denied the MAT credit only on the ground that the tax payable under normal provisions of the Act is higher than the tax payable under book profit for both the assessment years. It was the explanation of the assessee before the AO that if the AO passes order giving effect to the order of the Tribunal, then tax payable under normal provisions of the Act, would be less than the tax payable under the provisions of Sec.115JB of the Act. We find that IT (TP) A No.30/Chny/2021 :: 29 :: the assessee is entitled for MAT credit for taxes paid under book profit and such taxes can be carry forward to subsequent years. The AO has not denied the fact that the assessee is not entitled for MAT credit, but denied MAT credit only on the ground that income tax payable under normal provisions is higher than tax payable under book profit. On the other hand, the assessee proved that if relief allowed by ITAT, is considered by the AO, then tax payable under book profit, is higher than tax payable under normal provisions of the Act. Therefore, we are of the considered view that the facts need to be examined by the AO to allow credit for MAT in accordance with the provisions of Sec.115JB of the Act. Hence, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in accordance with law. 16. The next issue that came up for our consideration from additional grounds filed by the assessee’s appeal is levy of dividend distribution tax (in short “DDT") amounting to Rs.15,91,12,275/-. The AO has passed final assessment order u/s.143(3) r.w.s.144C(13) of the Act, without considering the fact that the assessee had paid DDT and such tax was reported in Form 26AS. It was the explanation of the assessee that the assessee has paid DDT on 06.10.2015 and the same has been reported in Form 26AS for the AY 2015-16. 16.1 We have heard both the parties, perused the materials available on record. The AO has levied DDT on the ground that the assessee does not IT (TP) A No.30/Chny/2021 :: 30 :: paid tax within specified period. It was the explanation of the assessee that the assessee has paid DDT on 06.10.2015 and the same was reported in Form 26AS. The facts need to be verified. Therefore, we are of the considered view that the issue needs to be set aside to the file of the AO. Hence, we set aside the issue to the file of the AO and direct the AO to re- examine the claim of the assessee in light of evidences filed to prove the facts that the assessee had already paid DDT. If assessee has already paid DDT, then the AO is directed to delete the addition towards DDT. 17. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on the 06 th day of April, 2022, in Chennai. Sd/- (महावीर िसंह) (MAHAVIR SINGH) उपा /VICE PRESIDENT Sd/- (जी. मंजूनाथा) (G. MANJUNATHA) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 06 th April, 2022. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु"/CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु" (अपील)/CIT(A) 6. गाड फाईल/GF