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2025 Supreme(Online)(ITAT) 4957
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
ARVIND LIMITED AHMEDABAD – Appellant
Versus
NFAC DELHI PRESENT JURISDICTION THE DCIT CIRCLE-1(1)(1) AHMEDABAD – Respondent
ITA 349/AHD/2024[2018-19]
The court affirmed the right of assessors to claim deductions beyond what was initially filed, emphasizing accuracy in tax liability over procedural technicalities.
Headnote:(A) Income Tax Act, 1961 - Sections 14A, 35(2AB), and 92CA - Appeals challenging disallowances and adjustments made by the Assessing Officer and confirmed by CIT(A) - Issues concerning disallowance under Rule 8D, Arms Length Price in transfer pricing, and deductions under ESOP. (Paras 6-12, 10.1-10.9)
(B) Deductions and exemptions - The Ld. CIT(A) allowed ESOP deduction, stating that denying it would lead to double taxation on employees. (Paras 10.1-10.2)
(C) Transfer Pricing - The court held that the upward adjustment in interest should consider the primary purpose of the loan and the correct parameters for adjustment. (Paras 8.1-8.3)
(D) Disallowances - The Assessing Officer’s disallowance under section 14A was partially upheld. (Paras 7, 7.5) (E) Additional claims - The court allowed reconsideration of unclaimed deductions by the assessee, emphasizing the opportunity to correct past errors. (Paras 10.6-10.9) (F)
Result: Appeals partially allowed for the assessee, whereas Revenue's appeal dismissed.
ORDER
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
These appeals have been filed by the assessee and Revenue against the order passed by the Ld. Commissioner of Income-Tax (Appeals), Ahmedabad-3 (hereinafter referred to as "CIT(A)" for short) under Section 250 of the Income- tax Act, 1961 [hereinafter referred to as "the Act" for short] dated 23.01.2024 for Assessment Year (AY) 2018-19. Since the issues are common and appeals are inter-connected, the same are being disposed of by this common order for the sake of convenience.
2. The brief facts of the case are that the assessee is engaged in the business of textile, brands, retail, engineering, water treatment, telecom and advanced materials sectors, amongst others. The assessee had filed original return of income for the assessment year under consideration on 30.11.2018 declaring total income at Rs.242,96,68,370/- under normal provisions of the Act and Book Profit u/s 115JB of the Act at Rs.269,08,73,462/- and thereafter, the assessee had filed revised return on 30.03.2019, declaring total income at Rs.243,07,47,560/- under normal provision of the Act and Book profit u/s 115JB of the Act for Rs.268,92,45,043/-. The case was selected for complete scrutiny, and thereafter the Assessing Officer has assessed the total income of the assessee at Rs.628,31,46,240/-, vide the impugned order dated 29.11.2021 passed u/s 143(3) r.w.s. 144C(3) r.w.s. 144B of the Act, by making various additions / disallowances.
3. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the ld. CIT (A) who has given partial relief to the assessee.
4. Aggrieved by the order of the ld. CIT(A), the assessee and Revenue, both are in appeal before the Tribunal. The Revenue is in appeal against the relief allowed by the ld. CIT(A) while the assessee is in appeal against the addition sustained by the CIT(A).
ITA No. 349/Ahd/2024 – Assessee’s appeal
5. The grounds raised in this appeal are as follows:-
“1. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in ordering that the disallowance of 14A r.w.r. 8D of the Act should be restricted considering investments, which have yielded exempt income during the year under consideration instead of deleting the entire disallowance made by the Assessing Officer as appellant has already made disallowance u/s 14A of the Act while filling Return of Income.
2. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in upholding upward adjustment of Rs.23,51,235/- being interest on loan given to AEs when interest charged by Appellant is at arms' length price as elaborately explained in written submission.
2.1 In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in not following decision of Hon'ble Ahmedabad ITAT in Appellant's own case for AY 2008-09 in ITA No. 2347/Ahd/2018, dated 26-05-2023 wherein interest rate of foreign loan considering LIBOR plus 2.5% is considered as reasonable rate for the purpose of determining ALP and interest charged by Appellant in year under consideration is within such parameters.
2.2 In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in holding that while applying filter to the loan connected data base, there was no requirement for applying one more filter "primary purpose" meaning thereby comparable interest rate on loan given to AE for specific purpose such as acquisition, takeover or dividend recapitalization should be excluded and only general corporate loan should be considered.
2.3 In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding TPO's working for computing ALP of interest charged on AE by considering forex risk 100 point BPS. Ld CIT(A) ought to have appreciated that comparable loan instances obtained from global data base which includes loan obtained in specific region/country by domestic c
