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ALP to be determined at rate of 3% and 1% respectively towards old guarantees new guarantees issues during year

July 10, 2020[2020] 117 518 (Mumbai - Trib.)

I TRANSFER PRICING: Where there was no cost incurred to provide corporate guarantee, ALP in respect of old guarantees was to be determined at 3 per cent and in respect of fresh guarantees issued during year, ALP should be determined at 1 per cent

II TRANSFER PRICING: Where assessee company had given loans to foreign AEs, only LIBOR rate at relevant time was to be considered and ALP was to be determined accordingly

III INCOME TAX: Expenditure such as professional fees, legal charges, due diligence fees etc. which resulted in acquisitions should form part of cost of investment i.e. capital expenditure; while expenditure incurred in respect of failed acquisitions would be revenue expenditure as no capital asset came into existence

IV INCOME TAX: Pursuant to this warranty clause, assessee had made provision for warranty and cost of warranty obligation was already included / embedded in sale price and that part of provision, claim for which was not made within warranty period was reversed, assessee's claim of provision for warranty was to be allowed

V INCOME TAX: While working out disallowance under third limb of Rule 8D(2), only those investments which had actually yielded exempt income during current year, was to be considered

VI INCOME TAX : Where assessee made year end provisions representing cost of various activities carried out by company during relevant financial period though concerned parties had not submitted their bills or such bills were pending formal approval but same were ascertainable and not mere adhoc provisions, same could not be disallowed for non deduction of TDS

VII INCOME TAX : Where in return of income, assessee claimed Rs. 844.32 crore as scientific research expenditur on conservative basis, while in Form 3CL, Rs. 950.91 crore was approved by DSIR, assessee was entitled for grant of additional deduction of Rs.106.59 crore

VIII INCOME TAX : Where Tribunal consistently accepted assessee vehicle/tractor manufacturer's contention that its transactions with dealer on sale of vehicles were on principal to principal basis, dealer incentive paid could not be disallowed for non-deduction of TDS

IX INCOME TAX: Where main objective of Industrial Promotion Subsidy was to intensify and accelerate process of dispersal of industries in less developed regions/backward areas, same was to be treated as capital receipt

X INCOME TAX: Foreign currency loans utilised for acquiring fixed assets and overseas investments was to be capitalised and correspondingly depreciation need to be granted to assessee

XI INCOME TAX: Deduction towards ESOP expenditure was to be allowed in respect of all options exercised during year being equal to difference between exercise price and market price at time of exercise of option

XII INCOME TAX: Assessee was entitled for deduction of provision for post retirement scheme for housing and for post retirement medical schemes made for present employees

XIII INCOME TAX : Where Company had disallowed Rs. 5.74 crore towards legal charges in connection with a Project holding same to be capital expenditure debited to Profit & Loss account but Rs. 3.34 crore had already been recovered, Rs. 3.34 crore should be reduce from total income

XIV INCOME TAX : Once profitability disclosed by assessee for a particular unit had been accepted to be at arm's length by TPO in transfer pricing adjustment, Assessing Officer should accept same for allowing claim of deduction under section 80IC

XV INCOME TAX : Transactions between holding company and subsidiary company are not regarded as transfer for purpose of computation of capital gains; or carry forward of capital loss
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