Disallowance under s 14A

No disallowance can be made under s 14A wherein there was no exempt income (tax free income) in the hands of the assessee — as held by ChenTrib in Siva Industries & Holdings Ltd v ACITIn favour of: The Assessee ; ITA No. 2148/Mds/2010 : Assessment Year: 2006–2007
Transfer pricingALP — If the international transaction between assessee and Associated Enterprises is in foreign currency, transaction would have to be looked upon by applying the commercial principles in regard to international transaction, the domestic prime lending rate would have no applicability and the international rate fixed being LIBOR would come into play.

Siva Industries & Holdings Ltd. v ACIT
I.T.A. No. 2148/Mds/2010
Assessment Year: 2006-07
Abraham P. George, AM and George Mathan, JM
Decided on: 20 May 2011
Counsel appeared:
Shri Sriram Seshadri for the appellant
Shri Shaji P. Jacob for the respondent
Per: George Mathan, JM :
This is an appeal filed by the assessee against the assessment order passed by the Assessing
Officer under section 143(3) read with section144C read with section 92CA(4) of the Income Tax
Act, 1961dated 26-10-2010 for the assessment year 2006-07.
2. Shri Sriram Seshadri, CA represented on behalf of the assessee and Shri Shaji P. Jacob, learned
Sr. DR represented on behalf of the Revenue.
3. It was the submission by the learned authorised representative that the issues in the appeal are
three-fold, the first issue being against the disallowance made by the Assessing Officer under
section 14A of the Act, the second being the action of the Assessing Officer in bringing to tax the
addition of Rs. 45,23,817,53 suggested by the TPO on account of the adoption of the prime
lending rate in respect of the charging of interest on the loan given by the assessee to its sister
concern as against the LIBOR rate and the third issue being against the action of the Assessing
Officer in not granting the TDS credit as claimed by the assessee.


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