Income Tax Appellate Tribunal - Chennai
Aban Offshore Ltd., Chennai vs Dcit Corporate Circle 1(1), Chennai on 12 April, 2021
आयकर अपील य अ धकरण, 'डी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH: CHENNAI
ी वी दग
ु ा राव, या यक सद य एवं ी एस. जयरामन, लेखा सद य के सम'
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND
SHRI S. JAYARAMAN, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.(TP)A No.86/Chny/2019
Assessment Year: 2015 - 2016
M/s. Aban Offshore Limited, Deputy Commissioner of
C/o M/s. P. Murali & Co., Income Tax,
Chartered Accountants, Vs. Circle - 1 (1),
No.6-3-655/2/3, Somajiguda, Aayakar Bhavan, M.G. Road
Hyderabad - 500 082. Nungambakkam,
[PAN: AAACA 3012H] Chennai - 600 034.
(अपीलाथ /Appellant) (()यथ+/Respondent)
अपीलाथ+ क, ओर से/ Appellant by Shri. P. Murali Mohan Rao, CA
:
()यथ+ क, ओर से /Respondent by : Shri. D. Srinivasa Rao, CIT
सन
ु वाई क, तार ख/Date of Hearing : 03.02.2021
घोषणा क, तार ख /Date of Pronouncement : 12.04.2021
आदे श / O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is against the Assessment Order dated 23rd November, 2019 passed u/s.143(3) r.w.s.144C(13) of the Income Tax Act, 1961 in F.No.AAACA3012H/DCIT/C.C-1(1)/2019-20; dated 23rd November, 2019 relevant to the Assessment Year 2015 - 2016 consequent to the directions of the Dispute Resolution Panel [DRP], Bangalore dated 25.01.2019 u/s.143(3) r.w.s.144C(1) r.w.s.92CA of the Income Tax Act, 1961.
I.T.(TP)A No.86/Chny/2019 :- 2 -:
2. The facts that are in brief is that the Assessee is M/s. Aban Offshore Limited is a Public Limited Company incorporated under the Companies Act, 1956 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.
3. The Assessee had filed the return of income for the Assessment Year 2015-16 electronically on 27.11.2015 admitting a total income of Rs.126,66,09,760/-. The return filed by the Assessee was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').
Subsequently, the case was selected for scrutiny under Computer Aided Scrutiny Selection (CASS) and notice u/s.143(2) of the Act dated 22.09.2016 was served on the Assessee. During the previous year relevant to the assessment year under consideration, the Assessee had entered into an international transaction with Associated Enterprises to the tune of Rs.1018,47,03,207/- and specified domestic transactions to the tune of Rs.19,32,98,095/-. The case has been referred to the Transfer Pricing Officer [TPO] and thereafter a notice u/s.142(1) of the Act was issued and after following the due procedures, the draft assessment order dated 31.12.2018 was completed and communicated to the Assessee. The Assessee has raised objection before the Dispute Resolution Panel [DRP] and the DRP has I.T.(TP)A No.86/Chny/2019 :- 3 -:
considered the objection raised by the Assessee and confirmed the draft Assessment Order and directed the Assessing Officer to complete the assessment dated 23.11.2019. As against the assessment order, the assessee has raised the following grounds:
4. The first ground of appeal is general in nature hence, no adjudication is required and the same is dismissed.
5. The second ground of appeal relates to Corporate Guarantee Fee:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that as per the Annual Report, the Assessee company has granted Corporate Guarantee to the AE to an amount of outstanding as on 31.03.2015 is Rs.152,57,52,930/-. In the Transfer Pricing Study Report, the Assessee company claims that during the course of Transfer Pricing proceedings, the company submitted that the Corporate Guarantee issue is merely a commitment and as such does not have any bearing on the profits, income, losses or assets. Consequently, such a commitment is not covered within the scope and spectrum of 'International Transaction' u/s.92B of the Income Tax Act, 1961. However, the Assessing Officer has not agreed with the explanation of the Assessee has noted that Corporate Guarantee is an 'International Transaction' and for the Assessment Year 2013 - 2014 , ALP of Corporate Guarantee has been determined at the rate of 1% which has been confirmed by the Hon'ble Dispute Resolution Panel [DRP]. Accordingly, Corporate Guarantee during the current year is continuing from the earlier I.T.(TP)A No.86/Chny/2019 :- 4 -:
years and the rate of charging Corporate Guarantee is taken as 1%.
Accordingly, the Corporate Guarantee Fee on 152,57,52,930/- works out to Rs.1,52,57,529/-. Accordingly, upward adjustment of Rs.1,52,57,529/- is recommended in the case of the Assessee for the Assessment Year 2015 -
2016.
6. On appeal before us, the learned Counsel for the Assessee has submitted that the Assessee has not incurred any cost while extending the Corporate Guarantee to the AEs and hence no adjustment to ALP is required to be made. He has also submitted that provision of Corporate Guarantee does not involve any cost to the Assessee and therefore does not have an International Transaction. He has also submitted that providing a Corporate Guarantee to an AE is to discharge his own obligation. He alternatively submitted that if the Corporate Guarantee is an International Transaction, the rate charged by the Assessing Officer at 1% is higher and submitted that 0.25% may be charged. Further, he relied upon the decision in the case of Asian Paints Limited Vs. Additional Commissioner of Income-Tax, Large Tax Payer Unit (LTU) reported in [2014] 41 Taxmann.com 71 (Mumbai - Trib.). He also relied upon the decision of the Hyderabad Bench of the Tribunal in the case of the Deputy Commissioner of Income-Tax, Circle - 16(1), Hyderabad Vs. Lanco Infratech Limited reported in [2017] 81 Taxmann.com 381 (Hyderabad - Trib.) I.T.(TP)A No.86/Chny/2019 :- 5 -:
7. On the other hand, the learned Departmental Representative has submitted that the Corporate Guarantee given by the Assessee to an AE is an International Transaction and the rate charged by the Assessing Officer at 1% is reasonable and strongly supported the order passed by the Assessing Officer.
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 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 I.T.(TP)A No.86/Chny/2019 :- 6 -:
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 a 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%.
11. Accordingly, we set aside the order passed by the Assessing Officer and direct the Assessing Officer to adopt at the rate of 0.50% commission on guarantee issued by the Assessee on behalf of its AEs, a subsidiary company.
I.T.(TP)A No.86/Chny/2019 :- 7 -:
Thus the ground of appeal filed by the Assessee for the Assessment Year 2015 - 2016 is partly allowed for statistical purposes.
12. The third ground of appeal relating to Disallowance of Interest Expenditure:
Facts are in brief that in the Assessment order, the Assessing Officer has noted that the analysis of the balance-sheet has revealed the Assessee has non-interest bearing funds i.e., capital and reserves amounting to Rs.3,149 crores and loan funds, i.e. interest bearing funds of Rs.5,514/- crores. From the above, it is evident that the Assessee's interest bearing funds is more than the non-interest bearing funds. The fixed assets of the Assessee comprises of rigs and drill ships which have been bought much earlier for which the Assessee would have utilized the non-interest bearing funds. The investments made in the subsidiary company, M/s. Aban Holdings Private Limited was Rs.2,604.67 crores. As a result, out of the total interest bearing funds, the Assessee could have used directly or indirectly for the investment to be made in the foreign subsidiary. As the Assessee has not clarified with evidence which part of the loan was used for the business and for investments even though it is specifically sought, the entire interest expenditure of Rs.92,04,63,163/- was presumed to be made towards investment in the foreign subsidiary. During the previous years, M/s. Aban Holdings Private Limited allotted shares against the outstanding loan to the Assessee. As the investments in Singapore made are in the nature of capital, I.T.(TP)A No.86/Chny/2019 :- 8 -:
the Assessee was asked to explain as to why the said expenses should not be disallowed. The Assessee submitted their reply and in a nutshell argued that the investments are made towards the commercial expediency and business prospects of the Assessee and the dividend earned will be taxable in India. As such, the Assessee requested to allow the entire expenses. However, the Assessing Officer has considered the explanation and not accepted the explanation of the Assessee and observed that the investments made in Singapore aid the Assessee's subsidiary business interest rather than the business interest of the Assessee, thereby no commercial expediency for the Assessee in the business carried in India against which the interest expenses are claimed. Further, no dividend income received by the Assessee in the Financial Year and the dividend income from the foreign investments are taxable only on the receipt basis. So the assessee cannot claim the interest expenses to the tune of Rs.159.39 crores as there is no dividend income earned during the year. The interest expenses towards investment in shares are to be capitalized, if the Assessee is not doing share trading business. The Assessing Officer by following the decision of the Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs Trishul Investments Limited [2008] 305 ITR 434 (MAD) has observed that the interest paid for acquisition of shares would partake character of cost of share and therefore the same was rightly capitalized along with the cost of acquisition of shares.
13. The Assessing Officer further noted that in the Assessee's own case for the Assessment Year 2010 - 2011, the Hon'ble DRP has upheld the I.T.(TP)A No.86/Chny/2019 :- 9 -:
Assessing Officer's decision on the same issue, since the facts of the case remain the same, the panel agrees with the findings for the Assessment Year 2010 - 2011 and reaffirms the reasons given by Panel. Considering the above, the objection of the Assessee is not acceptable. The Assessing Officer has further noted that even with the decision of the Hon'ble DRP, this case has been reversed by the Hon'ble ITAT, the addition under this head is made to keep the issue alive, since the appeal of the department is pending before the Hon'ble Madras High Court. Accordingly, he has confirmed the addition.
14. Before us, the learned Counsel for the Assessee has submitted that the Assessee Company is engaged in the business of offshore drilling for which it is required to own assets in the form of rigs and drill ships. Further each rig is a separate unit having its own technical and commercial capabilities and hence as a commercial prudent decision, the Assessee owns rigs under its wholly owned subsidiaries. For owning and maintaining its rigs, the Assessee requires huge capital. In order to meet the capital requirement of its subsidiaries, the Assessee has funded these subsidiaries by way of advancing loans / contributions to their equity. It is submitted that as per the provisions of Section 36(1)(iii) of the Act, any interest on borrowed funds which are used for the purpose of business and profession is a deductible expenditure.
15. In the present case, the borrowed fund is invested in subsidiaries which are wholly owned subsidiary company of the Assessee towards furtherance of the Assessee's business. Thus, the interest expenditure on borrowed funds I.T.(TP)A No.86/Chny/2019 :- 10 -:
utilized for the purpose of additional capital in foreign owned subsidiary shall be allowable u/s.36(1)(iii) of the Income Tax Act, 1961. He further submitted that the Assessee has invested the borrowed funds in purchase of shares of subsidiary companies, both for the purpose of acquiring and controlling interest and due to such acquisition, it resulted in promotion of the business of the Assessee a well as helpful to the assessee for having management control over said such subsidiary companies.
16. He further submitted that the investment made in the subsidiary is with the object to improve the business in the world market to its subsidiary and therefore the Assessee has borrowed the capital for the business purpose, i.e., commercial expediency and therefore the interest incurred so as to be treated as business expenditure and allowable for deduction u/s.36(1)(iii) of the Income Tax Act, 1961.
17. The learned Counsel for the Assessee has submitted that the Hon'ble ITAT has adjudicated the issue of interest in the Assessee's own case for the Assessment Year 2010 - 2011, 2011 - 2012 and 2012 - 2013. The issue has been restored back to the file of the Assessing Officer and the Assessing Officer has passed a consequential order dated 30.11.2018 for the Assessment year 2012 - 2013 and the addition made u/s.36(1)(iii) of the Act has been deleted.
18. He further submitted that the Hon'ble ITAT for the Assessment Year 2010 - 2011 and for the Assessment Year 2011 - 2012 in M.A.Nos.067 & I.T.(TP)A No.86/Chny/2019 :- 11 -:
68/Mds/2017, vide order dated 29.11.2017 in Paragraph No.21 has directed the Assessing Officer to comply with the directions of the Hon'ble ITAT with regard to the relevance of expenditure u/s.36(1)(iii) of the Act.
19. Subsequently, a consequential order has been passed by the Assessing Officer on 04.01.2018 for the Assessment Years 2010 - 2011 and 2011 - 2012, wherein the same issue has been deleted. He further submitted that even for the Assessment Year 2013 - 2014, DCIT finally has passed an order dated 26.03.2019 by allowing the interest expenditure u/s.36(1)(iii) of the Act.
20. The learned Counsel for the Assessee has further submitted that as per the Assessment Order which shows that the addition made by the Assessing Officer is only because the appeal is pending before the Hon'ble High Court and submitted that the issue is squarely covered by the decision of the Co- ordinate Bench of the Tribunal in the Assessee's own case for the Assessment Years 2010 - 2011, 2011 - 2012 and 2013 - 2014 and submitted that the addition may be deleted.
21. On the other hand, the learned Departmental Representative has submitted that the Assessee has borrowed the funds and advanced to the sister concern and therefore it is only for the benefit to the sister concern and not a business expediency for the Assessee and therefore the interest expenditure incurred by the Assessee cannot be allowed u/s.36(1)(iii) of the Act. He has relied upon the decision of the Hon'ble Supreme Court in the case I.T.(TP)A No.86/Chny/2019 :- 12 -:
of Maxopp Investment Limited Vs. Commissioner of Income Tax reported in [2018] 402 ITR 640 (SC).
22. We have heard both the sides and perused the records and had gone through the orders of the authorities below.
23. The Assessee M/s. Aban Offshore Limited is a Public Limited Company has borrowed certain funds and made investments in the Assessee's fully owned subsidiary and claimed that the interest paid on the said amount is for the business expediency for the reason that the Assessee as well as the subsidiary are in the same business and by advancing borrowed funds and purchase of subsidiary company shares was both for the purpose of acquiring controlling interest. Due to such an acquisition, the business of the Assessee gets emerged such acquisition, the business of the Assessee will be improved and also its business expediency. However, the Assessing Officer has not agreed with the explanation of the Assessee. He is of the opinion that no business expediency is for the Assessee using borrowed funds utilized for the purpose of sister concern. We find that the similar issue came up for consideration in the Assessment Year 2010 - 2011, 2011 - 2012 and 2012 - 2013 in I.T.A. Nos.585/Mds/2015 and 267/Mds/2016. In I.T.A. No.450/Mds/2017 for the Assessment Year 2012 - 2013, the Hon'ble Tribunal has considered for the Assessment Year 2011 - 2012, 2010 - 2011 and 2011
- 2012 by order dated 19.06.2017 and directed the Assessing Officer to verify as to whether the investment made in subsidiary to have controlling interest, or I.T.(TP)A No.86/Chny/2019 :- 13 -:
to avoid the dilution of controlling interest, or to keep the controlling interest intact as per the object clause of the Memorandum of Association of the Assessee company and to decide thereupon. The case of the Assessee is that in pursuance to the order passed by the Tribunal, the Assessing Officer deleted the addition for the Assessment Years 2010 - 2011, 2011 - 2012 and 2012 - 2013. We find that in ITA No.450/Mds/2017 forAY 2012-13 vide order dated 19.06.2017, the Tribunal has followed the assessee's own case in ITA Nos. 585/Mds/2015 & 267/Mds/2016 for AYs 2010-11 & 2011-12 dated 14.09.2016. For the sake of convenience, the relevant portion of the order extracted by the Tribunal in assessee's own case is extracted as under:
"After hearing to both the parties, we are of the opinion that the similar issue was considered by the Tribunal in Assessee's own case in I.T.A.Nos.585/Mds/2015 & 267/Mds/2016 for the Assessment Years 2010-2011 and 2011 - 2012 dated 14.09.2016 wherein the Tribunal held that:-
31. We find that the reliance placed on by the learned Departmental Representative on the judgement of the Madras High Court in the case of Trishul Investments (supra) is misplaced. The main contention of the learned Departmental Representative is that the interest expenditure on borrowings used for investment in wholly owned subsidiary cannot be allowed as deduction u/s.36(1)9iii) 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 undertaken as an investment activity and interest incurred upto the acquisition of the shares of 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 from 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 I.T.(TP)A No.86/Chny/2019 :- 14 -:
the Act. Therefore, the deductions are to be allowed in computing the income under various heads only to the extent it is provided byu 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 utilised 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.
31.5 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 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 I.T.(TP)A No.86/Chny/2019 :- 15 -:
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 capitalised 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."
4. 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."
24. In view of the above decision of the Hon'ble ITAT in the Assessee's own case for the Assessment Year 2012 - 2013 in I.T.A. No.450/Mds/2017 dated I.T.(TP)A No.86/Chny/2019 :- 16 -:
19.06.2017 and also the principle of consistency laid down by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs Commissioner of Income Tax reported in [1992] 193 ITR 321 (SC), we direct the Assessing Officer to follow the above passed order thereupon. So far as reliance placed by Ld. DR in the case of Maxopp Investment Ltd. (supra) is concerned, no application to the facts of this case.
Thus the ground of appeal filed by the Assessee is allowed for statistical purposes.
25. The fourth ground of appeal relating to Non-Deduction of tax on Professional and Consultancy Fee:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that it is seen from the finances furnished by the Assessee that it has incurred Rs.64.00 crores towards professional and consultancy fees. On verification of the details, it is seen that the Assessee has not deducted tax for an amount of Rs.2,48,46,142/- stating that the TDS is not applicable as expenses incurred outside India (Dubai). For the sake of convenience, the relevant portion is extracted as under:
"7. Non-Deduction of TDS for Technical Services rendered:
7.1. It is seen from the financials furnished by the assessee that it has incurred an amount of Rs.64.00 crores towards Professional and Consultancy Fees. On verification of the details, it is seen that the assessee has not deducted tax for an amount of Rs.2,48,46,142/- stating that the TDS is not applicable as expenses incurred outside India and paid out India (from Dubai).
Sl.No. Name of the Service Provider Amount (in Rs.)
1) Anchor Marine Equipment Co., 530,835
2) Aqualis Offshore Marine Services 318,901
3) Bahwan Cybertech Private Limited 340,062
4) Blue Chip Marine fzc 205,620
5) Bureau veritas 11,17,805
6) Capt. Mark O Carroll 42,34,657
I.T.(TP)A No.86/Chny/2019
:- 17 -:
7) Capt. Bernardlesage 9,64,960
8) Moreno & Associates 13,131
9) Oilfield Audit Services Inc. 5,04,795
10) Parveen Kapoor 16,60,592
11) PT. Tenga Baru Nuansa Persada 89,879
12) Seaworks Survey Est. 5,01,352
13) Sing Class 40,31,891
14) Solas Marine Services Co., L.L.C. 4,20,530
15) Tube Star International FZC 41,97,437
16) Tubestar Oil & Gas Services Pvt., 8,443
17) Western Oceanic Consultants JL 57,05,252
Grand Total 2,48,46,142"
From the above, it is clear that all the above payments are in the nature fees for technical services which attracts the provisions of Section 9(1)(vii) of the Income Tax Act, 1961. Accordingly, the payment of the professional and consultancy fees to a tune of Rs.2,48,46,142/- paid to various parties as listed above attracts the provision of Section 9(1)(vii) of the Act and tax has to be deducted at source of these payments. The same is added back to the income of the Assessee. The Hon'ble Dispute Resolution Panel [DRP] has rejected the objections raised by the Assessee, confirmed the draft assessment order.
26. On appeal before us, the learned Counsel for the Assessee has submitted that for the Assessment Year under consideration, the company has made payment for consultancy fee to various parties. The services are utilized by the company as the earning source is located outside India and submitted that for the purpose of business and promotion carried on outside India (Dubai) and as such these incomes were not chargeable to tax in the hands of the non-resident service providers. He further submitted that the provisions of Section 195(2) of the Income Tax Act, 1961 applies only when a part of the sum paid to non-residents will be income chargeable in India. Since the I.T.(TP)A No.86/Chny/2019 :- 18 -:
payments are to Dubai companies and consultancy services are not chargeable to tax in India. The payment is made outside India by the branch of the Assessee, as the branch did not have any establishment in India. No services are rendered in India and therefore Section 195(2) of the Act is not applicable. Therefore, there is no need to deduct TDS as there is no application of the Section 40(a)(ia) of the Income Tax Act, 1961.
27. The learned Counsel for the Assessee to support his arguments relied upon the decision of the Hon'ble Supreme Court of India in the case of M/s. GE India Technology Centre Private Limited Vs Commissioner of Income Tax reported in [2010] 327 ITR 456. He also relied upon the decision of the Hon'ble ITAT, Chennai Benches in the case of the Assistant Commissioner of Income Tax Vs. M/s. M.M. Forgings Limited reported in I.T.A. No.2679/Mds/2014.
The Ld. Counsel for the assessee has also submitted that the similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee's own case for A.Y 2012-13 in ITA No.450/Mds/2017 dated 19.06.2017.
28. On the other hand, the learned Departmental Representative relied upon the order of the lower authorities.
29. In the Assessment Order, the Assessing Officer has noted that the Assessee has paid professional & consultation fee and had not deducted the TDS. The case of the assessee is that the Assessee has made certain I.T.(TP)A No.86/Chny/2019 :- 19 -:
payments as consultancy fees to various parties. These services were utilized by the company for earnings from the source located outside India, i.e. for rig and consultancy or for the purpose of business or profession carried on outside India, i.e. Dubai Branch; as such these incomes were not chargeable to tax to non-resident service providers. It is submitted that the Assessing Officer without examining the provision of Section 195(2) of the Act simply made an addition to Section 9(1)(vii)(b) of the Income Tax Act, 1961. It is submitted that the Assessee has not utilized the services of the parties in India and also payments were made outside India and the services received from non-residents utilized in business or profession carried outside India would not deem to be income acquired in India to the non-residents.
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 India.
I.T.(TP)A No.86/Chny/2019 :- 20 -:
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, 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.
Thus the ground of appeal filed by the Assessee is allowed for statistical purposes.
33. The fifth ground of appeal relating to disallowance for non deduction of tax of payment of drilling services & Management fee:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that on verification of the Profit and Loss account for the year ended 31.03.2015, it is seen that the Assessee had claimed an amount of Rs.6,67,75,950/- towards 'Drilling Services and Management Fees' under the head 'other expenses'. The Assessee has filed the details in respect of the payment on Drilling Services and Management Fees and by considering the same, the Assessing Officer has held that the payment with regard to Management Fees amounting to Rs.6,67,75,950/- paid to Haledon International Corporation and Hester Development Inc. attracts the provisions I.T.(TP)A No.86/Chny/2019 :- 21 -:
of Section 9(1)(vii) and tax has to be deducted at source of these payments.
Accordingly, the sum is added to the total income of the Assessee.
34. Dispute Resolution Panel [DRP] has confirmed the order of the Assessing Officer.
35. The learned Counsel for the Assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the Co-ordinate Bench of the Tribunal in the Assessee's own case for the Assessment Year 2012 - 2013 in I.T.A. No450/Mds/2017 dated 19.06.2017.
36. The Ld. DR strongly supported the order passed by the Ld. DRP.
37. We have heard both the parties sides, perused the material available on record and gone through the orders of the authorities below. 38 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 I.T.(TP)A No.86/Chny/2019 :- 22 -:
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."
39. 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.
Thus the ground of appeal filed by the assessee is allowed for statistical purposes.
40. The sixth ground of appeal relating to denial of tax credit u/s. 90 of the Act:
Facts are in brief that the assessee has earned interest income of Rs.8,67,00,000/- from M/s. Aban Holdings Pvt. Ltd. which is a Singapore registered company and withholding the tax of SGD equivalent to INR Rs. 1,12,96,962/- has been deducted by M/s. Aban Holdings Pvt. Ltd. under the Singapore Income Tax Act. The assessee has claimed credit of the same in the return of income. The AO disallowed relief u/s. 90 of the Act amounting to Rs. 1,12,96,962/- which was deducted by Singapore authorities on the interest income from M/s. Aban Holding Pvt. Ltd. under the Singapore Income Tax Act. The assessee has submitted before us that since the income from foreign country of Rs. 8,66,10,040/- was offered to tax by the assessee, the assessee I.T.(TP)A No.86/Chny/2019 :- 23 -:
is entitled to get credit to the extent of tax paid in a foreign country. The assessee has filed breakup of the interest income in paper book page No.481 and also filed details of the withholding the tax received from Singapore tax authorities in paper book page No.440 to 441. It is also submitted that the issue is covered in favour of the assessee for the AY 2012-13 vide order dated 19.09.2017 in ITA No.450/Mds/2017 and submitted that the AO while giving effect to the directions of the Hon'ble ITAT for AY 2012-13 on 30.11.2018 has allowed the tax credit facility to the assessee-company by following the directions of the Hon'ble ITAT and submitted that the same may be followed.
41. On the other hand, the Ld. DR strongly supported the orders of the authorities below.
42. We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.
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-
I.T.(TP)A No.86/Chny/2019 :- 24 -:
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. 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 I.T.(TP)A No.86/Chny/2019 :- 25 -:
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.
Thus the ground of appeal filed by the assessee is allowed for statistical purposes.
44. The seventh ground of appeal relating to disallowance of loss on forward contracts:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that as per the Note.23 of the Financials (Other Expenses), it is reported that an amount of Rs.5.53 crores in the Profit and Loss account is at loss in respect of the cancellation of forward contracts as on 31st March, 2015. The Assessing Officer has called for the relevant details.
45. After considering the relevant details filed by the Assessee, the Assessing Officer has noted the export of goods and services to foreign countries and that are exposed to the vagaries of fluctuations in the Forex market. In order to protect against these vagaries of Forex transaction, exporters are allowed to hedge their risk within the regulatory framework of the I.T.(TP)A No.86/Chny/2019 :- 26 -:
Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000. There are many instruments available to hedge their risk like Forward Contract, Option Contract, Swap Contract and others (Generally termed as Forex Derivatives). These instruments protect the foreign currency receivable of the exporters for the exports in goods and services. These instruments offer protection by allowing the exporters to exchange the foreign currencies received out of exports to Indian rupees in a pre-agreed rate of exchange in future specified date, subject to various terms and conditions that vary according to the type of derivative countries.
46. So far as the facts of the Assessee is concerned, the confirmation submitted by the Assessee showed that the contracts were not settled by actual delivery but by cancellation or premature closure by paying or receiving the difference in the amount between the rate at which the contract has been entered and the prevailing exchange rate on the date of cancellation of the settlement. Thus, the Assessee's explanation that forward contract are basically risk management tools and they are useful in facilitating temporary hedging of price risks that was found to be incorrect. So, it is decided that the incomes received from the Forward and Options Contracts and loss on the same is not an income or loss from his business and accordingly the net of the income earned and the loss suffered deserves disallowance as these transactions is not laid out wholly and exclusively for the purpose of business under Section 37 of the Income Tax Act, 1961.
I.T.(TP)A No.86/Chny/2019 :- 27 -:
47. Accordingly, the Assessing Officer came to a conclusion that the Assessee's transactions are speculative transactions for the reason that there are contracts between the Assessee and the financial institutions (in this case Banks) for not delivered and without any specific underlying exposure. The Assessee had not furnished any risk analysis statement with underlying exposure. The Assessee has neither contract notes nor the risk analysis statement submitted to the banks while applying for the forward contracts. There was no evidence furnished with regard to the underlying risk for which forward contracts were taken. The Assessee neither proved that there was an underlying asset nor furnished any confirmation in this regard and the Banks with whom such contracts were entered. Accordingly, he has disallowed the amount of Rs.5.53 crores by treating it as speculative loss.
The Assessee has raised objections on the draft assessment order passed by the Assessing Officer before the DRP and the DRP has confirmed the draft assessment order and directed the Assessing Officer to complete the assessment.
48. Before us, the learned Counsel for the Assessee has submitted that the company's main line business 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 are made for provision of the rigs on charter-hire and drilling services in foreign currency, predominantly in USD. The nature of company's I.T.(TP)A No.86/Chny/2019 :- 28 -:
business also requires substantial imports for equipment and stores and spares for the maintenance and upkeep of the offshore rigs in order to ensure uninterrupted drilling operations.
49. He also submitted that when the entire business of the Assessee runs the risk of foreign exchange fluctuation and hence such losses can be nothing but business losses inextricably linked to the business of the Assessee and submitted that the loss on Forex contracts incurred in the course of business to hedge the foreign exchange exposures be allowed as business expenditure.
50. To support the above argument, he relied upon 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 in IT(TP)A. No.190, 176 (B)/2014 for the Assessment Year 2013 - 2014.
51. He also submitted that it is a business decision taken by the Assessee and to protect the interest of the business, he has entered into a Forex contract and subsequently he had suffered some loss. The Assessing Officer cannot say that it is not necessary for the Assessee to enter into such a contract.
52. On the other hand, the learned Departmental Representative strongly supported the order passed by the authorities below.
53. We have heard both the sides and perused the materials available on records and had gone through the orders of the authorities below.
I.T.(TP)A No.86/Chny/2019 :- 29 -:
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 AO 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 pleads that it has taken a business decision to protect its interest and had entered into a Forex contract with Banks and subsequently it has claimed loss on the Forex contracts.
56. In so far as the second objection raised by the AO, non furnishing of details i.e., invoices, risk analysis statement submitted to the bank etc. Thus, the A.O did not allow the claim for want of particulars from the assessee. In view of the above, we are setting aside the order passed by the A.O and direct the A.O to re-consider the issue afresh keeping in view of the decision of the I.T.(TP)A No.86/Chny/2019 :- 30 -:
Hon'ble ITAT of Bangalore Bench in the case of M/s. Essilor India Pvt. Ltd. Vs. The DCIT, supra.
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. Therefore, in view of the above, we are setting aside the order passed by the Assessing Officer and we direct the Assessing Officer to re-consider the issue 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.
58. The eight ground of appeal relating to Disallowance of expenses relates to earning exempt income u/s.14A r.w.R 8D:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that an amount of Rs.13,82,34,191/- as dividend from mutual funds / shares during the year and claimed the same as exempt u/s.10(34) of the Income Tax Act, 1961. As per the provisions of Section 14A of the Act, no deduction shall be allowed in respect of expenditure incurred in relation to such income which does not form part of the total income. The Assessing Officer has asked the Assessee to clarify as to why the disallowance should not be made u/s.14A r.w.Rule 8D. The Assessee replied that they had not incurred any expenditure in connection with earning exempt income and that the disallowance u/s.14A of the Act is not called for. The Assessing Officer I.T.(TP)A No.86/Chny/2019 :- 31 -:
after considering the explanation of the Assessee has noted that the Assessee has incurred an amount of Rs.93.01 crores as Finance Cost on its borrowed capital during the year. Though the Assessee has claimed that such borrowed funds were not utilized for making investments, it could not clearly establish the same. Funds for a Company come in a common kitty and it comprises of borrowed funds, share capital and retaining earnings (Reserves & Surplus).
Therefore, to argue that no portion of the interest paid relates to investment is not valid.
59. The Assessing Officer further noted that the Assessee cannot earn dividend income without the existence of management. The Assessee must have been incurred administrative expenses and without incurring the expenses, it is not possible to earn dividend income and accordingly the Assessing Officer has invoked Section 14A r.w.R-8D and worked out an amount to Rs.5,35,925/-, i.e. 0.5% of the average investments as the expenses incurred by the Assessee. Accordingly, the same is brought to tax.
60. On appeal, the Dispute Resolution Panel has modified the order. The DRP has disallowed an amount of Rs.4,27,934/- u/s.14A r.w.R-8D of the Act and added back to the total income of the Assessee and further as per the Section 115JB sub-section 2, Explanation 1 clause (f), the relevance of expenses earning exempt income of Rs.4,73,075/- is added back to the books of the Assessee.
I.T.(TP)A No.86/Chny/2019 :- 32 -:
61. The learned Counsel for the Assessee has submitted that Section 14A of the Act is a provision with fiction disallowing the deemed expenditure attributable to exempt income viz. dividend income u/s.10 of the Act and Section 115JB of the Act is also a provision with fiction for payment of tax in respect of deemed income and submitted that the profit for the purpose of Section 115JB of the Act another provision with fiction cannot be superimposed and the question of increasing the 'Book Profit' due to disallowance u/s.14A of the Act will not arise due to the fact that any notional adjustment in the book profit is not permissible. To support his argument he relied on the decision of the Delhi Special Bench in the case of Vireet Investments, 82 Taxmann.com 415
62. The learned Departmental Representative supported the order of the authorities below.
63. We have heard both the sides and perused the records and had gone through the orders of the authorities below.
64. The case of the Assessee is that he has not incurred any expenses for the earnings of the dividend income. However, the Assessee has not been able to establish before the Assessing Officer because the borrowed funds are not utilized for the purpose of investment. Therefore, the Assessing Officer has invoked Section 14A r.w.R 8D of the Income Tax Act, 1961. He has made a disallowance of Rs.5,35,925/- which is 0.5% of the average investments.
I.T.(TP)A No.86/Chny/2019 :- 33 -:
65. On appeal, the Dispute Resolution Panel has modified the order passed by the Assessing Officer and also made one more addition u/s.115 JB of the Act amounting to Rs.4,73,075/- but according to the Assessee which is not correct as no addition can be made in Section 115 JB of the Income Tax Act, 1961, which is contrary to the decision of the Delhi Special Bench in the case of Vireet Investments, 82 Taxmann.com 415.
66. It is also the case of the Assessee that no disallowance u/s.14A has to be made because the Assessee is having sufficient own funds. However, as for the Assessing Officer, the Assessee is not able to submit the details and substantiate that the borrowed funds are not utilized for the purpose of the business.
67. Thus, we set aside the order passed by the Assessing Officer and remit the issue back to the file of the Assessing Officer to examine afresh, keeping in view the decision of the Delhi Bench Special of the Tribunal (supra), passed order thereupon.
Thus the ground of appeal filed by the Assessee is allowed for statistical purposes.
68. The ninth ground of appeal relating to Disallowance of long term capital loss :
Facts are in brief that in the Assessment Order the Assessing Officer has noted that during the current year the Assessee has claimed Long Term Capital Loss on sale of investments in the equity shares of M/s. Aban Holdings I.T.(TP)A No.86/Chny/2019 :- 34 -:
Private Limited, Singapore who is wholly owned foreign subsidiary of the Assessee (or in other words buy-back of shares by the wholly owned foreign subsidiary). The details of the shares sold, such as the number of shares sold, sale consideration received, rate at which it is sold, cost of acquisition, indexed cost of acquisition, etc., in the month of June and July 2014 respectively. For the sake of convenience, the relevant portion of the same is reproduced from the assessment order as under:
"Equity shares of Aban Singapore Private Limited :
Loss on sale of Investments - Aban Holdings Private Limited USD Sale consideration of Investments - sold on 84,61,538 Equity Shares 6,600,000 various dates of June in F.Y. 2014 - 2015 @ USD 0.78 each Less :
Cost of acquisition Cost of inflation index
84,61,538 shares @ USD 1.00 FY: 2008-09 - 582 14,887,655
Index cost of acquisition FY : 2014 - 15 - 1024
Loss on sale of investments to be carried (82,87,6565)
forward
st
INR Conversion @ TT buying SBI Card rate as on May 21 @ 58,75 (Rs.48,68,99,749) /.............................(A) Sale consideration of Investments - sold on 1,02,56,410 Equity Shares @ USD 0.78 8,00,000 various dates of July in F.Y. 2014 - 2015 each Less :
Cost of acquisition Cost of inflation index 1,02,56410 shares @ USD 1.00 FY: 2008-09 - 582 18,045,643 Index cost of acquisition FY : 2014 - 15 - 1024 Loss on sale of investments to be carried (10,045,643) forward
INR Conversion @ TT buying SBI Card rate as on June 30tj @ 58,75 (Rs.59,99,22,592) /.............................(B) Total Long Term Capital Loss claimed on Loss on sale of investments on sale of Equity shares of Aban Holdings Private Limited is (A) + (B) = (Rs.48,68,99,749 + Rs.59,92,22,592) =Rs.108,61,22,341/-
12.2 It is also to be noted that during the current year the Assessee has reinvested in the shares of the same company in the month of July soon after the sale of investments.
12.3 The dates of sale of shares of M/s. Aban Holdings Private Limited, Singapore in the FY. 2014 -
2015 relevant to the AY.2015-2016 and subsequent investment in the shares of the same company are as under:
Sale of Investment in Aban Holdings Private Ltd or Rate at which sold Amount of sale Buyback of shares of Aban Holdings Private Limited I.T.(TP)A No.86/Chny/2019 :- 35 -:
workings for the FY 2014-15 Date No. of share sold USD USD 13.06.2014 12,82,051 0.7800 10,00,000 19.06.2014 5,12,821 0.7800 4,00,000 25.06.2014 6,41,026 0.7800 5,00,000 30.06.2014 60,25,641 0.7800 47,00,000 01.07.2014 1,02,56,410 0.7800 80,00,000 Total 1,87,17,949 1,46,00,000 Further investment in the shares of Aban Holdings Private Limited for the FY.2014 - 2015 Date of Investment Explanation No. of shares Amount of USD 14.07.2014 Equity Investment in Wholly 135,13,513 100,00,000 owned subsidiary 14.07.2014 Equity Investment in Wholly 67,56,757 50,00,000 owned subsidiary 14.07.2014 Equity Investment in Wholly 67,56,757 50,00,000 owned subsidiary 14.07.2014 Equity Investment in Wholly 67,56,757 50,00,000 owned subsidiary Total 337,83,783 250,00,000
69. From the above, the Assessing Officer has noted that the Assessee has sold tranche of shares in the wholly owned subsidiary M/s. Aban Holdings Private Limited from 13.06.2014 to 01.07.2014 for a sum of USD 146,00,000 incurring huge long term capital loss, only thirteen days later a sum of USD 250,00,000 was invested in the same shares by the Assessee. Since this is against a common prudence, the Assessee was asked to explain the transaction along with copies of buyback offer, copies of valuation reports, reason for sale and subsequent purchase of shares of the wholly owned subsidiary supported by minutes of meeting and copies of valid documentary evidences along with all relevant details. The Assessee has submitted as under:
"Our wholly owned subsidiary had come out with an offer for buyback of its equity shares in October 2013. Company had planned for redeeming its high cost bank debts and accepted the buyback offer pursuant to the Board approval on 13th November, 2013. The buyback was completed and the company redeemed its high cost debts during 2013-2014 and 2014 - 2015. Later during the year when company raised equity through Qualified Institutional Placement, it was thought appropriate to capitalize our wholly owned foreign subsidiary, because our wholly owned foreign subsidiary was the growth engine of the group. The investment was approved by the Board of Directors."
I.T.(TP)A No.86/Chny/2019 :- 36 -:
70. The Assessing Officer after considering the explanation of the Assessee has noted that the Assessee has not given background in which the Board of Directors have taken a decision. No evidence in respect of the Minutes of the Meeting and no extracts on the Minutes of the meeting, wherein the decision in respect of the sale of investment was furnished by the Assessee. However, the Assessee has not explained satisfactorily with all supportive evidences as to why such decision has been taken.
71. The Assessing Officer has also noted that the Assessee has not explained as to why such sale of shares was succeeded by reinvestment in the same shares and the Assessee has also not furnished any details in respect of the high cost bank debts being repaid or whether any reconstitution of debts were made. The Assessing Officer has again asked the Assessee as to why such long term capital gain should not be disallowed in the absence of the legitimate undertaking for such a transaction and he is of the opinion that the entire transaction was an arrangement between the associate entities. Again the Assessee has made a detailed submission before the Assessing Officer which is reproduced as under:
"We would like to submit that during the year under consideration, M/s Aban Holding Private Limited has bought back the shares from Aban Offshore Limited and accordingly, our company sold 7, SI 7 948 shares at the rate of $0.78 per share, The share price is arrived as per Rule 1JUA of Income Tax Rules, 1962. The company has incurred Long Term Capital Loss of $1,83,33,297 equivalent to INR 1,08,61,22,342/- after claiming index cost of acquisition. A detailed working of Long Term Capital Loss has been enclosed herewith for your kind consideration. Since, the investment in shares was held for more than 2 years and the same were sold at the value determined as per Rule 11 UA, our company I.T.(TP)A No.86/Chny/2019 :- 37 -:
has rightly claimed the long term capital loss on sale of such shares and same may kindly be allowed to carry forward to future years.
We would like to submit that the part of the above transaction had taken place in FY 2013-14 relevant to AY-2014-15 and a total capital loss on sale of shares of MIs Aban Holding Private Limited was arrived at 112,66,71,005/-. During the course of scrutiny proceedings, queries was raised regarding the Long Term Capital Loss claimed by our company and after our reply, the same was ace Private by the Assessing officer for A Y2014-15. Since the loss in current year in on the same transaction, we request you to kindly accept the Long Term Capital loss claimed by our company.
Herein, it is once again submitted before you kind office that the during the FY 2013-1 4, the assessee company was going through liquidity crises and therefore our company requested to buy back AHPL shares, AHPL agreed to buy back its shares from our company (A ban Offshore Limited). The decision to buy back of shares was finalized during FY2013-14 when our company was facing liquidity crises. However, the buyback transactions took place in 2phase of Installments i.e. once in FY- 2013-14andanother in Further, during the year under consideration, in July 2014, our company received investment from Qualified Institutional Buyer (QIB,) which has, a positive impact of the liquidity. Since AHPL is the growth engine of the Company, our company invested in the shares of AHPL.
Thus, the decision of buy back was taken in FY 2013-14 for the reasons of liquidity and funds availability and thereafter the Buy Back transaction was completed in two phases of installment i. e, first transaction in FY20] 3-14 and the second in the FY2014-15."
72. The Assessing Officer had considered the explanation of the Assessee and noted that the Assessee has not offered any explanation as to why such transaction was undertaken which has resulted in huge claim on long term capital loss. The Assessee has further noted that during the course of scrutiny proceedings, queries were raised according to the long term capital loss claimed by the company and the same was accepted by the Assessing Officer for the Assessment Year 2014- 2015.
73. At this point, the relevant note that during the assessment proceedings for the Assessment Year 2014 - 2015, the Assessee has not brought to the notice of the Assessing Authority that there was a reinvestment made by the I.T.(TP)A No.86/Chny/2019 :- 38 -:
Assessee in the same status of shares during the financial year 2014 - 2015 relevant to the Assessment Year 2015 - 2016. This material fact changes the colour of the transaction in as much as the intention of the Assessee in backing the artificial long term capital loss becomes abundantly clear. Therefore, the comparison cannot be drawn between both the Assessment Years because of the facts pertaining to both the years that are different.
74. In so far as the statement made by the Assessee is that there was a liquidity crisis faced by the Assessee for that the Assessing Officer had noted that no material is placed that shows that the Assessee is facing financial crisis. Accordingly, the Assessing Officer came to a conclusion that the Assessee has undertaken the transaction that is buying and selling of shares of the Assessee's wholly owned subsidiary without any valid reasons and the same is not substantiated by the Assessee by placing relevant materials and not disclosed the real reason behind undertaking such transactions. Accordingly, the long term loss claimed by the Assessee is disallowed.
75. The Assessing Officer also relied upon the decision of the Madras High Court in the case of M/s. Premier Synthetic Industries Vs. Income Tax Officer, Ward - II (7), Coimbatore [2012] 22 Taxmann.com 333 (Mad.). Keeping in view of the direction given by the DRP.
76. The ld. Counsel for the assessee has argued that the assessee has taken a business decision of buy and sale the shares therefore, the AO cannot step into the shows of the assessee. Further he relied on the decision of I.T.(TP)A No.86/Chny/2019 :- 39 -:
Hon'ble Supreme Court in the case of S.A Builders Vs. CIT 288 ITR 01 (SC). He further submitted that the capital loss on account of sale of shares was not adjusted against any capital gain even till date. Accordingly, no tax benefit was levied therefore, obtained by the assessee company after the capital loss was booked by it. To support his argument, he relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Gillette Diversified Operations (P.) Ltd. [2010] 324 ITR 226 (Del). He further submitted that part of the transaction had taken place at for the financial year 2013-14 relevant to the AY 2014-15 a total capital loss on sale of shares of M/s. Aban holdings Pvt. Ltd. accepted by AO subsequent to the year 2015-16 loss was not accepted which is not correct.
He further submitted that sale price is in accordance with Rule 11(UA) of the Rules and submitted that long term capital loss suffered by the assessee has to be allowed.
77. On the other hand, the learned Departmental Representative strongly supported the order passed by the Assessing Officer and also placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Premier Synthetic Industries Vs. Income-Tax Officer, Ward - II (7), Coimbatore reported in [2012] 22 Taxmann.com 333 (Mad.).
78. We have heard both the sides and gone through the orders of the authorities below.
I.T.(TP)A No.86/Chny/2019 :- 40 -:
79. The Assessee company has claimed long term capital loss on sale of investments in the equity shares of M/s. Aban Holdings Pvt. Ltd., Singapore, who is a wholly owned foreign subsidiary of the assessee-company (or in other words bought by back of shares by the wholly owned foreign subsidy). According to the Assessing Officer, the Assessee has not placed the Minutes of the Meeting and he also noted that the same shares were again invested by the Assessee in M/s. Aban Holdings Private Limited, Singapore. The Assessing Officer has asked the Assessee as to what is the reason for sale was and what is the reason for subsequent purchases. The Assessee has explained that the Board has taken the decision on 13th November, 2013 to redeem its high cost bank debts. According to the Assessing Officer, there is no reason for buying and selling the shares. In the Assessment Order, the Assessing Officer has further noted that the Minutes of the Meeting were not placed before the Assessing Officer during the course of the assessment proceedings. So far as Assessment Year 2014 - 2015 is concerned, the Assessee has not brought all the details before the Assessing Officer. Therefore, the same cannot be followed for the year under consideration.
80. We find that the Board has taken a decision to buy back the entire shares of M/s. Aban Holdings Private Limited, Singapore, Assessee's wholly owned subsidiary company and that no third party in involved. The transaction is between the Assessee's own sister concern and the Assessee. The Board has taken a decision on 13th November, 2013. As regards to the entire buyback of the shares, the Assessing Officer for the Assessment Year 2014 -
I.T.(TP)A No.86/Chny/2019 :- 41 -:
2015, in the scrutiny proceedings allowed the capital loss of the Assessee. In the year under consideration, the Assessing Officer says that the Assessment Year 2014 - 2015 is different from the Assessment Year 2015 - 2016. The Board has taken a decision with regard to the buyback of the shares. One transaction has already been completed for the Assessment Year 2014 - 2015 and the same is allowed by the Assessing Officer. The remaining part of the transaction is completed during the subsequent year and the Assessing Officer has doubted the same on the ground that the Minutes of the Meeting has not been placed before the Assessing Officer and also the Assessee has sold the same shares to M/s. Aban Holdings Private Limited, Singapore. We find that the reason given by the AO in our opinion is justified for the reason that the AO has given different treatment for the same shares for the year 2014-15 and 2015-16, the AO is disallowed the capital loss claimed by the assessee by following the decision of the Hon'ble Jurisdictional High Court in the case of Premier Synthetic Industries Vs. Income-Tax Officer, Ward - II (7), Coimbatore (supra). Even the Hon'ble Dispute Resolution Panel [DRP] has taken support from the same decision.
81. In the case of the Premier Synthetic Industries Vs. ITO, Ward-II(7), Coimbatore, the Hon'ble Madras High Court has considered that when there were no materials to show that funds for purchase of shares actually went from Assessee, the entire transactions were lacking genuineness. Under these facts, the Hon'ble Madras High Court has held that the loss cannot be allowed either as a revenue loss or a capital loss. The above decision is not applicable I.T.(TP)A No.86/Chny/2019 :- 42 -:
to the facts of the case. As per the note filed by the Assessee in the present case, the Assessee has made investment in M/s. Aban Holdings Private Limited, Singapore for the financial year 2008 - 2009 dated 27.09.2012, AGM held by M/s. Aban Offshore Private Limited to buyback of shares on 30.10.2013, buyback of shares of the first half on 01.02.2013 and buyback of shares of the second half was on June 2014. The above facts were neither properly examined by the DRP nor by the Assessing Officer.
82. In view of the above by considering the facts and circumstances of the case, we are of the opinion that the order passed by DRP has to be set aside and the issue has to be remitted back to the A.O. Accordingly, we set aside the order passed by DRP and remit the matter back to the AO to decide the issue afresh keeping in view of the observations made by us.
Thus the ground of appeal filed by the Assessee is allowed for statistical purposes.
83. The tenth ground of appeal relating to disallowance of Professional and Consultancy Services:
Facts are in brief that in the Assessment Order, the Assessing Officer has noted that the Assessee has claimed a sum of Rs.1,89,00,000/- under the head professional and consultancy services which was paid to M/s. Emkay Global Financial Services for receipt of services for business strategy. The Assessing Officer has asked the Assessee to furnish the nature of services I.T.(TP)A No.86/Chny/2019 :- 43 -:
rendered along with documentary evidences. The Assessee has submitted as under:
"The payment is made towards fees for advising on issues relating to business strategy. It is most humbly submitted that during the Financial Year 2014 - 2015, our company was going through difficult business period that had to go for corporate restricting in order to service the liabilities.
M/s. Emkay Global Financial Services Limited is a company founded in the year 1995 is providing financial advice in various areas and is listed in the major recognized stock exchanges of India including Bombay Stock Exchange. The company is located in Mumbai and its PAN is AAACE 0994L. During the year under consideration, M/s. Emkay Global Financial Services Limited ha provided our company consultancy services in respect of financial restructuring of our company and accordingly has raised an invoice of Rs.1,89,00,000/- towards such services and also charged service tax @ 12.36% of Rs.23,36,040/-. Thus, the payment was made after deducting the applicable TDS.
It is not out of place to submit here that the above payments are reflected in the Form 26AS of M/s. Emkay Global Financial Services Limited and the same is offered by them to Income Tax. Further, M/s. Emkay Global Financial Limited is not a related party to M/s. Aban Offshore Limited.
Therefore, it is submitted that the payments made to M/s. Emkay Global Financial Services Limited are towards the business requirements of our company which helped us in restructuring the financial structure of the company. Therefore, the expenditure incurred towards business expediency and the same is allowable u/s.37(1) of the Income Tax Act, 1961."
84. The Assessing Officer has considered the explanation given by the Assessee and he has noted that the Assessee has not furnished any details of the nature of services rendered by the party, M/s. Emkay Global Financial Limited to identify as to whether the expenditure is wholly and exclusively incurred for the purpose of business. He further noted that the Assessee has not filed any details to prove that the expenditure does not relate to the capital expenditure. The Assessing Officer further noted that the services rendered by M/s. Emkay Global Financial Limited for the purpose of financial restructuring is done for the Assessee company thereby incurring a huge long term capital loss which cannot be allowed under the reason, as the entire transaction is sham transaction. Accordingly, he disallowed the same on appeal.
I.T.(TP)A No.86/Chny/2019 :- 44 -:
85. The Assessee has raised objection against the draft assessment order passed by the Assessing Officer before the Hon'ble DRP. The Hon'ble DRP had confirmed the draft assessment order and also relied upon the decision of the Hon'ble Supreme Court in the case of India Cements Limited Vs. The Commissioner of Income Tax reported in [1966] 60 ITR 52.
86. Before us, the learned Counsel for the Assessee has submitted that the Assessee has is engaged in the services of M/s. Emkay Global Financial Services Limited towards the business requirements of the Assessee company and therefore the expenses incurred by the Assessee for the purpose of business requirements of the Assessee company and therefore the expenses incurred by the Assessee for the purpose of business and is allowable u/s.37(1) of the Income Tax Act, 1961.
87. The learned Departmental Representative has submitted that the Assessee has not filed any details as to what is the nature of services rendered by M/s. Emkay Global Financial Limited and he strongly placed reliance on the authorities below.
88. The learned Counsel for the Assessee has submitted that the expenditure incurred by the Assessee for the purpose of business is allowable u/s.37 of the Income Tax Act, 1961 and submitted that the Assessee has received consultancy services from M/s. Emkay Global Financial Limited for financial restructuring. It is for the purpose to run the business of the Assessee and therefore the same cannot be disallowed.
I.T.(TP)A No.86/Chny/2019 :- 45 -:
He further submitted that the Assessee has deducted service tax and also the Tax Deducted at Source [TDS] in respect of the payment made to Emkay Global Financial Limited. He also submitted that the Assessee has taken a decision in respect of his business and a Consultant is engaged for which he had paid consultancy charges for the services and therefore the Assessing Officer cannot sit upon the business decision taken by the Assessee and disallow the expenditure which is incorrect. To support his arguments, he relied upon the decision in the case of M/s. S.A. Builders Limited Vs. Commissioner of Income Tax (Appeals) reported in 288 ITR 1/158 Taxmann 74 (SC); Assistant Commissioner of Income Tax Vs. Durgapur Tea Company [2003] 131 Taxmann 39; Principal Commissioner of Income Tax Vs. Basti Sugar Mills Company Limited reported in [2018] 98 Taxmann.com 401 (Delhi). He also relied upon the decisioni in the case of Commissioner of Income Tax Vs. South India Sugars Limited reported in [2005] 275 ITR 491 (Mad.)
89. We have heard both the sides and perused all the records and had gone through the orders of the lower authorities.
90. The case of the Assessee is that the Assessee is engaged with M/s. Emkay Global Financial Limited for a business strategy and also business requirements of the company had paid an amount of Rs.1,89,00,000/- and the Assessing Officer has asked the Assessee to submit the details and he has submitted that the expenditure incurred by the Assessee is for the purpose of business. Before the AO the assessee has submitted that the expenditure I.T.(TP)A No.86/Chny/2019 :- 46 -:
incurred towards assessee's business purpose TDS was deducted on the payment and the expenditure allowable u/s. 37(1) of the Act. However, the AO not accepted the explanation of the assessee and disallowed entire expenditure by following the directions of the DRP.
91. It is a fact that the Assessee has engaged services of M/s. Emkay Global Financial Limited towards Consultancy Services. He has deducted the TDS on the payment made to the above company. It is a case of the Assessee that for the purpose of business, he has engaged the services of M/s. Emkay Global Financial Limited.
92. So far as this aspect is concerned, in our opinion it is the business decision taken by the Assessee to engage the services of a particular company for the purpose of business. Therefore, the Assessing Officer is not justified in respect of the Consultancy Services received by the Assessee because the Assessee has paid an amount of Rs.1,89,00,000/- and TDS is also being deducted on the said payment. No prudent businessman can make a payment to the third party without receiving the services from the party. The only objection in our view that is concerned is the details in respect of the services rendered that are not filed before the Assessing Officer.
93. The Assessing Officer has not examined as to whether M/s. Emkay Global Financial Limited has offered the same for taxation or not? This fact is very much necessary to decide this issue. Therefore, we set aside the order passed by the Assessing Officer and remit the matter back to the file of the I.T.(TP)A No.86/Chny/2019 :- 47 -:
Assessing Officer to examine as to whether M/s. Emkay Global Financial Limited has offered the amount received from the Assessee for taxation or not? We also direct the Assessee to submit all the details of the services rendered by M/s. Emkay Global Financial Limited.
In view of the above, the ground of appeal filed by the Assessee is allowed for statistical purposes.
94. In the result, the appeal filed by the assessee, the ground No.2 is partly allowed for statistical purpose and all remaining grounds of appeal allowed for statistical purpose.
Order pronounced on 12th April, 2021 in Chennai.
Sd/- Sd/-
( ी एस. जयरामन) (वी दग
ु ा राव)
(S. JAYARAMAN) (V. DURGA RAO)
लेखा सद य/ACCOUNTANT MEMBER या यक सद य/JUDICIAL MEMBER
चे नई/Chennai,
3दनांक/Dated: 12th April, 2021
IA, Sr. PS
आदे श क, ( त4ल5प अ6े5षत/Copy to: 1. अपीलाथ+/Appellant
2. ()यथ+/Respondent
3. आयकर आयु7त (अपील)/CIT(A)
4. आयकर आय7 ु त/CIT
5. 5वभागीय ( त न ध/DR
6. गाड फाईल/GF