N.R.S. Ganesan, Judicial Member:

1. This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-V, Chennai, dated 26.10.2012 and pertains to assessment year 2008-09.

2. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the first issue arises for consideration is adjustment of Rs. 5,49,000/- in respect of corporate guarantee provided to Associated Enterprise namely, M/s Redington Distribution Pte Ltd., Singapore.

3. Referring to the order of this Tribunal dated 26.6.2015 in the assessees own case for assessment year 2007-08, the ld. Counsel submitted that an identical issue came before this Tribunal and this Tribunal found that the corporate guarantee given by the assessee to the Associated Enterprise does not involve any cost to the assessee, therefore, it has no bearing on the profit, income, loss or assets of the assessee. Therefore, such guarantee is outside the ambit of international transaction.

4. On the contrary, Shri S. Balasubramanian, Ld. Departmental Representative submitted that an identical issue came before Tribunal with regard to corporate guarantee provided by the assessee to the very same Associated Enterprise at Singapore. This Tribunal after placing its reliance on the decision of the Delhi Bench of this Tribunal in Bharti Airtel Ltd. v. Addl. CIT [2014] 43 taxmann.com 150/63 SOT 113 found that corporate guarantee provided by the assessee to its Associated Enterprise at Singapore does not involve any cost to the assessee therefore, it was outside the ambit of international transaction. This Tribunal further found that the corporate guarantee provided by the assessee cannot be subject matter of adjustment for determining ALP.

5. We have considered the rival submissions on either side and also perused the material available on record. As rightly submitted by the ld. Counsel and the ld. DR, for the assessment year 2007-08, a similar adjustment was made to the extent of Rs. 1,84,17,371/-. This Tribunal after placing its reliance on the decision of the Delhi Bench of this Tribunal in Bharti Airtel Ltd. (supra), found that providing corporate guarantee to its Associated Enterprise does not involve any cost to the assessee, therefore, it is outside the ambit of international transaction to which ALP adjustment has to be made. Since the facts are identical for the year under consideration, this Tribunal is of the considered opinion that the decision of this Tribunal in the assessees own case for assessment year 2007-08 is equally applicable. Accordingly, by following the decision of this Tribunal in assessees own case for assessment year 2007-08, the addition made by the lower authorities to the extent of Rs. 5,49,000/- is deleted.

6. The next issue arises for consideration is disallowance of trade mark licence fee.

7. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the very same issue came before this Tribunal for assessment year 2007-08. This Tribunal, referring to its earlier order for the assessment year 2009-10 in assessees own case and the judgment of the Apex Court in S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1 /158 Taxman 74 , found that the expenditure is an allowable business expenditure.

8. We heard Shri Balasubramanian, ld. DR also.

9. As rightly submitted by the ld. Counsel for the assessee, for the assessment year 2007-08, the Assessing Officer disallowed a sum of Rs. 1,80,98,708/- towards trade mark licence fee. This Tribunal found that nothing uncommon in the assessees making payment to use the trade mark REDINGTON to M/s Redington Distribution Pte. Ltd., Singapore. By placing its reliance on the order of this Tribunal in assessees own case for assessment year 2009-10 and the judgment of the Apex Court in S.A. Builders Ltd. (supra), this Tribunal found that the expenditure claimed by the assessee is an allowable expenditure. Since the facts are identical, this Tribunal is of the considered opinion that the claim of the assessee has to be allowed as business expenditure. By following the orders of this Tribunal for assessment year 2009-10 and 2007-08, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow the claim of the assessee towards trade mark licence fee as business expenditure.

10. The next issue arises for consideration is disallowance of Rs. 2,55,33,000/- u/s 14A of the Act.

11. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the investment was made out of the internal accruals. The ld. Counsel further submitted that the paid up capital and reserves and surplus of the assessee for the year ending 31.3.2008 was Rs. 569,55,22,000/-. The investment in Indian companies were only to the extent of Rs. 89,07,33,000/-. The ld. Counsel further submitted that the assessee has not received any income by way of dividend during the year under consideration. Referring to the decision of this Tribunal in Asstt. CIT v. M. Baskaran [2014] 50 taxmann.com 138/[2015] 152 ITD 844 (Chennai), the ld. Counsel submitted that on identical set of facts, this Tribunal found that section 14A has no application and accordingly, deleted the disallowance made by the Assessing Officer u/s 14A of the Act. The ld. Counsel has also placed his reliance on the judgment of the Delhi High Court in CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28, the copy of which is filed before this Tribunal.

12. On the contrary, Shri S. Balasubramanian, Ld. Departmental Representative submitted that as on 31.3.2008, the assessee made investment to the extent of Rs. 3,20,82,00,000/- as against Rs. 2,38,07,00,000/- in the preceding year. The assessee has not offered any dividend income for taxation. The Assessing Officer also found that no disallowance was made by the assessee u/s 14A of the Act. According to the ld. DR, a portion of the expenditure attributable for making such a huge investment has to be computed by applying Rule 8D of the Income Tax Rules. The ld. DR further submitted that the assessee now claims before this Tribunal that no borrowed funds were used for making investment and the assessee has invested its own funds in other companies. The assessee also claims that as on 31.3.2008 Rs. 569,55,22,000/- was the capital and reserves and surplus. These facts were not available before the lower authorities. Therefore, according to the ld. DR, the CIT(A) has rightly confirmed the disallowance made by the Assessing Officer.

13. We have considered the rival submissions on either side and also perused the material available on record. The assessee now claims before this Tribunal that the investment was made out of its own funds accrued internally. The assessee also claims that as on 31.3.2008 the capital and reserves and surplus was available to the extent of Rs. 569,55,22,000/- and the investment was made to the extent of Rs. 32,082.47 lakhs. In the immediately preceding year the investment was Rs. 23,808.73 lakhs. No material is available on record with regard to internal accrual of funds in the regular course of its business activity. As rightly submitted by the ld. Counsel, if the assessee has its own funds for making investment then there is no question of any disallowance of notional interest on the borrowed funds. Since the assessee specifically claims that no borrowed funds were diverted for investment in other companies, this Tribunal is of the considered opinion that funds available with the assessee on the date of making investment has to be examined. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance made by the Assessing Officer u/s 14A of the Act to the extent of Rs. 2,55,33,000/- is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue afresh and find out the available interest free funds with the assessee and thereafter decide the issue in accordance with law after giving a reasonable opportunity of hearing to the assessee.

14. In the result, the appeal of the assessee is partly allowed for statistical purposes.