Tribunal Corrects Corporate Guarantee Fees and Transfer Pricing Adjustments for A.Y 2009-12

The Tribunal rectified mistakes in the original order regarding the corporate guarantee fee for A.Y 2009-10 and 2010-11, finding it necessary to adjust the fee percentage. For A.Y 2011-12, the Tribunal held that the corporate guarantee was not an international transaction before 01-04-2012, dismissing the Revenue's appeal and allowing the assessee's appeals. The Tribunal also addressed transfer pricing adjustments related to the corporate guarantee provided to AEs in the USA, aligning with the decision in the case of Siro Clinpharm Private Ltd.

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Issues involved:
Rectification of alleged mistakes in the order of the Tribunal for A.Y 2009-10, 2010-11, and 2011-12 regarding corporate guarantee fee and its classification as an international transaction.

Detailed Analysis:

1. Issue of Corporate Guarantee Fee for A.Y 2009-10 and 2010-11:
The Tribunal had previously held 0.50% to be a reasonable corporate guarantee fee for these assessment years. The assessee contended that this finding was a mistake apparent from the record. On the other hand, the Revenue argued that this decision was correct. The Revenue also claimed that the case law of Siro Clinpharm Private Ltd, which supported the assessee's position, was not presented during the original hearing. After considering the arguments, the Tribunal found that the corporate guarantee fee issue for these years needed rectification as it was indeed a mistake apparent from the record.

2. Classification of Corporate Guarantee as an International Transaction for A.Y 2011-12:
In the case of A.Y 2011-12, the Tribunal had concluded that the corporate guarantee was not an international transaction. The Revenue contended that this decision was also a mistake apparent from the record. The Revenue argued that the corporate guarantee had always been an international transaction as per the pre-amended definition of international transaction under section 92B of the IT Act. However, the assessee argued that the amendment to Sec. 92B by the Finance Act specifically brought corporate guarantee into the realm of international transactions and should not be applied retrospectively. The Tribunal, after considering the arguments and the case law of Siro Clinpharm Private Ltd, held that the corporate guarantee could not be treated as an international transaction for the period prior to 01-04-2012. Therefore, the Tribunal dismissed the Revenue's MA and allowed the assessee's MAs for this issue.

3. Transfer Pricing Adjustment for Corporate Guarantee Provided to AEs in USA:
The Tribunal also addressed the transfer pricing adjustment suggested by the TPO regarding the corporate guarantee provided by the assessee to its AEs in the USA. The TPO believed that the assessee should have charged a guarantee fee for the corporate guarantee provided. However, the Tribunal, following the decision in the case of Siro Clinpharm Private Ltd, held that the corporate guarantee was not an international transaction for the period before 01-04-2012. Consequently, the Tribunal allowed certain grounds related to this issue and declined to adjudicate on others, as they would be merely academic exercises.

In conclusion, the Tribunal allowed the MAs filed by the assessee and dismissed the MA filed by the Revenue, thereby rectifying the identified mistakes in the original order.

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