Corporate guarantee transfer pricing and service tax turnover mismatch-0.60% ALP upheld; advance receipts excluded; fresh claims remanded.

Transfer pricing on corporate guarantees turned on determining the arm's length guarantee commission. Following its own order for earlier AYs and relying on the bank's rate, the ITAT sustained 0.60% as the ALP for all corporate guarantees, including one where no subsequent comparable material was produced; the assessee's ground was partly allowed. Addition based on higher turnover in service tax returns depended on whether receipts were revenue or advances. Applying accrual principles, the ITAT held that amounts shown in ST-3 as advances could not be taxed as current-year revenue and rejected the CIT(A)'s percentage-completion approach; the addition was deleted and the ground allowed. On fresh deduction claims, appellate power was affirmed per SC in Goetze, and the matter was remanded to the AO for verification; remand for statistical purposes.

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Issues Involved:
1. Non-compliance with section 144B of the Act.
2. Transfer pricing addition on account of corporate guarantee.
3. Addition to income based on Service Tax Return.
4. Claim for taxes paid outside India.
5. Deduction u/s. 80JJAA.
6. Short TDS credit granted.
7. Short credit of Regular Tax Paid.
8. Interest levied u/s 234B & 234C.

Summary:

1. Non-compliance with section 144B of the Act:
The ground related to non-compliance with section 144B was not pressed by the assessee and was dismissed accordingly.

2. Transfer pricing addition on account of corporate guarantee:
The assessee contested the transfer pricing addition of Rs. 13,97,23,463/- made at the rate of 1.16% of the guarantee amount. The ITAT noted that in earlier years, similar issues were resolved by sustaining the corporate guarantee at 0.60% for certain entities and 0.20% for others. The ITAT decided to follow the rule of consistency and sustained the corporate guarantee at 0.60% for all guarantees, including those given to SAE Tower Holding LLC, due to lack of evidence for subsequent corporate guarantees.

3. Addition to income based on Service Tax Return:
The assessee argued that the amount of Rs. 43,42,62,923/- reflected in the service tax returns was an advance from customers and not actual turnover. The ITAT observed that the assessee had correctly accounted for revenue based on services provided and not advances received. The addition was deleted as the amounts were indeed advances and not revenue for the current assessment year.

4. Claim for taxes paid outside India:
The ITAT remitted the issue back to the Assessing Officer (AO) for verification of records and determination on merits, allowing the assessee an opportunity to be heard.

5. Deduction u/s. 80JJAA:
Similar to the previous issue, this was remitted back to the AO for verification and determination on merits.

6. Short TDS credit granted:
This issue was also remitted back to the AO for verification and determination on merits.

7. Short credit of Regular Tax Paid:
The ITAT remitted this issue back to the AO for verification and determination on merits.

8. Interest levied u/s 234B & 234C:
This ground was deemed consequential and was not adjudicated at this stage, keeping it open for future consideration.

Conclusion:
The appeal by the assessee was partly allowed, with several issues remitted back to the AO for further verification and determination on merits, and the addition based on service tax returns was deleted. The corporate guarantee rate was adjusted to 0.60% for consistency.

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