Tribunal rules for assessee, dismissing revenue appeal & cross-objection, making adjustments on interest, guarantee & expenses.

The tribunal ruled in favor of the assessee, dismissing the revenue's appeal and the assessee's cross-objection. The adjustments related to interest on loan and mobilization advance were deleted, considering foreign currency transactions. For the corporate guarantee, a fee of 0.27% was upheld. The disallowance of sub-contract expenditure was set aside for re-examination due to lack of evidence. The disallowances of license membership, subscriptions, access fees, and miscellaneous entertainment expenses were also directed for re-examination, with adjustments limited to 10% of un-vouchered expenses.

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Issues Involved:
1. Transfer Pricing adjustment related to Interest on Loan.
2. Transfer Pricing adjustment related to Corporate Guarantee.
3. Transfer Pricing adjustment related to Interest on Mobilization Advance.
4. Disallowance of Sub-Contract Expenditure.
5. Disallowance of License Membership, Subscriptions & Access Fee.
6. Disallowance of Miscellaneous and Entertainment Expenses.

Detailed Analysis:

1. Transfer Pricing Adjustment Related to Interest on Loan:
The assessee had given a loan to its AE in Singapore and justified the interest rate using the Comparable Uncontrolled Price (CUP) method, benchmarking it against the Singapore Prime Lending Rate (PLR). The TPO rejected this and used the Indian PLR, resulting in an adjustment. The tribunal held that since the loan was in foreign currency and consumed outside India, the Singapore PLR should be used. Consequently, the adjustment was deleted.

2. Transfer Pricing Adjustment Related to Corporate Guarantee:
The assessee provided a corporate guarantee to its subsidiaries for acquiring a coal mine without charging a fee. The TPO considered this an international transaction and applied a 2% fee, which the DRP reduced to 0.53%. The tribunal upheld the transaction as an international one but directed the AO/TPO to apply a fee of 0.27% based on a precedent. The tribunal also rejected the contention that the fee should be proportionate to the period of the guarantee.

3. Transfer Pricing Adjustment Related to Interest on Mobilization Advance:
The TPO treated mobilization advances as loans and made an adjustment using the domestic PLR. The tribunal found that these advances were part of regular business transactions and not loans. It noted that the assessee did not charge interest on advances to both AEs and non-AEs and did not pay interest on advances received. The tribunal deleted the adjustment, emphasizing that such advances are common in the construction industry and not subject to TP adjustments.

4. Disallowance of Sub-Contract Expenditure:
The AO disallowed sub-contract expenses based on a survey and statements from third parties, categorizing the payments as non-genuine. The tribunal found that the assessee was not given adequate time to furnish evidence and that the DRP refused to consider additional evidence. The tribunal directed the AO to re-examine the claim, allowing the assessee to furnish evidence. It also noted that service tax should not be disallowed as it was not claimed as an expenditure.

5. Disallowance of License Membership, Subscriptions & Access Fee:
The AO disallowed Rs. 24,99,777/- without providing quantification details. The tribunal directed the AO to provide details and allow the assessee to furnish supporting bills or vouchers. The issue was set aside for re-examination.

6. Disallowance of Miscellaneous and Entertainment Expenses:
The AO disallowed 20% of the un-vouchered expenditure. The tribunal found inconsistency in the AO's approach and directed a re-examination, restricting the disallowance to 10% of the un-vouchered amount.

Conclusion:
The tribunal allowed the assessee's appeal for statistical purposes, dismissing the revenue's appeal and the assessee's cross-objection. The AO was directed to re-examine several issues, providing the assessee with an opportunity to furnish necessary evidence.

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