Tribunal upholds CIT(A) decisions on interest charges and guarantee fee.

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on both issues. The determination of Arm's Length Price for interest charged on advances to the subsidiary company was deemed acceptable as it exceeded the LIBOR rate, consistent with previous court decisions. Additionally, the corporate guarantee fee charged was not considered an international transaction, leading to no adjustment being required. The Tribunal's ruling affirmed the decisions of the CIT(A) in both matters.

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Issues:
1. Determination of Arm's Length Price for interest charged on advances to subsidiary company.
2. Corporate guarantee fee and its adjustment.

Issue 1: Determination of Arm's Length Price for interest charged on advances to subsidiary company:
The appeal was filed by the revenue against the order of the Commissioner of Income-Tax (Appeals) regarding the determination of Arm's Length Price for interest charged on advances given to the subsidiary company, which is also the Associated Enterprise of the assessee company. The AO referred the issue to the TPO for determining Arms Length Price due to international transactions with the AE. The TPO proposed an adjustment as the interest charged was deemed not at ALP. However, the CIT(A) deleted the addition, holding that the interest charged was acceptable as it was higher than LIBOR rate, following precedents such as the decisions of the Delhi High Court and the Bombay High Court. The Tribunal upheld the CIT(A)'s decision, citing consistency with previous judgments in the assessee's own case for the assessment years 2011-12 and 2012-13.

Issue 2: Corporate guarantee fee and its adjustment:
The second issue revolved around the corporate guarantee fee charged by the TPO on a guarantee provided by the assessee to its AE. The TPO proposed an adjustment, but the assessee argued that no adjustment was warranted as the corporate guarantee was given to protect the interest of shareholders and secure credit facilities to its subsidiaries without incurring any expenditure. The CIT(A) held that providing a corporate guarantee to the AE did not constitute an international transaction under section 92B of the Act, following the decision of the Hon'ble ITAT, Hyderabad. The Tribunal, in line with various judgments, including those of the ITAT Kolkata and ITAT Hyderabad, upheld the CIT(A)'s decision, ruling that no adjustment was required as the corporate guarantee did not impact the profits, income, losses, or assets of the assessee.

In conclusion, the Tribunal dismissed the revenue's appeal on both issues, affirming the decisions of the CIT(A) regarding the determination of Arm's Length Price for interest charged on advances to the subsidiary company and the corporate guarantee fee adjustment.

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