Tribunal affirms deduction under Income-tax Act & corporate guarantee fee rate, dismissing Revenue's appeals.

The Tribunal upheld the Commissioner's decision to allow the deduction under section 80IB of the Income-tax Act for the assessment years in question, based on previous favorable rulings. Regarding the determination of the arm's length price of the corporate guarantee fee, the Tribunal supported the 0.5% per annum rate set by the Commissioner (Appeals) in line with judicial precedents. The appeals by the Revenue were dismissed, affirming the allowance of deduction and the arm's length price determination for both assessment years.

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Issues:
1. Allowability of deduction under section 80IB of the Income-tax Act, 1961 for assessment years 2012-13 and 2011-12.
2. Determination of arm's length price of corporate guarantee fee.

Analysis:

Issue 1: Allowability of deduction under section 80IB:
The appeals were filed by the Revenue challenging two orders passed by the Commissioner (Appeals) related to the deduction claimed under section 80IB of the Income-tax Act. The Assessing Officer disallowed the deduction in both assessment years due to including income from scrap sales. However, the Commissioner (Appeals) allowed the deduction based on previous Tribunal decisions favoring the assessee. The Tribunal upheld the Commissioner's decision citing identical facts and previous rulings in favor of the assessee.

Issue 2: Determination of arm's length price of corporate guarantee fee:
The Assessing Officer made adjustments for corporate guarantee fees charged by the assessee's AE, leading to significant additions to the assessee's income. The Transfer Pricing Officer determined the guarantee commission rates, resulting in adjustments for both assessment years. The Commissioner (Appeals) directed the Assessing Officer to consider the arm's length price of the corporate guarantee commission at 0.5% per annum based on precedent rulings and decisions of the Tribunal and High Court. The Tribunal upheld this decision, emphasizing the reasonableness of the 0.5% rate in line with judicial precedents.

In conclusion, the Tribunal dismissed the appeals, affirming the allowance of deduction under section 80IB and the determination of the arm's length price of the corporate guarantee fee at 0.5% per annum for both assessment years. Additionally, certain grounds raised by the Revenue were dismissed as not relevant to the Commissioner (Appeals) order.

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