Tribunal directs deletion of transfer pricing adjustments, sets ALP for corporate guarantees, and allows appeal partially.

The Tribunal directed the AO to delete the transfer pricing adjustments if the reimbursement amount was not routed through the P&L Account. The issue of business advances was set aside for verification of regular business transactions with AEs. For corporate guarantees, the ALP was set at 0.53% instead of 1.75%. The disallowance of interest on TDS was deleted as it was not considered interest paid on income tax. The appeal was partly allowed for statistical purposes.

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Issues involved:
The judgment involves issues related to transfer pricing adjustments, business advances, corporate guarantees, and disallowance of interest on TDS.

Transfer Pricing Adjustments:
The assessee challenged certain additions sustained by the DRP in respect of transfer pricing issues, specifically reimbursement of expenditure, interest on advances, and corporate guarantee. The TPO had made an upward adjustment based on the assumption that no independent party would render services without a markup. The Tribunal directed the AO to verify if the reimbursement amount was not routed through the P&L Account, in which case the addition should be deleted.

Business Advances:
The AO referred trade advances to AEs as lending and borrowing transactions, subject to ALP determination. The assessee argued that these advances were not covered under section 92B of the Act and were provided for administrative convenience. The DRP upheld the TPO's findings but directed the ALP to be computed at 5% instead of 12%. The Tribunal set aside the issue for verification of whether the trade advances were part of regular business transactions with AEs.

Corporate Guarantees:
The issue of corporate guarantees was contested, with the assessee arguing that it did not involve costs and did not fall under international transactions. The DRP determined the ALP for corporate guarantees at 1.75%, which the assessee contested as too high. The Tribunal, following relevant case law, set the ALP for corporate guarantees at 0.53% and directed the AO to adopt this rate.

Disallowance of Interest on TDS:
The last ground pertained to the disallowance of interest on TDS. Citing precedent, the Tribunal directed the AO to delete the disallowance, stating that interest on TDS is not interest paid on income tax per se. As a result, the appeal of the assessee was treated as partly allowed for statistical purposes.

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