ITAT allows rectification application for transfer pricing adjustment on guarantee fees to associated enterprise under section 254

The ITAT Ahmedabad allowed the assessee's miscellaneous application for rectification under section 254. The Tribunal found merit in the assessee's contention that the issue of transfer pricing adjustment for guarantee fees paid to an associated enterprise required reconsideration. The assessee argued that in a comparable case for assessment year 2009-10, the Tribunal had deleted a similar addition made by the AO/TPO. The Tribunal acknowledged this plea was not considered in the impugned order when rejecting the transfer pricing adjustment claim, constituting a mistake apparent from record requiring recall and re-adjudication.

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Issues:
1. Recall of the order passed by ITAT under section 254(2) of the Income Tax Act, 1961 regarding adjustment of guarantee fees to AE.
2. Reconsideration of the Tribunal's decision in light of the inconsistency with a similar case from the previous assessment year.

Issue 1: Recall of the ITAT Order
The assessee filed a Misc. Application seeking recall of the ITAT order passed in IT(TP)A. No. 930/Ahd/2015 to rectify a mistake apparent from the record. The issue raised was the addition made by the AO/TPO on account of adjustment of Rs. 52,91,667/- concerning the international transaction of payment of guarantee fees to AE. The Tribunal confirmed the upward adjustment, dismissing the assessee's claim. The assessee argued that a similar addition made in the previous assessment year was deleted by the ITAT, indicating a mistake in the current decision. The Tribunal agreed, recalling the order for re-adjudication specifically on ground no. 4 related to the adjustment of guarantee fees.

Issue 2: Reconsideration of Tribunal's Decision
The Tribunal overlooked the fact that a comparable case from the previous assessment year had a different outcome where the Tribunal had deleted a similar addition made by the Department. The assessee contended that this inconsistency required a reevaluation of the decision. The Tribunal acknowledged this argument, finding merit in the contention that the issue of adjustment of guarantee fees to AE needed re-consideration due to the inconsistency with the previous decision. The Tribunal recalled the order for readjudication solely on ground no. 4, emphasizing the need to address the mistake apparent from the impugned order.

In conclusion, the ITAT Ahmedabad, comprising SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER, allowed the assessee's Misc. Application, directing a re-adjudication of the issue of adjustment of guarantee fees to AE in line with the inconsistency with a similar case from the previous assessment year. The Tribunal recognized the mistake apparent from the record and recalled the order for a focused reconsideration, highlighting the importance of maintaining consistency in decisions across different assessment years.

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