Arm's length price for corporate guarantee commission upheld at 0.5% based on past acceptance and comparable decisions.

Corporate guarantee commission was examined for arm's length pricing, with 0.5% supported by the assessee's earlier year treatment, acceptance in its own case for a prior year, and comparable judicial decisions treating that rate as reasonable for guarantees to banks. On that basis, the 0.5% commission was upheld and the Revenue's 1.4% adjustment was not sustained.

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Issues: Whether the arm's length price of corporate guarantee commission should be taken at 1.4% as determined by the Revenue or at 0.5% as adopted by the assessee.

Analysis: The assessee had charged 0.5% commission in earlier assessment years in similar facts. The same rate had already been accepted in the assessee's own case for an earlier year. Support was also drawn from comparable judicial decisions upholding 0.5% as reasonable for corporate guarantees given to banks.

Conclusion: The arm's length commission for the corporate guarantee is to be taken at 0.5%, and the Revenue's 1.4% adjustment is not sustained.

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