AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 721
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....e service providers. Assessee filed its revised return of income for A.Y. 2009-2010 on 29th March, 2010 declaring income of Rs. 2,14,040/-. Since assessee had international transactions with its AE Apollo Health Street Inc., a wholly owned subsidiary of assessee, the matter was referred to the TPO who after analyzing various transactions accepted the transactions reported by the assessee with reference to provision of I.T.E.S provided to its AE on TNMM method. However, the TPO noticed that assessee has provided corporate guarantee to its subsidiary for obtaining loan in USA. He considered the corporate guarantee as an 'international transaction' and analysed the guarantee given to the subsidiary. Assessee subsidiary M/s. Apollo Health Street Inc, (AHSI-USA) entered into 'Facilities agreement' dated 29.08.2007 with Barclays Capital and Bank of India, New York Branch wherein assessee has given a corporate guarantee to the lending Banks against the loan given to AE. Assessee has not charged any fees for the corporate guarantee given and also not reported the transaction in Form 3CEB. It was stated by assessee that proceeds from the loan were utilized by the A.E. for ac....
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....quired loan as part of agreement in USA. Being the subsidiary of assessee, assessee only provided corporate guarantee and there was no fee charged by the Bank in the transaction consequently, there is no liability to the assessee and therefore, assessee also has not charged any corporate guarantee fees. Further, it was submitted that the TPO did not go by any prescribed method and arrived at so called BBB- rating to the A.E. on certain presumptions and also considered the domestic bond rates for determining the ALP for a loan obtained in US. There was no additional guarantees except a comfort letter given to the Banks. In fact, it was submitted that entire group assets were pledged by the A.E. Since the method adopted by the TPO is not a prescribed method, following the Coordinate Bench decision in the case of Glenmark Pharmaceutical Ltd., vs. Addl. CIT ITA.No.5031/Mum/2012 dated 13.11.2013, only CUP method should be adopted for analyzing the corporate guarantee provided by the assessee. further, when the loan was obtained in 2009, TPO has adopted the ratings as on 01.01.2012. It was submitted that the whole analysis adopted by the TPO is not according to the methodology and the is....
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....P method is applied when a price is charged for a product or service and service is the case here. Further, academically, the CUP can be internal or external. Internal CUP, being the comparability of the similar transaction between the assessee and the unrelated party, are admittedly not available to either parties of the dispute. Therefore, the exploration is for external CUP. Revenue authorities have roped In four or such CUPs and mostly Banks with bank guarantee transaction prices/rates. As detailed above the GC transaction rates available on the websites of Bank of India, Allahabad Bank, HSBC, EXIM BANK OF USA and the Rabo India Finance P Ltd, are held by the Tribunal as not good comparables on comparable facts. On this facts of the present case too, we are of the opinion, they are not appropriate external CUPs. The 'external CUP' by definition is a price charged in comparable Uncontrolled price between third parties when compared to the price of a controlled transaction with the AE. None of the CUPs used by the TPO falls within the said definition of external CUP. Thus, there are no 'internal CUP' on one side and the CUPs used by the TPO/CIT(A) are also outside....
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....ue opportunity to the assessee and considering the objections raised by the assessee in its proper perspective. Assessee is free to raise any other contention also if required. With these observations, assessee's grounds are considered as allowed and entire issue of determination of ALP on corporate guarantee provided by the assessee to it's A.E. is restored to the file of A.O. for fresh adjudication. Other Corporate Matters 8. Ground Nos. 8 and 9 are not pressed and therefore, it need not be adjudicated. Ground No. 10 is with reference to not providing credit for self-assessment tax paid of Rs. 31,88,563/-, A.O. is directed to examine and allow credit of the above amount, after giving due opportunity to the assessee to furnish necessary challans if not already on record. Ground No. 10 is considered as allowed for statistical purposes. 9. Ground Nos. 11 and 12 pertain to levy of interest under section 234B and 234C particularly on T.P. adjustment. The submission was that interest cannot be levied not only on the reason that adjustments made by the TPO could not be anticipated by the assessee but also by reason of retrospective amendment brought on statute. Since issue of....
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....he decision in the case of planet Online Pvt. Ltd., in ITA.No.1016/Hyd/2007". 15. Even though the ground is not clear about the issue Revenue is contesting. As seen from para 7.1 of the DRP order, DRP rejected A.O's contention in not allowing deduction under section 10A on foreign exchange loss of Rs. 16,30,300/-. A.O. while re-computing deduction under section 10A disallowed the foreign exchange loss but did not allow the deduction under section 10A. It was the contention that whatever amounts are added back in the computation are also eligible for deduction. The DRP following the decision in the case of DCIT vs. M/s. Planet Online P. Ltd., ITA.No. 1016/Hyd/2007 and Hon'ble Bombay High Court judgment in the case of CIT vs. Gem Plus Jewellery India Ltd., 233 ITR 248 allowed the assessee's contentions. 16. After considering the rival contentions, we do not see any reason to interfere as the DRP which followed the consistent stand taken by the ITAT Coordinate Benches of the Tribunal and also followed the judgment of Hon'ble Bombay High Court. Ground No.2 is accordingly rejected. 17. Ground No.3 is as under : "The ld. DRP did not consider the consistent stand of th....