TaxTMI 
TaxTMI 
2017 (5) TMI 636
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....n 143(3) r.w.s 144 of the Income-tax Act, 1961 ('the Act') after considering the adjustments made by learned Transfer Pricing Officer ( ' TPO') in his order passed under section 920 A( 3 ) of the Act and subsequently confirmed by the learned Dispute Resolution Panel ('DRP'). 2. The learned AO/DRP has erred in violating the principles of judicial discipline disregarding the decision of the Hon'ble Tribunal in Appellant's own case for AY 2009-10 wherein similar issues have been decided in favour of the Appellant in similar facts and circumstances of the case. GROUNDS RELATING TO TRANSFER PRICING MATTERS: 3. The learned TPO I AO / DRP have erred in making an addition of INR 1,02,69,10,730 to the total income (as detailed below) of the appellant in respect of two international transactions entered into by the appellant with its associated enterprises ('AE') (hereinafter referred to as 'impugned transactions'): S.No. Particulars Amount (INR) 1 Adjustment in respect of guarantee commission on intra-group guarantees extended by the appellant 31,03,25,000 2 Adjustment in respect of subscripti....
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....ndings of the learned TPO. b. The learned AO / DRP has travelled beyond the provisions of the Act in seeking to re-characterize lawfully consummated transaction(s), where no such power, express or implied, is conferred under the Act. 11. The learned AO I DRP have erred on facts and in law in disallowing interest expense, amounting to INR 2,30,46,251, claimed by the appellant by holding that the appellant has not established the commercial expediency for advancing interest free loans to sister concerns I subsidiaries and without appreciating the fact that advances to Subsidiary Companies were made from own surplus funds and no portion of the borrowed funds was used for the same. 12. The learned AG / DRP have erred in charging interest under section 234B of Act amounting to INR 15,90,86,399 and section 234D of the Act amounting to INR 7,69,43,968. 13 The learned AG I DRP has erred in levying the interest under section 244A of the Act amounting to INR 5,20,98,981. 14 The learned AG has erred in initiating penalty proceedings under section 271(1)(c) of the Act." 3. Grounds 1 to 4 are general, therefore, these are dismissed. 4. Grounds ....
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....has already decided this issue by accepting the adjustment @1% as has been voluntarily added by the assessee in its income. Relevant findings of the Tribunal as given in the order for AYs 2009-10 & 2010-11 are reproduced below:- "22. We have heard the rival submissions and also perused the relevant material placed on record. The assessee has given corporate guarantee on behalf Aegis USA amounting to Rs. 666,46,80,000/- and on behalf of Essar Services, Mauritius for Rs. 75,73,50,000/-. Before us, the Ld. Counsel had submitted that in the subsequent years the assessee has suo moto entered into Guarantee Agreements with its AE pursuant to which it has charged guarantee commission of 1% from its AE, w.e.f. financial year 2007-08 for a period of five years. The said guarantee commission recovered by the assessee has been recognized in the financial statement by the assessee for the assessment year 2012-13 and has also been offered for tax in that year. In wake of these facts and without going into the other arguments of the assessee and also looking to the fact that the Tribunal in various cases has accepted guarantee commission chargeable between 0.5% to 1%, we hold that guara....
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....he Tribunal for AYs 2009-10 & 2010-11. It is noted that the Tribunal decided this issue in favour of the assessee by observing as under:- "27 We have heard the rival submissions and also perused the relevant findings in this regard in the impugned orders. The assessee has subscribed to redeemable preference shares of its AE, Essar Services, Mauritius and has also redeemed some of these shares at par. The TPO has redeemed some of these shares at par. he TPO has re-characterized the said transaction of subscription of shares into advancing of unsecured loan by terming it as an exceptional circumstance and has charged/imputed interest, on the reasoning that in an uncontrolled third party situation, interest would have been charged. We are unable to appreciate such an approach of TPO and under what circumstances, leave above any exceptional circumstances, a transaction of subscription of shares can be re-characterized as Loan transaction. The TPO /Assessing Officer cannot disregard any apparent transaction and substitute it, without any material of exceptional circumstance highlighting that assessee has tried to conceal the real transaction or some sham transaction has been un....
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....ring the year. Rather, the loans have been repaid. Our attention was also drawn on the balance-sheet and other financial statement of the assessee showing that own funds of the assessee are much more than the loans and advances. 15. It is noted that the Tribunal decided this issue in favour of the assessee for AYs 2009-10 & 2010-11 by observing as under:- "57. After considering the rival submissions and on perusal of the relevant material on record, it is seen that the advance given to the subsidiary was 1 . 32 crores as on 01 . 04 . 2008 and as on 31.03.2009 it stood at Rs. 6,13,19,000/-. As against that, the assessee had own funds to the tune of Rs. 346.19 crores in the form of share capital and share premium and during the year it has raised shares of 279.93 crores out of which 4.81 crores had been lent to the sister concern. In such a situation, where the assessee has substantial own funds, then presumption is that assessee has given advance to its sister concern from its own funds. Thus, following the ratio laid down by the Hon'ble jurisdictional High Court in the case of Reliance Utilities and Power Ltd (supra) which have been followed in various other decisio....