TaxTMI 
TaxTMI 
2018 (10) TMI 127
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect of interest charged on advances given to the subsidiary company M/s Jayant PTE Ltd, which is also the Associated Enterprise(AE) of the assessee company. The assessee is a public limited company listed in the BSE & NSE Stock Exchanges and is a 100% EOU with about 97% of export sales. It is having 100% subsidiary in Singapore i. e. M/s Jayant PTE Ltd. which in turn has established instant coffee manufacturing units in Switzerland and Vietnam through its 100% subsidiaries in the respective countries. Hence, in effect all these step down subsidiaries are 100% subsidiaries of the assessee company. As on 01. 04. 2012, there was an outstanding loan of Rs. 9.645 crores lent to its subsidiary company, M/s Jayant PTE Ltd. The entire loan of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in international transactions in outbound loans and the same is considered to be at Arm Length Price. However, not being convinced with the explanation of the assessee, the TPO has charged the interest @14. 45% PLR prevailing during the financial year 2012-13 and proposed for adjustment. The AO made the adjustment as proposed by the TPO and accordingly made the addition of Rs. 62,07, 858/- in respect of the adjustment of interest on the amounts advanced to its AE. 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld. CIT(A) deleted the addition holding that on the loan granted by the assessee to its AE located at abroad, LIBOR rate of interest is applicable for determining the arm length price. Sinc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipal aim of enhancing the brand image of Company's Products globally and also to save on transportation costs. As on 31-03-2012, the Company is having huge internal accruals of about Rs. 253. 04 crores and out of the same, the Company has lent a small amount on to its wholly owned subsidiary Viz. Jayant PTE Ltd. with the above mentioned objects. i. e. only for business purposes viz. enhancing its brand value n global markets and save on huge transportation costs. As on 01. 04. 2012, the opening balance in the above loan account is Rs. 9. 645 crores and at the end of the financial year i. e. as on 31- 03-2012 the dosing balance was Rs. 72, 70, 963/-. " Identical issue has been decided by this Tribunal in the assessee's own case for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed for adjustment of ALP towards corporate guarantee for an amount of Rs. Rs. 2,12,79, 726/-, u/s 92CA of the Act. Accordingly, the AO made the addition while framing the assessment u/s 143(3) r. w. s. 92CA(3) dated 27. 12. 2016 and made the addition of Rs. 2,12,79,726/-. On appeal, the Ld. CIT(A) held that providing corporate guarantee on behalf of its 100% subsidiary AE would not constitute an international transaction within the meaning of section 92B of the Act and accordingly held that no adjustment is warranted. The Ld. CIT(A) relied on the decision of Hon'bleITAT, Hyderabad in the case of Batronics India Limited Vs. Dy. Commissioner of Income Tax, Circle-1(2), Hyderabad reported in (2017) 86 taxmann 254. For the sake of clarity, we ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee's case. The Ld. AR invited our attention to the decision of ITAT Kolkata, 'C' Bench in the case of DCIT, Circle-8(1), Kolkata Vs. M/s EIH Ltd. , [2018] 89 taxmann. com 417 (Kolkata - Trib) wherein Hon'ble ITAT held as under : "12. 12. Thus, we hold that when a parent company extends an assistance to the subsidiary, being associated enterprise, such as corporate guarantee to a financial institution for lending money to the subsidiary, which does not cost anything to the parent company, and which does not have any bearing on its profits, income, losses or assets, it will be outside the ambit of international transaction under section 9213(1) of the Act. In this regard, we would like to hold that issuance of corporate guarantee by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....P. ) Ltd. v. Dy. CIT [IT Appeal No. 2618 (Mum. ) of 2014, dated 31-3-2016). The Bench observed that transfer pricing is a legislation seeking the tax-payers to organise their affairs in a manner compliant with the norms set-out. In short, it is an anti abuse legislation which tells you as to what is the acceptable behaviour but it does not trigger levy of tax in a retrospective manner because no party can be asked to do an impossibility. Analysing further the Bench observed that though Explanation to Section 92B is stated to be clarificatory, it has to be necessarily treated as effective from the A. Y. 2013-2014 and in this regard, relied upon the observations of the Hon'ble Delhi High Court in the case of Skies Satellite. We have also ....