2018 (5) TMI 1816

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....dairy products. The issue before us is the transfer pricing adjustment made on a corporate guarantee given by the assessee-company to its AEs BAMPL, Mauritius, and Strategic Food International Co. LLC, Dubai. The assessee had provided guarantee to ABN and AMRO Bank NV (now, The Royal Bank of Scotland NV). The assessee has determined arm's length price at 0.2%. Based on free quotes obtained from Royal Bank of Scotland which was 0.25% and Indusind Bank which was 0.15% and hence the average of 0.2% was adopted as ALP by the asssessee. The T.P.O. determined at an ALP of 3%. The DRP in its order dated 13.12.2016 considered the submissions of the assessee and directed the TPO to adopt interbank lending rate as a benchmark for determination of ALP....

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.... adjustment of Rs. 2,27,19,431/- be deleted. 3. For that on the facts and in the circumstances of the case and in law and without prejudice to the preceding grounds, the TPO as well the Hon'ble DRP failed to appreciate that the corporate guarantees were given by the appellant to AE for pure business considerations and it was in the nature of an owner-shareholder activity and hence no transfer pricing adjustment was warranted in this regard. 4. For that on the facts and in the circumstances of the case and in law and without prejudice to the preceding grounds, the manner & methodology adopted by the Hon'ble DRP to ascertain the fees for corporate guarantee at 150 bps was unjustified, flawed & incorrect and therefore the upwa....

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....tion. The assessee in this case has obtained the quotes from RBS and as well as from Indusind Bank. The credit rating of the assessee and other financial data were considered by the banks, before giving a free quote to the assessee. Thus in our view the free quotes taken by the assessee for the very same transactions do constitute material for determination of ALP. Though the assessee has quoted a decision in the case of Asian Paints of the ITAT in support of its contention that the CUP method should be used for determination of arm's length price and that such exercise would result in determination of ALP at 0.20%, we do not apply the same, as factually they are variations in facts. The credit rating of an organisation etc. plays an import....