TaxTMI 
TaxTMI 
2019 (2) TMI 628
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....ire any adjudication. 3. The issue raised in Ground Nos. 3 to 6 is against the Transfer Pricing [TP] adjustment of Rs. 7,22,77,019/- on account of guarantee commission in respect of corporate guarantee provided by the assessee to its Associated Enterprises [AEs]. 3.1. The facts in brief are that - assessee has given corporate guarantee to Axis Bank to extend foreign currency loan of USD 19,000,000 to its 100% subsidiary Main Street 741 (Pty) Ltd. The guarantee given was for Rs. 1,03,30,00,000/-. Similarly, assessee has given guarantees to Exim Bank, Deutsche Bank AG, Singapore Branch, ING Bank N.V., Singapore Branch, Macquerie Capital (Singapore) Pte. Ltd., for securing foreign currency loans to various bodies and entities. The Transfer P....
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....nce shares. TPO re-characterized the said transaction as interest free loan and applied interest @ 11.91%, using the bond rates and proposed a transfer pricing adjustment of Rs. 70.13 Crores. DRP in principle, upheld the assessment made by the TPO, however, the interest rate was reduced to London Inter-Bank Offered Rate [LIBOR]+300 basis points, following the earlier order, resulting into the reduction in transfer pricing adjustments to Rs. 20.07 Crores. 4.2. Ld. AR submitted before the Bench that the issue involved in Ground Nos. 7 to 10 has been decided in favour of the assessee by the decisions of the Co-ordinate Benches of the Tribunal in AYs. 2009-10, 2010-11, 2011-12 & 2012-13, wherein the Co-ordinate Benches have held that the subsc....
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.... has also been decided in favour of the assessee by the decisions of the Co-ordinate Benches of the Tribunal in AYs. 2009-10, 2010-11, 2011-12 & 2012-13 under similar facts, wherein the Co-ordinate Benches have held that where the assessee has substantial own funds, then presumption is that assessee has given advances to its sister concerns from its own funds. Thus, following the ratio laid down by the Hon'ble Jurisdictional High Court in the cases of CIT Vs. Reliance Utilities Ltd[313 ITR 340] (Bombay High Court) and CIT Vs. HDFC Bank Ltd., in ITA No. 330 of 2012) (Bombay High Court), dt. 23-07-2014, the issue has been decided in favour of assessee. 5.3. We have heard the rival contentions and perused the decisions relied upon. Since ....
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....e AO has failed to record any satisfaction for making disallowance u/s. 14A of the Act, which is a pre-condition for invoking the provisions of Section 14A of the Act and therefore, disallowance of Rs. 1.17 Crores should be deleted. The Ld. Counsel for the assessee without prejudice also submitted that if at all the disallowance is to be made, the same should be made in proportion of exempt income to total income (i.e., 1.77%) out of miscellaneous expenses incurred by the assessee. If the same principle is applied, the disallowance u/s. 14A works out to Rs. 3.89 Lakhs. Ld. AR also drew our attention to the working of the said amount, attached in the Appendix-I. Ld. AR in defense of his argument, argued that no disallowance is to be made, w....
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....e AO before invoking provisions of 14A rule 8D. Undisputedly, no investment was made during the year in the subsidiary companies. Ld. DRP deleted the disallowance u/s. 14A r.w. rule 8D(2)(ii) by recording a finding on facts that assessee's own funds were more than the investment in the subsidiary companies. Therefore, no disallowance u/s. 14A r.w. Rule 8D(2)(ii) is required to be made by following the decision of the Hon'ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd., [394 ITR 449] (SC). Whereas the DRP sustained the addition of Rs. 1,17,74,975/- under Rule 8D(2)(iii) towards administrative expenses. In our view, the ratio laid down in the decision of Hon'ble Supreme Court in the case of Maxopp Investmen....