AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1816
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....Income Tax (Appeals)- 20, New Delhi pertaining to assessment years 2008-09, 2009-10 and 2010-11. All these appeals and cross objections pertain to same assessee and were heard together. Hence these are being disposed of by this common order for the sake of convenience and brevity. 2. In its cross objections, the assessee has challenged the transfer pricing adjustment considering corporate guarantee as international transaction and since this challenge goes to the root of the matter, we decided to proceed with the cross objection first. 3. Briefly stated, the facts of the case are that the assessee group is in the business of manufacturing yarn and markets its products under the CLC brand name. The group is headquartered at New Delhi and h....
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....ansactions have not been shown as international transaction and bench marked. The TPO was of the firm belief that providing corporate guarantee for AEs is an independent class of international transaction and has to be bench marked by applying CUP as the most appropriate. The assessee was accordingly show caused to explain as to why corporate guarantee given should not be considered as international transaction and bench marked by using CUP as most appropriate method. The assessee filed detailed reply, the relevant part of which reads as under: "The assessee has given 3 corporate guarantees in respect of the associated enterprises as under: (i) Assessee's subsidiary Spentex Tashkent Toyepa LLC (STTL) had entered into an assets....
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....i) The assessee had given corporate guarantee to Citi Venture Capitalist, for investment made by them in Spentex Netherlands, 3. V. As already explained supra, the same is in the nature of shareholder activity and does not result in an international transaction, per se, no adjustment is called for. The Hyderabad Bench of Tribunal in the case of Four Soft Limited: ITA No. 1495/Hyd/2010, vide decision dated 9.9.2011 has held that issuance of corporate guarantee, per Se, is not an international transaction and is incidental to the business of the assessee. Hence, no TP adjustment was deemed proper by the IT AT Bench". 7. The TPO was not convinced with the reply of the assessee and was of the opinion that by providing bank guarantees to AEs,....
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....he Act was inserted w.r.e from 1.4.2002 i.e. right from the time of inception of transfer pricing legislation in India. 13. The coordinate bench of the Tribunal at Delhi in the case of Bharti Airtel Ltd Vs. ACIT in ITA No. 5816/DEL/2012 vide order dated 11.03.2014 had an occasion to deal with the issue of classification of corporate guarantee as international transaction. The relevant findings of the Tribunal read as under: (i) A transaction between two enterprises constitutes an "international transaction" u/s 92B only if it has a bearing on profits, incomes, losses, or assets of such enterprises". Even the transactions referred to in the Explanation to s. 92 B, which was inserted with retrospective effect (which includes giving of gua....
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....A similar view was taken by the Ahmedabad Bench of the Tribunal in the case of Micro Ink Limited Vs. ACIT in ITA No. 2873/Ahd/2010. In this case, the Tribunal followed the decision of the Delhi Bench of the Tribunal. 16. The Chennai Bench of the Tribunal in the case of Redington India Ltd Vs. ACIT [2014] 49 TAxmann.com 146 has held as under: (i) A transaction between two enterprises constitutes an "international transaction" u/s 92B only if it has a bearing on profits, incomes, losses, or assets of such enterprises". Even the transactions referred to in the Explanation to s. 92 B, which was inserted with retrospective effect (which includes giving of guarantees under clauses (c)), should also be such as to have a bearing on profits, inc....