TaxTMI 
TaxTMI 
2019 (6) TMI 40
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....cts of the case in deleting the adjustment of Rs. 5,63,84,899/- made by the A.O on account of computation of ALP. 2. The Ld.CIT(A) erred in law and on facts of the case in deleting the A.O to restrict the disallowance u/s 14A of the I.T Act read with Rule 8D of the IT Rules to the administrative cost. 3. The Ld.CIT(A) erred in law and on facts of the case in deleting the addition of Rs. 15,475/- made by the A.O on account of late payments of ESI." 3. The assessee is a manufacturer of oncology formulations and bulk drug which are used for curing cancer related diseases. With growing overseas market, the company was keen to set-up subsidiaries outside India such as Dabur Oncology Pic ("Dabur UK"), Dabur Pharma (Thailand) ....
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....verage rate of interest on such RFC on the basis of 5 banks as under:- Sl No. Bank Name RFC Deposit rate (in%) 1 Hongkong and Shanghai Banking Corporation (HSBC) 0.76 2 ICICI 2.39 3 Industrial Credit and Investment Corporation of India (IDBI 2.39 4 Punjab National Bank (PNBP 2.44 5 State Bank of India (SBI) 2.39 AVERAGE 2.07% Applying CUP method, the assessee concluded that the interest earned by the assessee from its AE being higher than the average rate of RFC deposits of the comparables companies, international transactions of receipt of interest from AE is at arm's length price. The TPO was of the view that RFC rate of various banks may not be a good benchmark in a....
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....LP and relied upon the order of the TPO and Assessing Officer. As regards Ground No. 2, the Ld. DR submitted that the Assessing Officer was right in making disallowance u/s 14A read with Rule 8D (3) which should have been sustained by the CIT(A) as regard to administrative cost. The Ld. DR further submitted that in relation to Ground No. 3, the late payment of ESI Contribution is also rightly added by the Assessing Officer to the assessee's income. 6. The Ld. AR submitted that Ground No. 1 is covered in favour of the assessee by Tribunal's order in Assessment Year 2008-09, 2009-10 being ITA No. 3013 & 6264/Del/2015 order dated 31/12/2018. As regards Ground No. 2, the Ld. AR submitted that the investment in domestic bank was only 2.5 lakh....
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....ation u/s 133(6) of the Act from State Bank of India regarding rate of bank guarantee, proposed the ALP adjustment at 4.75% as against nil being claimed by the assessee. It is well settled that providing bank guarantee is an international transaction and the same needs to be benchmarked as per provisions of Section 92(1) of the Act. The Ld. Commissioner of Income Tax (A) has also held so and thereafter he proceeded to compute the corporate guarantee fee @ 0.5%. While doing so, the Ld. Commissioner of Income Tax (A) observed that the assessee had given corporate guarantee to a foreign bank for providing loan to its foreign AE in foreign currency whereas the TPO had considered the quote for giving guarantee in India. The Ld. Commissioner of I....
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....E and the assessee equally as no cogent reasoning has been given for the same and, accordingly, we deem it fit to modify the order of the Ld. Commissioner of Income Tax (A) in this regard to the extent that corporate guarantee fee @1% should be applied in the case of the assessee in place of 0.5% as has been applied by the Ld. Commissioner of Income Tax (A). We accordingly direct the Assessing Officer to re-compute the ALP for corporate guarantee fee @1%. Thus, this ground stands partly allowed. 10.1 Coming to the second limb of the transfer pricing adjustment which pertains to interest on loan, it is seen that the assessee had given loan to two foreign subsidiaries in UK and Thailand and had charged interest rate of LIBOR plus 1.1....
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.... this direction of the Ld. DRP for assessment year 2006-07, it is apparent that he has not considered the directions of the Ld. DRP while deciding this issue. We also note that the assessee has not filed any appeal against this direction of the Ld. DRP for assessment year 2006-07. Accordingly, in view of the factual matrix, this issue needs to be restored to the file of the Ld. Commissioner of Income Tax (A) to be decided afresh after Fresenius Kabi Oncology Ltd. considering the directions of the Ld. DRP in this regard in assessment year 2006-07 and after giving the assessee a proper opportunity present its case. Accordingly, this ground stands allowed for statistical purposes." 11. So, respectfully following the ....