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2020 (1) TMI 443
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....009 for A.Y.2003-04 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-XXXIII, Mumbai in appeal No.CIT(A) XXXIII/Intl.Taxn/IT-198H/05-06 dated 27/02/2006 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/01/2006 by the ld. Asst. Director of Income Tax (IT) 3(1), Mumbai (hereinafter referred to as ld. AO). 2. The first issue to be decided in the appeal of the assessee for A.Y.2002-03 is as to whether the ld. CIT(A) was justified in upholding the disallowance of Rs. 14,09,77,991/- being salaries paid to expatriate employees of the assessee. 2.1. During the course of assessment proceedings, the assessee was requested to give details with regard to salary paid to expatriate employees and also justify the claim of deduction thereon. The assessee has filed detailed response in this regard vide letter dated 17/12/2004 stating that the expatriate officers rendered services in India for which they were paid salaries and said salary has been taken into account in computing their salary income chargeable to tax in India after due deduction of tax at source in terms of Section....
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....es though paid overseas were offered for taxation in India in their hands, the claim of the appellant disallowed by the AO is confirmed. 8. It was held in CIT vs. Emirates Commercial Bank Ltd. [now known as Abu Dhabi Commercial Bank Ltd.] 262 ITR 55 [Bom] that this was a case 'where the expenditure was exclusively incurred for the branch and there was concurrent finding of facts recorded by the CIT(A) as well as the Tribunal that the officers came from the head office at Abu Dhabi to Bombay to attend to the work of the Bombay Branch and, in connection with that work, the expense was incurred and that the expense was initially incurred by the head office and was recovered by the head office from the branch in India by raising a debit note and therefore, the expense was incurred for the branch office in India and hence, Section 44C had no application. In ABN Amro Bank NV vs. JCIT [ITA No.692/Cal/2000 (Calcutta ITAT)], the employees concerned rendered whole time service India throughout the accounting year under consideration and it was held that the assessee's claim towards off shore payment to the expatriate employees in India will have to be allowed [para 12 of the....
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....uction in computing the income of the Indian branch as it was incurred wholly and exclusively for the Indian operations. The disallowance of the AO of Rs. 15,70,62,023/- being the salary paid to expatriate employees is confirmed, Ground no. 2 is dismissed. 2.3. Aggrieved, the assessee is in appeal before us. 2.4. We have heard rival submissions and perused the materials available on record. We find that this issue is already decided by the Co-ordinate Bench of this Tribunal in all earlier years in favour of the assessee. The ld. CIT(A) had placed reliance on the order passed by the predecessor for the A.Y.2001-02. We find that this Tribunal in assessee's own case in ITA No.4670/Mum/2005 for A.Y.2001-02 dated 20/11/2015 had held as under:- 15. Before us the ld.DR submitted the facts as submitted before the lower authorities and relied on the order of AO. He submitted that the findings of the ld. CIT(A) is not in consonance with law and legal position. Therefore, he submitted that the order of ld.CIT(A) be set aside and that of AO be restored. 16. The ld. AR submitted that the issue raised in this ground stands cover in favour of the assessee by the decision of t....
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....and rendering related services to its customers and are not in the nature of general administration expenses and also not in the nature of common expenditure allocable to the branches. Hence, it was specifically submitted that this expenditure will not fall within the ambit of "head office expenses" within the meaning of Section 44C of the Act. The ld. AO however, disregarded the contentions of the assessee and observed that these expenses were not debited by the assessee in its profit and loss account and accordingly treated the same as "head office expenses" u/s.44C of the Act. Hence, he disallowed the sum of Rs. 4,54,65,934/- in the assessment. The ld. CIT(A) upheld the action of the ld. AO by observing as under:- "12. I have carefully examined the appellant's submissions. The appellant has relied on Mumbai ITAT's order dated 28.6.2005 in the case of BBME for A.Ys. 92-93 to 97-98 [paras no.4 to 6, pages 2 to 4] [pg.no.94 to 96 of compilation] in which the decision of Hon'ble Bombay High Court in Abu Dhabi Commercial Bank 262 ITR 55 [Bom] was also considered and it was held that the expenses on mobilization of NRI deposits do not fall under the scope of head office expen....
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....the revenue could not bring any material contrary to constrain to take a different view. Therefore, respectfully following the order of the Tribunal in assessee's own case, we allow Ground No.2 taken by the assessee." 3.2.1. We also find that on further appeal by the revenue before the Hon'ble Jurisdictional High Court in Income Tax Appeal No.1569/2016 dated 06/02/2019 against this Tribunal order, the Hon'ble High Court held that the Tribunal had decided in identical manner in earlier years in identical situation and that revenue had not preferred any appeal before the High Court for those earlier years. The Hon'ble High Court also observed that non-filing of appeals by the revenue before the Court for the earlier years was not on the ground of low tax effect. Hence, it held that the decision of the revenue not to challenge the Tribunal judgment in earlier years in respect of some assessee had to be understood as conscious decision of accepting the proposition of the Tribunal. Accordingly, the Hon'ble High Court did not entertain the question raised by the revenue. 3.3. Respectfully following the aforesaid decision of this Tribunal and Hon'ble Jurisdictional High Court....
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....ward contracts gets matured i.e. in A.Y.2003-04. The ld. CIT(A) also directed the ld. AO to grant deduction of Rs. 15,16,14,000/- being the loss arising on account of valuation of outstanding forward contracts as on 31/03/2001 as the same is to be allowed even as per analogy of the ld. AO. 4.3. Aggrieved, both revenue and assessee are in appeal before us. 4.4. We have heard rival submissions. We find that this issue is already covered by the decision of this Tribunal in assessee's own case for A.Y.2001-02 in ITA No.4424 and 4670/Mum/2005 dated 20/11/2015 wherein it was held as under:- "120. We have considered the rival submissions and perused the record. We find that the issue raised by the assessee stands covered by the decision of Hon'ble Supreme Court in the case of Woodward Governor India P. Ltd (supra) wherein the Hon'ble Supreme Court held that "that the loss suffered by assessee on account of fluctuations of foreign exchange as on the date of Balance Sheet is an item of expenditure under section 37(1), allowed the mark to market loss in the case of equity index/stock future as an allowable loss." We find that the issue in hand and the....
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....ind from page 99 of the paper book comprising of letter dated 21/03/2005 filed by the assessee before the ld. AO wherein it has been categorically stated by the assessee that the incremental investments made in tax free bonds during the year by the assessee was only Rs. 49,48,13,717/-, which has been erroneously taken by the lower authorities at Rs. 89,48,13,717/-. From the perusal of the balance sheet of the assessee, it is very clear that the assessee is having substantial interest free funds which is much more than the investment made in the securities and bonds of the assessee which had yielded exempt income. Hence, by placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd., reported in 313 ITR 340 and HDFC Bank Ltd. reported in 366 ITR 505, there cannot be any disallowance on account of interest on borrowed funds u/s.14A of the Act. However, certain administrative expenses certainly need to be disallowed u/s.14A of the Act as the law has been amended with retrospective amendment from 01/04/1962 onwards. In this regard, we find that the Hon'ble Calcutta High Court in the case of CIT vs. R.R. Sen & Brothers P ....
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.... to 20% thereon. 6.3. Aggrieved, both assessee as well as revenue are in appeal before us. 6.4. We find that this issue is already covered in favour of the assessee by the Co-ordinate Bench of this Tribunal in assessee's own case for A.Y.1998-99 in ITA No.5306 & 5472/Mum/2001 dated 22/01/2016 wherein the ground raised by the revenue was dismissed by placing reliance on the order of this Tribunal in assessee's own case for A.Y.1992-93 in ITA No.628/Mum/1999 dated 15/02/2007. We also find that the issue on payments to clubs are covered by the decision of Hon'ble Supreme Court in the case of United Glass Manufacturing Company Ltd., in Civil Appeal No.6447/2012 and also by the decision of Hon'ble Jurisdictional High Court in the case of OTIS Elevators Ltd. reported in 195 ITR 682. Respectfully following the same, the ground no.5 raised by the assessee is allowed and ground no.3 raised by the revenue is dismissed. 7. Ground No.6 raised by the assessee is with regard to disallowance of provision for liability on account of bonus points accrued on credit cards of Rs. 3,91,61,437/-. 7.1. The brief facts of this issue are that the assessee made provision of Rs. 3,19,61,437/- tow....
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.... the basis of 'estimated eligible purchases' [80%] multiplied by estimated cost per unit' [0.91%] multiplied by the 'estimated redemption rate' )[0.80%] is stated to be 0.58% but considering local consumer expectations, the Indian (branches of the bank provide for bonus points at 1% upto June, 2001 and 0.70% w.e.f. 'June, 2001. The provisions, redemptions and reversals for F.Y. 2001-02 to 2002-03 is given as under: - Financial Provision Redemption Reversals Net Provision [per the Tax Audit Report] (Rs.) (Rs.) (Rs.) (Rs.) 2001-2002 6,54,71,962 (76,86,725) (1,86,23,800) 3,91,61,438 2002-2003 6,46,00,000 (2,86,06,953) Nil 3,59,93,047 7.3. The ld. CIT(A) upheld the action of the ld. AO by observing as under:- 35. I have carefully considered the appellant's submissions. In support of its contentions, the appellant has relied on the order of the CIT(A) for A.Y.2001-02 in its own case. It was held in para 14 of the appeal order for A.Y. 2001-02 that the CIT(A) agreed with the contention of the appellant that the bonus points accruing to the customers is a liability against the commis....
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.... all aspects of the matter and prayed that the ground raised by the revenue be confirmed. In support of this contentions he placed reliance on the following decisions : a) ACIT V/s M/s Shoppers Stop Ltd -ITA No.1835/Mum/2010 (AY-2003-04) dated 25.1.2012; b) Syndicate bank V/s DCIT (Bang ITAT) -(2013) 38 taxmann.com 25); c) Bharat Earth Movers V/s CIT -245 ITR 428 (SC); d) Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC); e) Rotork India Pvt. Ltd. Vs. CIT reported in 314 ITR 63 (SC); f) Taparia Tools Ltd v Joint CIT [2003] 260 ITR 102 (Bom),; g) Vinitee Corporation (P) Ltd. (2005) 146 Taxman 313 (Delhi); and h) CIT v. Beema Manufacturers P. Ltd. (2003) 130 Taxman 400 (Mad) ITA No.2519/Mum/2004 and other six appeals 87. We find that the ld.CIT(A) has considered this issue with detailed discussions, we also find that an identical issue had come up before the various forums/ Judicial authorities, and therein the Courts have decided this issue in favour of the assessee. Hence, this issue stands covered in favour of the assessee. Therefore, we do not find any infirmity in the order of ld.CIT(A). Accordingly, w....
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....action of the ld. AO by observing as under:- "41. I have carefully considered the appellant's submissions. In the appellant's case for A.Y.2001-02, the CIT(A) considered the finding in the appellate order of Abu Dhabi Commercial Bank Ltd. for A.Y.98-99 supra in which it was inter alia held that when the bank gives a guarantee, its obligation extends to the entire period for which the guarantee is given and in exchange of this obligation, the bank received the commission and it is wrong to say that such commission accrues to the full extent the moment when the bank stands as a guarantor since the obligation is spread over a period of time, so should the guarantee commission. It was also observed in the case of Abu Dhabi Commercial Bank l.:d. that the issue is covered by the decision of the Hon'ble Calcutta High Court in ilio case of CIT vs. Bank of Tokyo Ltd. 71 Taxman 85 where it was held that the right to receive for unexpired period beyond the expiry date of the previous year remains in suspense and it is only upon certain conditions fulfilled viz. the guarantee running the full course or the period of debt guaranteed, that the right to the entirety of the co....
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....T(A) be upheld. He also contended that an identical issue had come up before the various Courts and they have decided the issue in favour of assessee. Accordingly, he placed reliance on the following case law: a) BNP Paribas SA (Bombay HC) (2013) (32 Taxman.com 276); b) CIT V/s Bank of Tokyo Ltd (71 Taxman 85); c) Bank of Baharain and Kuwait (Mumbai ITAT SB) (2010) 41 SOT 290). 100. After hearing both the parties on the issue and on perusal of the records including the case relied upon by the parties, we find that the ld. CIT(A) has passed well reasoned order and directed the AO to delete the addition. For the sake of convenience, we also reproduce the relevant findings of the Hon'ble Calcutta High Court( viz CIT Vs. Bank of Tokyo Ltd.) as under : "The Revenue contends that the right to receive the commission being a one-time right, its accrual shall coincide with the commencement of the service rendered by way of guaranteeing the debt repayment; it is immaterial that the repayment covers more than on previous year. Therefore the entirety of the commission accrues at a time. The assessee-bank on the other hand, submits that the servi....
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.... 14,99,000/- incurred on library subsidy, contributions to staff cultural committee and recreation club. 91. We have already discussed similar ground of revenue's appeal and vide paragraphs 21 to 28 of this order for the assessment year 1999-2000, we have dismissed ground taken by revenue therein. Therefore, following the above view, here also we dismiss Ground No.4 taken by Revenue." 10.1. Respectfully following the same, the ground No.2 raised by the revenue is dismissed. Disallowance of Guest House Expenses: Rs. 60,42,262/- 11. The ld. AO observed that assessee furnished the break-up of the expenditure towards rent, salaries and other expenses like electricity, laundry, telephone etc., but did not file any details with regard to user of the goods used and how the expenditure was connected with the business of the assessee u/s.37 of the Act. Accordingly, the ld. AO disallowed the sum of Rs. 60,42,262/- in the assessment. The assessee before the ld. CIT(A) submitted that this issue is already covered in its favour by the orders of the ld. CIT(A) for A.Yrs. 1998-99 to 2001-02. Respectfully following the said orders, the ld. CIT(A) deleted the disallowance o....
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.... respect of entertainment expenses. 93. This ground being identical and no change in facts to that of Ground No.5 for the assessment year 1999-2000, we take similar view as taken therein vide para No.30 to 35 of this order. Accordingly, we dismiss Ground No.5 taken by Revenue." 12.2.1. Respectfully following the same, the ground No.5 raised by the revenue is dismissed. 13. The ground No.9 raised by the assessee with regard to transfer pricing issue is general in nature and does not require any specific adjudication for the A.Y.2002-03. Transfer pricing issues: 14. The assessee is an Indian branch office of HSBC and a reference was received from ADIT International Taxation-3(1), Mumbai on 30/09/2003 u/s.92CA(1) of the Act by the ld. TPO for computing the arm's length price (ALP) in relation to international transactions with associated enterprises (AEs) reported in form 3CEB filed along with the return of income for the A.Y.2002-03. An additional reference was also received from the ld. AO for computing ALP of the international transactions relating to marketing services for correspondent banking activity and also oversight responsibilities of the employees of t....
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....Indian FIs includes marketing of loans, payments and cash ent facilities, guarantee and other products offered by HSBC India These if and when sold by HSBC India results in revenue streams like float income, guarantee commission, fee income as a result of payment and cash lent facilities etc. This revenue is booked by HSBC India and is also offered to income tax It may be noted and appreciated that such revenue arises directly as a result of all underlying risks assumed by HSBC India vis-a-vis the products that are sold to such Indian FIs. The revenue booked by HSBC India for the subject year is hereunder. Sr.No. Sector Amount INR million 1. Securities Houses 27.759 2. NBFC 9.244 3. Fund Managers 0.624 4. Insurance 7.229 TOTAL 44.856 Indian banks The Indian banks have to establish relations with the overseas banks as the Indian banks themselves do not have network of branches outside India. INM IB markets the Nostro accounts and trade finance services offered by overseas branches of HSBC to such Indian banks. In this connection no revenue is booked by HSBC India since the underlying risks associated with....
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.... Rs. 4,421,190 General administration costs allocated to above direct costs (refer our letter dated 20 December 2004) Rs. 5,683,700 Rs. 2,841,850 Head Office expenses allocated @17.5% of administration costs (based on the ratio of Head office expenses debited to P & L operating expenses (excluding employee costs) Rs. 994,648 Rs. 497,324 Total costs Rs. 15,520,729 Rs. 7,760,364 14.5. The assessee vide letter dated 21/03/2005 submitted before the ld. TPO with regard to marketing of derivatives by attaching an extract from the global transfer pricing policy relevant to the year under consideration in respect of determination of fees for marketing activities for derivative products. The assessee submitted that the fees received by HSBC India i.e. the assessee, was in accordance with the said policy. 14.6. The ld. TPO has observed that the bank had rendered above mentioned services to the foreign entities and for these services, the income is earned by such foreign entities. Out of the income earned, HSBC India was not rewarded for the functions undertaken by it, despite the fact that HSBC India had incurred certain costs for rendering these services. Th....
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....udice to our above contention, we submit that in any case a mark-up should not be loaded on the Head Office expenses proposed to be allocated to the marketing support provided in respect of correspondent banking activities and support provided by bank's employees to overseas associated enterprises as there is no value addition by the branch, with respect to the Head Office costs allocated on an overall basis by the Head office. 4. Without prejudice to our contention that no mark-up should be loaded on the cost proposed to be attributed to the marketing support provided in respect of correspondent banking activities and support provided by bank's employees to overseas associated enterprises, as regards the seven comparable companies selected by your office, we submit that the said companies are not functionally comparable to the marketing activities undertaken by the bank. These companies are engaged in full-fledged financial services and are exposed to risks which are significantly different than those assumed by the bank. At best, these companies can be compared to our associated enterprises, who provide financial services to the customers. Thus, we submit that th....
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....portant factor which requires to be considered while analyzing the comparability of uncontrolled transaction with the international transaction. A search was conducted by this office for the companies who are engaged in the financial consultancy services, business consultancy services and other consultancy services and the companies which were earning more than 75% of the income from fee based activity were identified for FAR analysis. After considering the Directors Report and Notes to Accounts of the companies, the companies mentioned in the show cause notice were considered as comparables. No company can be identified, whose FAR analysis would be exactly comparable to the international transactions, considering the availability of data. The services rendered by the bank are unique and are rendered by foreign banks only. No Indian company renders the exactly similar services, therefore, there is a shortage "of the reliable data. The Transactional Net Margin Method used by this office as the Most Appropriate Method measures the total return derived from the controlled tax payer's most narrowly defined business activity for which reliable dat....
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....on costs, the Arm's Length Price of this transaction is computed at Rs. 19,076,528/- as against Nil. Due to this, an upward adjustment of Rs. 19,076,528/- is required to be made to the income of the assessee." 14.9. With the aforesaid observations, the ld. TPO made an upward adjustment of Rs. 1,90,76,528/- to the ALP in respect of correspondent banking activities of the assessee. 14.10. While applying TNMM, the ld. TPO aggregated the entire direct, indirect cost of the correspondent banking department of the assessee along with head office expenses to calculate the cost base and subsequently applied mark up on this cost to arrive at the adjustment. The ld. CIT(A) provided an adhoc relief by restricting the cost base to only 75%. 14.11. Aggrieved the assessee is in appeal before us. 14.12. We have heard the rival submissions and perused the materials available on record including the various judicial pronouncements that were relied upon by the parties at the time of hearing before us. The preliminary facts stated hereinabove are not reiterated herein for the sake of brevity. From the facts narrated above, we find that INM IB majorly manages relationships of Indian FI....
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....g a part of the HSBC group derived reciprocal benefits and thus the non-charging of costs for providing the incidental marketing support services to overseas HSBC entities would not cause any prejudice to the interest of the assessee as well as the revenue. 14.12.2. Further, the total cost of INM IB division is only Rs. 1.55 Crores, whereas the income earned from the activity performed by INM IB division is Rs. 4.48 Crores (including income from Indian FI and Rs. 1.97 Crores- float income from Vostro account). Even if only the float income from Vostro Account is considered, still the assessee has earned a profit of Rs. 42 Lakhs (1.97-1.55 cr) resulting in profit margin of 27%, which has been already offered to tax. The profit margin arrived is much higher than the margin of 22 percent arrived at by the TPO. If both the income (income from Indian FI and Float income) are considered, the profit margin stands at 189 percent. This shows that the assessee is adequately compensated for the activities carried out by INM IB division. Hence the allegation of the revenue that the assessee has not been adequately compensated has no merits. 14.12.3. We find lot of force in the case law r....
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....considering the head office expenses for arriving at the cost base. It was submitted that only indirect costs are attributable to the activities should have been considered as concerned employees perform the work in the Indian business of the assessee and they do not use any significant additional facility to provide marketing support in respect of correspondent banking activities. Further, there is no reason for allocating head office expenses to the costs incurred for rendering services as the head office expenditure allocated to India is for the purpose of main line of banking business undertaken by the assessee and the inputs provided by the head office are not directly related to the incidental marketing support activity rendered by the assessee. Though we find lot of force in the aforesaid argument of the ld. AR, in any case, the nature of services are such that they are reciprocal in nature and hence, there cannot be any attribution of mark up on the same. Hence, we hold that no mark up should be loaded on the attribution of costs towards incidental marketing activities undertaken by the assessee in connection with the correspondent banking activities. 14.16. In view of t....
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.... : 1,726,281 (based on actual time spent) 3,029,623 4,755,904 Chandrashekar Sawant Manager Service Quality Training 2,605,241 356,882 {based on estimated time spent) 269,446 626,328 R L Gopalkrishnan Asst Manager Internal Audit 2,060,904 340,274 (based on actual time spent) 597,181 937,455 Pramod Maveli Executive Internal Audit 879,337 156, 144 (based on actual time spent) 270,523 426,667 Total 22, 716, 515 15.4 The assessee submitted that these employees normally rendered the services from India only. In case of travel, the travel expenses, boarding and lodging expenses are borne by the respective entities. The cost attributed to the services rendered to the AEs is based on the actual time spent and maintained by the bank in the form of time sheets. 15.5. The ld. TPO applied TNMM as the MAM with net cost plus as the profit level indicator. He adopted the comparable entities rendering the services in the telephone service industry and arrived at the comparable mean margin of 22.91% and applied the same on the total cost of Rs. 2,27,16,515/-. Accordingly, the ALP of the....
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....ked independently. Hence, the transfer pricing adjustment made in this regard by the ld. TPO in respect of role of certain employees of the bank for the A.Y.2002-03 is directed to be deleted. Accordingly, the ground Nos. 11.1. to 11.4 raised by the assessee for the A.Y.2002-03 are allowed. 16. Ground No.12 raised by the assessee for A.Y.2002-03 is with regard to charging of interest u/s.234D of the Act which is consequential in nature. The ld. AO is hereby directed to re-compute the same based on the fact of actual refunds granted to the assessee. 17. The revenue has raised the solitary ground on the transfer pricing issue with regard to deletion of transfer pricing adjustment of Rs. 10,80,225/- in respect of support services in relation to External Commercial Borrowings (ECBs). 17.1. The brief facts of this adjustment are that the assessee submitted details of ECBs by Indian Corporates from the overseas branches to the extent they relate to the relationship / efforts of the Corporate banking team of HSBC India as under:- Name of Indian Borrower Amount of Loan provided by overseas A.E Date of borrowings Overseas lender A.E Larsen & Toubro Ltd (L&T) USD 10....
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....ndered for continuing ECB transactions is required to be worked out because the overseas branch is helped by a local branch for the documentation, collecting fees, ensuring smooth and timely payment of interest etc., and credit review and monitoring of performance, monitoring of breach of covenants, monitoring of assets, co-ordination with other banks, lenders to clients under syndication and preparation of watch list report. 17.5. The ld. TPO observed that for the activity relating to origination and marketing of foreign currency loans, provided by foreign branches of the banks, the uncontrolled transactions are not available, as the same service are not being provided by any Indian entity to unrelated party, similarly the foreign branches of the foreign bank are not obtaining such services from any unrelated party in India. Therefore, the CUP method by using uncontrolled transactions cannot be applied. The ld TPO observed that during the Transfer Pricing Assessments, in the cases of other foreign banks, it is seen that the banks are receiving compensation for services provided for ECBs disbursed earlier. He observed that this information is not discussed, by naming the bank, f....
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.... rate or vice versa because the loan disburser is concerned with the value received in the transaction and not the split thereof. (b) The income streams from ECBs would be the interest margin, commitment fees or any similar charges paid by the borrower and booked in overseas branch books. If a particular split from either interest or fee is used for computing the arm's length price, it might lead to shifting of consideration for the ECBs, from fee to interest or vice versa. 17.8. The Arm's Length Price in respect of the services rendered for continuing ECB transactions is also required to be worked out as the bank is rendering the services which are discussed above. 17.9. The compensation for such services is required to be computed at Arm's Length. In the present case, by using the data available in the case of other foreign banks, the 25% of the earnings received by the Foreign Branches is considered as compensation at arm's length. The transactions of providing the support for continued ECB transactions offered by the foreign branches, are the unique transactions undertaken by the foreign banks only, and in such cases, it is reasonable and appropri....
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.... reiterated herein for the sake of brevity. It is not in dispute that assessee had received Debt Syndication Fees of Rs. 67,68,620/- together with 50,000 USD as its fee / commission income for enabling the Indian customers to avail ECBs from its overseas branches. The said receipt of fee / commission income has been accepted to be at arm's length. Hence, there is no question of further fee that is required for the assessee in respect of continuing ECBs. We find that the ld. CIT(A) had categorically observed that HSBC India does not assume any risk in respect of continuing ECBs compared to the nature of service rendered by them. This categorical finding has not been controverted by the revenue before us. Hence, we hold that no transfer pricing adjustment in respect of the services rendered by HSBC India in respect of continuing ECBs more so when the entire commission income / Debt Syndication Fee income received by the assessee have already been accepted to be at arm's length. Accordingly, ground No.6 raised by the revenue is dismissed. 18. In the result, appeal filed by the assessee is partly allowed and appeal filed by the revenue is dismissed. ITA No.3996/Mum/2009 & ITA ....