TaxTMI 
TaxTMI 
2020 (11) TMI 334
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....umstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)-38, Mumbai ("CIT(A)")erred in holding the rate of guarantee commission at 2.5% as the Arm's Length Price on the guarantee amount of Rs. 15,19,44,000/- without appreciating that the Associate Enterprise has availed the facility to the extent of Rs. 2.48 crores. 3. Ground No. 3 On the facts and circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals)-38, Mumbai ("CIT(A)")erred in upholding the order of the Asstt. Commissioner of Income Tax, Central Circle-42, Mumbai ("AO") in making an addition of Rs. 1,66,80,000/-to total income on account of unexplained paintings." 2.1 Shri J.D. Mistry, appearing on behalf of the assessee submitted that in ground No. 1 of the appeal, the assessee has assailed the findings of Assessing Officer and the CIT(A) in treating the provision of Corporate Guarantee by the assessee for its Associate Enterprise (AE) as International Transaction. The ld. Counsel for the assessee submitted that the Corporate Guarantee offered by the assessee on behalf of its AE is not an International Transaction and hence, no Arms Length Pric....
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....er annexure to Assessment Order) valued at Rs. 1,66,80,000/-. The ld. Counsel of the assessee asserted that even otherwise the addition is unsustainable as the paintings in question were acquired prior to search block period, therefore, addition qua such paintings cannot be made in search block period. The ld. Counsel for the assessee submitted that similar additions in respect of paintings were made in the case of Ms. Kavita Singh, one of the promoters of the assessee company. The issue travelled to the Tribunal in Kavita Singh v. Dy. CIT [IT Appeal No. 1242 (Mum.) of 2012, dated 8-12-2017]. The Tribunal vide order accepted the documentary evidences furnished by the assesse during search and assessment stage and deleted the addition. The case of the assessee is on same pedestal, therefore, the additions in the case of assesse deserves to be deleted on same analogy. 4. Per contra, Shri Akhtar H. Ansari, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. Departmental Representative submitted that the Hon'ble Bombay High Court in the case CIT v. Everest Kento Cylinders Ltd. [2015] 58 taxmann.com 254/232 ....
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....ing empty hard gelatine capsules. The assessee provided Corporate Guarantee of 2.4 million Euros (Equivalent to Rs. 15,19,44,000/-) to its Croatian AE. The assessee did not make any adjustment on account of Corporate Guarantee facility provided to it's AE. The Transfer Pricing Officer (TPO) held that the Corporate Guarantee is an international transaction. The TPO applied CUP to bench mark the international transaction holding guarantee commission @3% and made adjustment of Rs. 20,89,230/- . The assessee carried the issue in appeal before the CIT(A). The first appellate authority upheld the findings of TPO in treating corporate guarantee as international transactions. However, the rate of commission was reduced from 3% to 2.5%. Against the addition confirmed, the assessee is in appeal. 8. The ld. Counsel for the assesse in support of his submissions that corporate guarantee is not an international transaction has placed reliance on Tribunal decisions. The contentions raised by ld. Counsel are unsustainable in the light of decision rendered by Hon'ble Jurisdictional High Court in the case of Everest Kento Cylinders Ltd. (supra). Thus, we hold Corporate Guarantee facility ....
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....antee is contingent liability, relevant consequence depends upon future event. However, the quantum of exposure should be on the basis of actual exposure. In this case, it is not clear from the document submitted before us the actual exposure. Therefore, we find it appropriate to remit this issue back to the file of TPO/AO to determine the actual exposure of contingent liability for this AY and apply the rate of 0.53% as per the ratio of Glenmark Pharmaceuticals Ltd. (supra) on the actual contingent liability." In view of our above discussion, the ground No. 2 is allowed in principle. In the instant case, the assesse has purportedly availed facility of Rs. 2.48 crores as against corporate guarantee of Rs. 15.19 crores. For the purpose of determination of corporate guarantee commission in line with our observations and for the purpose to ascertain/verify the extent of corporate guarantee exposure, we deem it appropriate to restore this issue to the Assessing Officer. The ground No. 2 of the appeal is allowed for statistical purpose in the above said terms. 10. The third ground of appeal is in respect of addition of Rs. 1,66,80,000/- on account of unexplained paintings found du....
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....tled 'Style Encapsulated' is on the collection of paintings by Associated Capsules Group. At page 111 is a photograph wherein the painting "Woman with Pots" can be seen placed at office reception. The edition of magazine in which the article was published indicates that the painting was purchased by the assessee prior to October/November, 1991. Since the painting is old and was not acquired during the block period, the addition cannot be made in respect of said painting. The reason given by Assessing Officer for rejecting the evidence furnished by the assessee is that it is difficult to ascertain that it is the same painting as shown in the old magazine. The addition has been made by the Assessing Officer purely on surmises and conjectures. 12. The next paintings taken as a test sample by the ld. Counsel for the assessee is at serial no. 2 and 3 of the annexure to Assessment order i.e. paintings titled "2 Hands (Bronze)" and "2 Hands (Black)" by Shamshad. The ld. Counsel for the assessee referring to pages 19, 20 and 21 of the Paper Book submitted that the paintings were purchased from Lawrence Art Gallery on 19-12-1997. The invoice of the painting is at page 19 of the P....
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....gs and adjudicated the matter substantially in assessee's favor in the light of these evidences. Similar evidences are stated to have been placed before us in the paper-book and the assessee has drawn analogy by tabulating the same in the following manner: - Sl. No. Annexure Evidence No. of Pain tings Addition by A.O. (in Rs.) ITAT order of Mrs. Kavita Singh-ITA No.1242/Mum/2012 dated 8 October, 2017 similar issue Prior to Block period (Annexure - I to III) 1 Annexure-I Magazines 11 1,20,00,000 2 Annexure-II Photographs 3 60,50,000 3 Annexure-III Vouchers, Bills 11 88,50,000 Page 6 &7, Para-7 4 Annexure IV Panchnama 11 1,42,00,000 Page-6, Para-7 5 Annexure V Low Value 5 2,55,000 Page-8, Para-9 6 Annexure VI Vouchers, Bills (during the block period) 4 2,79,00,000 Page-8, Para-9 Since facts as well as circumstances of additions are pari-materia the same, we restore the matter back to the file of Ld. AO and direct him to re-appreciate the evidences furnished by the assessee in the l....