TaxTMI 
TaxTMI 
2021 (4) TMI 254
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....me-tax Act, 1961 passed by the Deputy Commissioner of Income Tax, Range 5(1)(1), Mumbai ('hereinafter referred to as Assessing Officer7) and relates to the Assessment Year 2012-2013. (1). The Assessing Officer (AO) / Transfer Pricing Officer (TPO) / Dispute Resolution Panel (DRP) erred in holding that the transaction of giving financial guarantee by the Appellant on behalf of its Associated Enterprises (AEs) was an "international transaction" under Section 92B of the Act. (2). The AO / TPO / DRP erred in determining the Arm's Length Price of the financial guarantees given by the Appellant on behalf of its AEs @ 2% per annum. (3). The AO / TPO / DRP erred in making a transfer pricing adjustment of Rs. 28,69,70,745/-on account of guarantee commission. (4). The AO /TPO / DRP failed to appreciate that giving of financial guarantees by the Appellant on behalf of its subsidiaries was a shareholder activity for which no charge is required. (5). The AO / TPO / DRP erred in law and in facts in rejecting the benchmarking analysis undertaken by the Appellant in respect of guarantee commission in its transfer pricing documentation. ....
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....urther expenses of Rs. 20,37,871/- under Section 14A read with Rule 8D(2)(iii). (17). The AO erred in levying interest under section 234C of Rs. 1,51,62,514/-. The interest under section 234C should be restricted to Rs. 11,74,709/-. The Appellant craves leave to add to, amend, alter, modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time." 2. Briefly stated, the assessee company which is engaged in the business of owning, operating and charter hiring of supply vessels, tugs, barges, rigs and all types of vessels related to offshore services and undertaking activities related to drilling including deep water drilling and shipping related activities had e-filed its return of income for A.Y 2012-13 on 28.11.2012, declaring a total income of Rs. 102,21,04,981/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. Observing that the assessee during the year in question had entered into international transactions with its associat....
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....hort "DRP"). Before the panel the assessee objected both to the transfer pricing adjustments as well as the additional disallowance under Sec. 14A r.w. Rule 8D(2)(iii) that was proposed by the A.O. However, the DRP not finding favour with the contentions advanced by the assessee dismissed the respective objections as were raised before it. 6. After receiving the order passed by the DRP under Sec. 144C(5), dated 29.12.2016, the A.O taking cognizance of the fact that pursuant to rejection of all the objections that were raised by the assessee before the DRP the draft assessment order passed by him had remained undisturbed, therein assessed the income of the assessee company vide his order passed under Sec. 143(3) r.w.s 144C(13), dated 06.01.2017 at Rs. 132,70,76,760/-. 7. Aggrieved, the assessee has assailed the assessment framed by the A.O under Sec. 143(3) r.w.s 144C(13), dated 06.01.2017 in appeal before us. The Ld. Authorised Representative (for short "A.R") for the assessee at the very outset of the hearing of the appeal took us through the respective issues which were being assailed in the present appeal. Ld. A.R had challenged the TP adjustment of Rs. 28,69,70,745/- t....
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....ty, or the credit rating of the company was sovereign. It was submitted by the ld. A.R that the TPO was of the view that the fee for the corporate guarantee given by the assessee to a foreign bank would be higher than the bank guarantee fee charged by the banks. Accordingly, the TPO backed by his aforesaid conviction, in substance, without adopting any specified method for benchmarking the transaction of providing of guarantee by the assessee to its foreign AEs had on an ad hoc basis took the ALP of the guarantee fees at 2% p.a and determined the same at Rs. 36,66,16,120/-. As the assessee had made a suo motto adjustment of Rs. 7,96,45,375/- i.e @0.43% thus, the TPO made an upward adjustment of Rs. 28,69,70,745/- [Rs. 36,66,16,120/- (-) Rs. 7,96,45,375/-]. Ld. A.R assailed the determination of the ALP of the financial guarantee that was provided by the assessee to the banks in order to facilitate raising of loans by its AEs. It was submitted by the ld. A.R that the TPO had grossly erred in law in rejecting the Internal CUP that was adopted by the assessee for benchmarking the transaction of providing of financial guarantee by the assessee to the foreign banks for facilitating raisi....
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.... the assessee to the foreign banks in order to facilitate raising of the loans by its AEs at 2% p.a. 9. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the assessee"s counsel to drive home his claim. As is discernible from the orders of the lower authorities, corporate guarantees were given by the assessee company to the foreign banks in order to facilitate raising of loans by its AEs viz, Greatship Global Energy Services Pte. Ltd; and Greatship Offshore Services Pte. Ltd., both Singapore based concerns; from DnB Nor Bank, Singapore; Bank Of Nova Scotia, Singapore; and ABN Amro Bank. Although the assessee had not charged any guarantee fees as per its books of accounts, however, in Form 3CEB it had taken the ALP of guarantee fees at 0.43% of the amount of loan and had computed the ALP of the corporate guarantee given to the banks on behalf of its AEs, viz. GGOS and GGES at Rs. 2,57,96,937/- and Rs. 5,38,48,438/-, respectively. Accordingly, the assessee had made a suo-motto adjustment of Rs. 7,....
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....r authorities and are unable to persuade ourselves to subscribe to either the reasoning or the manner adopted by them for determining/sustaining the ALP of the transaction of provision of corporate guarantee by the assessee to the foreign banks for facilitating raising of loans by its AEs. Observing, that the guarantee fees rates charged by the banks to Indian companies varied from 1.10% to 3%, the TPO had adopted the same as a yard stick and had concluded that the range of corporate guarantee fee for foreign based transactions would conservatively be in the range of 1.5% to 3.5%. As such, in the backdrop of his aforesaid observations that the TPO had estimated the corporate guarantee fee at 2% of the actual borrowed capital. In our considered view the very basis adopted by the TPO for determining the ALP of the corporate guarantee i.e guarantee fees rates charged by the banks to Indian companies is inconsistent with the ratio laid down by the Hon'ble High Court of Bombay in the case of CIT Vs. Everest Kanto Cylinders Ltd. (2015) 378 ITR 57 (Bom). In its aforesaid order, it was held by the Hon"ble High Court that the considerations which apply for issuance of corporate guarantee we....
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....he Corporate Guarantee fee that should have been charged by the assessee company from its AE so as to determine the arm"s length price of the instant transaction. In our considered opinion, the aforesaid approach of the TPO is clearly inconsistent with the ratio laid down by the Hon"ble Bombay High Court in the case of Everest Kanto Cylinder Ltd. (supra). Notably, in the case of Everest Kanto Cylinder Ltd. (supra), the dispute was relating to the adjustment made by the TPO in the matter of Guarantee commission earned for providing a Corporate Guarantee to the Bank in connection with the borrowings made by the AE of the assessee therein. The TPO determined the arm"s length price of such transaction based on the instance of commercial banks providing Guarantee on behalf of their clients. The Hon"ble High Court held that the considerations which apply for issuance of Corporate Guarantee were distinct and separate from that of Guarantee provided by the banks and, therefore, the two transactions were incomparable. In our considered opinion, similar parity of reasoning is applicable in the present case too because the considerations which weigh for raising of bonds, that too in Indian ma....
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.... assessee to various banks for standing guarantees on its behalf for certain third parties. As observed by the Hon"ble High Court in the case of Everest Kento Cylinders Ltd. (supra), higher commission is to be paid for obtaining bank guarantee, as they are easily encashable in the event of default as in comparison to corporate guarantee provided by an assessee company to a bank for facilitating raising of loan by its AE. Accordingly, we are of the considered view that insofar the adequacy of the ALP of the corporate guarantee fees determined by the assessee at 0.43% is concerned, the same in the backdrop of the aforesaid facts cannot be called in question. Apart from that, we find that it was also the claim of the assessee before the lower authorities that Kotak Mahindra Bank (as per its sanction letter) had expressed its willingness to give guarantee on behalf of the AEs at a commission rate of 0.40% p.a/0.50% p.a. In the backdrop of the aforesaid fact, we find substantial force in the claim of the ld. A.R that the aforesaid credit sanction letter too would constitute a CUP for benchmarking the transaction of providing of corporate guarantee by the assessee to the banks for facili....
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.... Ltd., Mauritius was not at arm"s length. Briefly stated, the assessee had advanced interest bearing loans to its various AE"s, as under : (A). Greatship Global Holdings Ltd : Date of disbursement Date Principal amount Rate LIBOR + 2.9% Period ended No. of days Interest (USD) Ex. Rate Interest (Rs.) 22.02.2011 01.04.2011 01.10.2011 22.02.2012 4,00,00,000 4,00,00,000 4,00,00,000 0.0369275 0.0369275 0.0396605 30.09.2011 21.02.2012 31.03.2012 183 144 39 7,38,550 5,81,154 1,69,465 45.88 49.21 49.21 3,40,68,228 2,85,98,593 83,39 03.11.2011 03.11.2011 1,80,00,000 0.0384489 31.03.2012 150 2,83,639 49.21 1,39,57.906 03.02.2012 03.02.2012 50,00,000 0.3984 31.03.2012 58 31,567 49.21 15,53,423 06.02.2012 06.02.2012 85,00,000 0.0398275 31.03.2012 55 50,873 49.21 25,03,439 Total 8,90,20,949/- (B). Greatship (UK) Limited : Date of disbursement Date Principal amount Rate LIBOR + 3% Period ended No. of days Interest (USD) Ex. Rate Interest (Rs.) 18.03.2011 01.04.2011 18.03.2012 10,00,000" 10,00,000 ....
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....y his aforesaid observations, the TPO was of the view that if the transaction cost, hedging cost, penal cost and cost of security were taken into consideration, then the same would not be less than 700 basis points. Observing, that the assessee had not taken into consideration the aforesaid factors the TPO rejected the internal CUP method applied by the assessee. Further, the TPO was of the view that if the assessee opted to benchmark the loan transaction by treating the AE as a tested party under the external CUP method then the onus was cast upon it to find out comparable transactions where third parties (with same credit rating and in the same geography as the AE) under similar circumstances had borrowed funds in UK and Mauritius. Observing that the Hon"ble High Court of Delhi in the case of CIT Vs. Cotton Naturals (I) Pvt. Ltd (55 taxmann.com 523), had held, that the ALP of the interest rate should be determined based on the rates prevailing with respect to the currency in which such loans were advanced the TPO conducted search on www.bloomberg.com to find out the average interest rate of foreign currency loans taken by companies in Mauritius and U.K. Based on his search, the T....
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....t correct and the TPO had rightly applied the external CUP. Further, it was observed by the DRP that the TPO had rightly held that as the credit rating of the assessee and its AE could not be same thus, the loans raised by the assessee could not be used to benchmark the loans given by it to its AE. Also, the DRP was of the view that the directions given by it in the assessee"s case for the preceding year as regards a loan that was advanced by the assessee to its AE at Singapore could not be applied as a precedent for determining the ALP of the interest paid on the loan that was advanced to its AE, viz. GGHL, Mauritius. Accordingly, in the backdrop of its aforesaid observations the panel rejected the objection of the assessee as regards the TP adjustment w.r.t the interest charged by the assessee on the loan advanced to its Mauritius based AE, viz. GGHL. After receiving the order passed by the DRP under Sec. 144C(5), dated 29.12.2016 the A.O vide his order passed under Sec. 143(3) r.w.s 144C(13), dated 06.01.2017 inter alia made an addition towards TP adjustment of Rs. 97,39,903/- as regards the ALP of interest paid on loan advanced by the assessee to its AE, viz. GGHL, Mauritius....
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.... charged on the said loan at 6.17% p.a. However, as submitted by the ld. A.R the DRP had vide its order for A.Y 2011-12 had therein vacated the view taken by the TPO and had accepted that the interest charged by the assessee at LIBOR + 2.9% p.a on the said loan was at arm"s length. It was further submitted by the ld. A.R that the DRP in the assessee"s case for A.Y 2010-11 had accepted the interest rate of LIBOR + 300 basis points to be at arm"s length in respect of loan of USD 4 million that was given to its another AE, viz. GGES and was repaid by the latter during the said year itself. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R that the DRP had consistently been holding the interest rate of LIBOR + 2.9% / 3% p.a charged by the assessee on the loans advanced to its AEs as being at arm"s length. It was the claim of the ld. A.R that qua the loan transaction in question the DRP had in the immediately preceding year held that the interest charged by the assessee at LIBOR + 2.9% p.a was at arm"s length. Ld. A.R in order to drive home his claim that the interest charged by the assessee on the loan advanced to its AE, viz. GGHL, Mauritius was at arm"s length, ....
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..... Considering itself as the tested party, the assessee had benchmarked the interest charged on the loans advanced to its AE, viz. GGHL on the basis of the arithmetic mean of the interest rate that was paid by it on the foreign currency loans that were availed by it from foreign banks. As the arithmetic mean of the interest rates charged by the banks in respect of the foreign currency loans availed by the assessee worked out at LIBOR + 1.829%, as against the interest that was charged by the assessee on the loan given by it to its AE, viz. GGHL, Mauritius at LIBOR + 2.9% thus, the interest charged on the loan advanced to the AE was claimed to be at arm"s length. As observed by us at length hereinabove, the TPO had rejected the Internal CUP that was applied by the assessee for benchmarking the interest charged on the loan advanced to its aforesaid AE, viz. GGHL, Mauritius, primarily for the reason that all the foreign currency loans which had been used as comparable by the assessee were fully secured upto 130% of the value of loan alongwith mortgage of the ship. Further, it was observed by the TPO that the assessee while benchmarking the interest transaction had failed to take cogn....
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.....Y 2007-08 (copy on record). In its said order the Internal CUP in the form of interest paid by the assessee company on its own borrowings from bank to benchmark the interest charged by the assessee on a loan given to its AE was accepted. The Tribunal in its said order had upheld the benchmarking of the interest charged by the asseseee on the loan given to its AE, on the basis of the Internal CUP applied by the assessee i.e interest paid by the assessee on its foreign currency borrowings from KEIXM bank and State Bank of India. Accordingly, respectfully following the view taken by the Tribunal in its aforesaid order, we find no infirmity in benchmarking of the interest charged by the assessee on the loans advanced to its AE, viz. GGHL, Mauritius by applying of an Internal CUP i.e arithmetic mean of the interest rate charged by the banks on the foreign currency loans availed by the assessee during the year in question. Apart from that, we also find substance in the claim raised by the assessee before the lower authorities that the foreign currency loans obtained by its holding company viz. Great Eastern Shipping Company Ltd. at an interest rate of LIBOR + 1.79% p.a and LIBOR + 1.....
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.... loan advanced to its AE, viz. GGHL at LIBOR + 2.9% as being at arm"s length. The Grounds of appeal Nos. 8 to 11 are allowed in terms of our aforesaid observations. 16. We shall now deal with the assessee"s grievance that the A.O/TPO/DRP had erred in making a transfer pricing adjustment of Rs. 62,23,256/- in respect of sale of an under construction vessel, viz. "Greatship Vimla" by the assessee to its AE, viz. Greatship Global Offshore Services Pte. Ltd., Singapore (for short "GGOS"). Briefly stated, the assessee had entered into a ship building contract dated 23rd July, 2008 with Drydocks World Singapore Pte. Ltd for construction of an Anchor Handling Tug and Supply Vessel (for short "AHTSV"), viz. "Vimla" having Bollard pull of minimum 150 tons. The contract price for the construction of the said vessel was SGD 4,96,20,000. The assessee paid 10% of the contract price towards the first instalment of SGD 49,62,000 on 11th August, 2008. Further, the assessee had also incurred certain expenses towards salary and expenses of employees deputed to supervise the construction of the vessel and loss on cancellation of forward foreign exchange contracts which were entered to hedge agains....
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....ns for the financial year 2008- 09 at 3.21%, as was gathered by him from the website www.bloomberg.com, therein worked out the ALP of the notional interest at Rs. 62,23,256/-. 17. Aggrieved, the assessee assailed the aforesaid transfer pricing adjustment of Rs. 62,23,256/- before the DRP. It was the claim of the assessee that the TPO was not vested with the jurisdiction to reclassify the international transaction of sale of vessel by the assessee to its AE into a transaction of loan advanced to the AE. It was submitted by the assessee that as it was not the case of the TPO that the form of the transaction was different from its substance thus, he was not justified in recharacterising the transaction of sale of vessel by the assessee to that of a loan advanced by it to its AE. It was further submitted by the assessee that the TPO had exceeded his jurisdiction while observing that the assessee by investing the funds of SGD 49,62,000 on the construction of vessel had lost the "opportunity cost", as he could have otherwise earned a decent interest on the same. It was submitted by the assessee that the A.O/TPO cannot step into the shoes of a businessman to decide as to whether a part....
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.... of notional interest on the impugned loan which was allegedly stated to have been advanced by the assessee to its AE, viz. GGHL, Mauritius. 18. The assessee has assailed the TP adjustment carried out by the A.O/TPO as regards the determination of ALP of the notional interest of Rs. 62,23,256/- which as per the TPO the assessee ought to have charged from its AE, viz. GGOS, Singapore. Before us, it was submitted by the ld. A.R that as it was not the case of the TPO that the form of the transaction was different from its substance, therefore, he was not justified in recharacterising the transaction of sale of vessel by the assessee as a loan advanced to its AE, viz. GGOS, Singapore. In order to support his aforesaid contention the ld. A.R had drawn support from the order passed by the Tribunal in its own case for A.Y 2008-09 and A.Y 2009-10 in ITA No. 7673/Mum/2012 & 1703/Mum/2014, dated 21.06.2019 (copy placed on record). Our attention was drawn by the ld. A.R to the relevant observations of the Tribunal, wherein by drawing support from the judgments of the Hon"ble High Court of Delhi in the case of EKL Appliances Ltd. (2012) 345 ITR 241 (Del) and Sony Ericsson Mobile Communicati....
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....ces Limited. (2012) 345 ITR 241 (Del), wherein the Hon"ble High Court after drawing support from OECD guidelines had observed as under: 1.36 A tax administration's examination of a controlled transaction ordinarily should be based on the transaction actually undertaken by the associated enterprises as it has been structured by them, using the methods applied by the taxpayer insofar as these are consistent with the methods described in Chapters II and III. In other than exceptional cases, the tax administration should not disregard the actual transactions or substitute other transactions for them. Restructuring of legitimate business transactions would be a wholly arbitrary exercise the inequity of which could be compounded by double taxation created where the other tax administration does not share the same views as to how the transaction should be structured. 1.37 However, there are two particular circumstances in which it may, exceptionally, be both appropriate and legitimate for a tax administration to consider disregarding the structure adopted by a taxpayer in entering into a controlled transaction. The first circumstance arises where the economi....
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....he parties had been engaged in arm's length dealings. Article 9 would thus allow an adjustment of conditions to reflect those which the parties would have attained had the transaction been structured in accordance with the economic and commercial reality of parties dealing at arm's length." 17. The significance of the aforesaid guidelines lies in the fact that they re-cognise that barring exceptional cases, the tax administration should not disregard the actual transaction or substitute other transactions for them and the examination of a controlled transaction should ordinarily be based on the transaction as it has been actually undertaken and structured by the associated enterprises. It is of further significance that the guidelines discourage re-structuring of legitimate business transactions. The reason for characterisation of such re-structuring as an arbitrary exercise, as given in the guidelines, is that it has the potential to create double taxation if the other tax administration does not share the same view as to how the transaction should be structured. 18. Two exceptions have been allowed to the aforesaid principle and they are (i) where the ec....
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....is restricted to the determination of the arm"s length price of the international transaction of an assessee, and the same by no means could be stretched to providing of advise or commenting on the prudence of the assessee as regards its business decisions or providing guidance as regards the manner in which the business ought to have been carried out. We, thus, are of the considered view that the TPO by observing that the assessee had lost the "Opportunity cost" had clearly exceeded his jurisdiction. Backed by our aforesaid observations, we are unable to uphold the transfer pricing adjustment of Rs. 62,23,256/- worked out by the TPO/DRP as regards the notional interest which as per them the assessee ought to have charged from its AE, viz. viz. GGOS, Singapore. Accordingly, we herein direct the A.O/TPO to vacate the transfer pricing adjustment of Rs. 62,23,256/- made towards notional interest. The Grounds of appeal nos. 12 to 14 are allowed in terms of our aforesaid observations. 21. We shall now deal with the claim of the assessee that the A.O/DRP had erred in invoking Rule 8D without recording an objective satisfaction that having regard to the accounts of the asssessee the su....
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.... of the Act. 23. The assessee has assailed the disallowance u/s 14A as had been worked out/sustained by the A.O/DRP. The ld. A.R assailed the disallowance computed by the A.O under Sec. 14A, on the ground, that the latter had without recording any satisfaction dislodged the suo-motto disallowance that was offered by the assessee in its return of income. It was submitted by the ld. A.R that as held by the Hon'ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd. Vs. DCIT & Anr (2017) 394 ITR 449 (SC) and Maxopp Investment Ltd. Vs. CIT (2018) 402 ITR 640 (SC), the A.O before dislodging the suo-moto disallowance worked out by the assessee under Sec. 14A of the Act therein remained under a statutory obligation to record his satisfaction that having regard to the accounts of the assessee as placed before him, it was not possible to generate the reasonable satisfaction with regard to the correctness of the claim of the assessee. It was submitted by the ld. A.R that the Hon"ble Apex Court had observed that it was only after the A.O had recorder his dissatisfaction as regards the correctness of the claim of the assessee that the provisions of Sec. 14A(2) and (3) r.w....
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....unts of the assessee as placed before him it was not possible to generate the reasonable satisfaction with regard to the correctness of the claim of the assessee thus, on the said count itself the disallowance so enhanced by him was liable to be vacated. We have given a thoughtful consideration to the aforesaid contention of the assessee and find substantial force in the same. As observed by the Hon'ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd. Vs. DCIT & Anr. (2017) 394 ITR 449 (SC), it is only after the A.O had recorded his dissatisfaction as regards the correctness of the claim of the assessee that he can thereafter invoke the provisions of Sec.14A(2) and (3) r.w. Rule 8D. The Hon"ble Apex Court in its aforesaid order had observed as under: "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule SD of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is n....
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.... quantifying interest saddled upon it under Sec. 234C of the Act. It was submitted by the ld. A.R that though as per the mandate of Sec. 234C the interest for deferment of advance tax is to be levied on the basis of the tax due on the returned income, the A.O, however, had wrongly computed the same on the basis of the tax due on the assessed income of the assessee. In order to fortify his aforesaid claim the ld. A.R had drawn our attention to the "Explanation" to Sec. 234C(1) of the Act. On the basis of his aforesaid contention it was submitted by the ld. A.R that the interest u/s 234C in its case was liable to be restricted to an amount of Rs. 11,74,709. 27. Per contra, it was submitted by the ld. D.R that no infirmity did emerge from the computation of interest u/s 234C by the A.O. 28. We have deliberated at length on the aforesaid contention of the counsel for the assessee. Before adverting any further, we deem it fit to cull out Sec. 234C of the Act, which during the year in question read as under : "Interest for deferment of advance tax. [(1) Where in any financial year,- [(a) an assessee, other than an eligible assessee in respect of theeligible bus....
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....) of [section 2; or], and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year:] [Provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000), as amended by the Taxation Laws (Amendment) Act, 2000(1 of 2001), and the assessee has paid the amount of shortfall, on or before the 15th day of March, 2001, in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000, and the 15th day of December, 2000:] [Provided also that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rates of surcharge under sect....
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....ng on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of,- (i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ia) any relief of tax allowed under section 89;] (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA." Accordingly, on the basis of our aforesaid observations, we concur with the claim of the ld. A.R that the interest under Sec. 234C is to be computed on the tax due on the returned income i.e the tax chargeable on the total income declared in the return ....
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....in law and in facts in rejecting the benchmarking analysis undertaken by the Appellant in respect of guarantee commission in its transfer pricing documentation. (8). Without prejudice to Ground Nos. 1 to 7, the AO / TPO / DRP erred in computing the arm's length price of the financial guarantees given by the Appellant on behalf of its AEs in an arbitrary manner. (9). The AO / TPO / DRP erred in holding that the interest charged by the Appellant at the rate of LIBOR + 2.9% per annum in respect of loan of USD 71.5 million given to its AE, Greatship Global Holdings Ltd., Mauritius, was not at arm's length. (10). The AO / TPO / DRP erred in making a transfer pricing adjustment of Rs. 33,85,759/-in respect of loan of USD 71.5 million given by the Appellant to Greatship Global Holdings Ltd., Mauritius by holding that the arm's length price of the loan was LIBOR + 3.332% p. a. (11). The AO / TPO / DRP erred in not following the order of the DRP for the Assessment Year 2011-2012 wherein this very loan given to Greatship Global Holdings Ltd. (GGHL) at interest rate of LIBOR + 2.9% was held to be at arm's length. (12). The AO / TPO ....
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.... disallowance under Sec.14A at Rs. 10,68,219/-. Observing that the aforesaid disallowance was worked out by the assessee de hors the methodology contemplated in Rule 8D of the Income tax Rules, 1962, the A.O reworked out the disallowance under Sec. 14A r.w. Rule 8D at Rs. 25,28,937/-. Accordingly, the A.O considering the suo moto disallowance that was already offered by the assessee in its return of income therein made a further disallowance of Rs. 14,60,718/- [Rs. 25,28,937/- (-) Rs. 10,68,219/-]. On the basis of his aforesaid observations the A.O vide his order passed under Sec.143(3) r.w. Rule 144C(5), dated 23.11.2017 proposed to assess the income of the assessee company at Rs. 188,46,43,290/-. 34. Objecting to the additions/disallowances proposed by the A.O vide his draft assessment order passed under Sec. 143(3) r.w.s. 144C(5), dated 23.11.2017 the assessee carried the matter before the DRP. Observing that its predecessor panel while disposing off the objections of the assessee for the immediately preceding year i.e A.Y. 2013-14 had modified the ALP of the guarantee fee from 2.07% as worked out by the TPO to 1.25% per annum, the DRP taking note of the fact that there was n....
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....banks to facilitate raising of loan by its AEs at 2.07% p.a. Accordingly, the TPO made an upward TP adjustment of Rs. 36,51,19,108/- as regards the financial guarantee given by the assessee to the banks on behalf of its AEs. Aggrieved, the assessee objected before the DRP to the determination of the ALP of financial guarantee that was provided by it on behalf of its AEs to the banks at 2.07% by the TPO. Observing that the predecessor panel while disposing off the objections of the assessee for the immediately preceding year i.e A.Y. 2013-14 had modified the ALP of the guarantee fee from 2.07% as worked out by the TPO to 1.25% per annum, the DRP taking note of the fact that there was no shift in the facts or the financial conditions of the AEs during the year in question thus directed the TPO/AO to adopt the ALP at 1.25% for computing the guarantee fee that the assessee ought to have charged from its AE. 38. The assessee being aggrieved with the order of the A.O/DRP wherein they had determined the ALP of the corporate guarantee @ 1.25% p.a has carried the matter in appeal before us. As the facts and the issue involved as regards determination of the ALP of corporate guarantee pro....
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....im. Thereafter, the TPO carried out search on www.bloomberg.com to find out the average rate of interest on foreign currency loans given by various companies to their AEs in Mauritius, and taking the ALP at LIBOR + 3.32% p.a made a TP adjustment of Rs. 33,85,759/-. Objection filed by the assessee as regards the TP adjustment w.r.t interest on loan advanced to its AE, viz. GGHL, Mauritius, did not find favour with the DRP, who therein principally upheld the view taken by the TPO. However, the DRP directed the TPO to examine as to whether or not the TP adjustment was within the range of 3% of the international transaction value (actual interest charged) mandated by the above provision. 40. Before us, the assessee has assailed the TP adjustment carried out by the A.O/TPO as regards the interest that was charged by it on the loan advanced to its AE, viz. GGHL, Mauritius. As the facts and the issue involved as regards the determination of ALP of interest charged by the assessee on the loans given to its AE, viz. GGHL remains the same as were there before us in its case for A.Y 2012-13, therefore, our order therein passed shall apply mutatis mutandis for the purpose of disposal of the....