TaxTMI 
TaxTMI 
2021 (10) TMI 822
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.... on loans advanced in foreign currency. 2. Sh. Nitesh Joshi appearing on behalf of the assessee submitted that in ground no. 1 to 7 of the appeal, the assessee has assailed Transfer Pricing Adjustment (T.P. Adjustment) on account of guarantee commission. The assessee has given guarantee on behalf of its two Associated Enterprises (AE) i.e. Greatship Global Energy Services Pte. Ltd. and Greatship Globle Offshore Services Pte. Ltd., Singapore for facilitation of loan from overseas banks for working capital purpose. The assessee has not charged any guarantee commission from AEs, however, the assessee has made suo-moto adjustment of Rs. 4,77,00,897/- on the basis of guarantee commission paid by the assessee to ABN Amro Bank and Kotak Mahindra Bank. To bench mark the transaction the assessee applied internal CUP and determine Arms Length Price (ALP) of guarantee commission at 0.41%. The Transfer Pricing Officer (TPO) rejected assessee's benchmarking and re-computed corporate guarantee commission at Rs. 29,08,59,126/- at the rate of 2.5%. The ld. Counsel submitted that TPO had made similar adjustment in respect of guarantee commission in A.Y. 2012-13 and AY 2013-14, the assessee carried....
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....on account of mismatch in Form 26AS is warranted. The ld. Counsel in support of his arguments placed reliance on the following decisions: 1. Schindler (I) Pvt. Ltd. v/s. ACIT, 116 taxmann.com 222 (Mum. Trib.). 2. Lintas (I) Pvt. Ltd. v/s. DCIT, 107 taxmann.som 426 (Mum. Trib.). 3. S. Ganesh v/s. ACIT in ITA No. 527/Mum/2010 for AY 2006-07, decided on 08.12.2010. 4. A.F. Ferguson & Co. Vs. JCIT in ITA No. 5037/Mum/2012 for AY 2008-09 decided on 10.10.2014. 2.3 The ld. Counsel submitted that in ground no.11, the assessee has assailed charging of interest under section 234B. 2.4 The ld. Counsel for the assessee stated that, he is not pressing ground no.12 of appeal relating to charging of interest under section 234C of the Act, as the issue has been resolved in rectification proceedings under section 154 of the Act. 3. On the other hand, Sh. Sushil Kumar Mishra representing the Department vehemently defended the impugned order on the issues raised by the assessee in its appeal. The ld. DR prayed for upholding the findings of AO on the issues assailed by the assessee in its appeal. 4. We have heard the submissions made by rival sides and have examined the orders of authorit....
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....income-tax authorities. Notably, the TPO has benchmarked the instant transaction of provision of Corporate Guarantee on the basis of respective abilities of the assessee and AE to raise Bonds in the Indian domestic market. The TPO asserted that based on the debt-equity ratio, the credit rating of the assessee company was higher in comparison to that of the AE and, therefore, the rate of interest payable by the AE to raise bonds in the Indian market would be higher than the rate payable by the assessee-company. Such differential has been used to determine the 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 asses....
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....iew therein taken. Accordingly, we find no infirmity in the adoption of internal CUP i.e the average guarantee fees that was paid by the assessee to, viz. RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank and Yes Bank, for standing guarantee on its behalf of the assessee in case of third parties, viz. ONGC, BG Exploration etc." [emphasized by us] 5. Further, the co-ordinate bench while commenting on adequacy of ALP of the corporate guarantee fees determined by the assessee after examining various decisions rendered by the Tribunal and decision in the case of CIT v/s. Everest Kanto Cylinder Ltd. [378 ITR 57 (Bom.)] concluded, that corporate guarantee as determined by the assessee at 0.43% requires no interference. The relevant findings of the co-ordinate bench on the issue are as under: "10. Insofar the adequacy of the ALP of the corporate guarantee fees determined by the assessee at 0.43% of the amount of loan is concerned, the same, as observed by us hereinabove is the average of the guarantee fees that was paid by the 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 ....
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....) 47 CCH 0162 (Mum) .5% Accordingly, in terms of our aforesaid observations we find no reason to dislodge the ALP of corporate guarantee determined by the assessee at 0.43% p.a by adopting Internal CUP method. In the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the determination of the ALP of the corporate guarantee at 2% p.a by the A.O/TPO. We, thus, uphold the ALP of corporate guarantee as determined by the assessee at 0.43% p.a and direct the A.O/TPO to vacate the upward transfer pricing adjustment of Rs. 28,69,70,745/- made in the hands of the assessee. The Grounds of appeal Nos. 1 to 7 are allowed in terms of our aforesaid observations." In assessment year under appeal, the assessee has worked out corporate guarantee commission at 0.41% by adopting internal CUP. Thus, in light of the decision of co-ordinate bench in assessee's own case and parity of facts, we see no reason to take a different view. Following the above decision, we hold that corporate guarantee commission determined by the assessee is at arms length, requires no adjustment. Consequently, the findings of the AO in the impugned order on this issue are set-aside a....
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....26AS. In proceedings before the DRP, the assessee furnished additional evidence. Remand report was sought from the AO on additional evidences filed by the assessee. After reconciliation the difference was reduced to Rs. 30,29,102/-. The assessee in order to reconcile the difference furnished statements giving party-wise details of receipts on which tax was deducted. The statements were further classified into tonnage & non-tonnage receipts. Since, the assessee has been able to reconcile substantial entries and there was discrepancy only in respect of minuscule part of entries in Form 26AS, it would not be justified to make addition merely on the basis of AIR information keeping in view the fact that the assessee is in shipping business having tonnage & non tonnage receipts, there would always be some possibility of mismatch in Form 26AS vis a vis books of assessee. We find that in the case of A.F. Ferguson & Co. Vs. JCIT (supra), the Tribunal held that the Revenue cannot made addition solely on the basis of AIR information. The assessee cannot be asked to prove in negative, the onus is on the AO to prove that the assessee has received the income. The relevant extract of the finding....