TaxTMI 
TaxTMI 
2021 (10) TMI 927
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....ranspires during the course of hearing that the very issue had arisen in assessee's cases ITA Nos.1719/Hyd/2016, 435/Hyd/2018 & 2154/Hyd/2018 for preceding assessment years i.e. AYs. 2012-13, 2013-14 & 2014-15 wherein the coordinate bench has upheld an identical adjustment vide following detailed discussion: "5. We find no merit in the assessee's foregoing contentions. There is no dispute that this tribunal's various earlier co-ordinate bench decisions (2015) 63 taxmann.com 353 (Ahd-trib), Micro Ink Ltd Vs. ACIT, Bharti Airtel Ltd., Vs. Addl.CIT, (2014) 63 SOT 113 (Delhi) and (2017) 86 taxmann.com 254 (Hyd) Bartronics India Ltd, Vs. DCIT had indeed held a corporate guarantee to be purely a shareholder activity than forming an international transaction u/s.92B of the Act. This legal proposition is no more res integra in view of the PCIT Vs. M/s.Redington (India) Limited, TCA Nos.590 & 591 of 2019, dt.10-12-2020 (Madras) taking note of not only the foregoing legislative positions (supra) but also holding that the same carried retrospective effect as well. Their lordships' detailed discussion to this effect reads as under: "67. The next issue is with regard to the Corporate Guaran....
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.... is no time period for expiry of the guarantee. Consequently, it will demand more commission charges than the commission charged by the Banks. That apart, the assessee had taken maximum risk in providing Bank Guarantee to their subsidiaries and the entire credit risk is owned by the assessee, the Indian Company and it has to be reimbursed at maximum percentage of fees. Further, the TPO noted as to the manner in which the Bank's charge commission on guarantees extended and observed that the Bank will insist upon cash deposits / guarantee deposits / asset mortgage etc., to extend guarantees on behalf of their clients. Further, it was pointed out that if a situation arises that the Bank Guarantee has to be invoked, when the Associate Enterprise is not in good financial position, obviously, the assessee is at risk and they claim that there is no risk in providing guarantees cannot be accepted. The TPO drew a comparison between the Guarantees issued by the Bank and Guarantees issued by the assessee on behalf of the Associated Enterprise to the Bank. It has been recorded that the Associated Enterprises of the assessee have not provided any security to the assessee. In the agreement /....
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....d term as amended by the Finance Act, 2012. The Tribunal is a final authority to render findings on fact. The Tribunal failed to give any reason as to how the decision in Bharti Airtel Limited would apply to the assessee's case. Furthermore, there was no record placed before the Tribunal by the assessee that they have not incurred any cost for providing Bank Guarantee. As observed earlier, the TPO has compared the nature of documentation executed by the assessee in favour of his Associated Enterprise to come to the factual conclusion that it is a financial service. This finding of fact has not been interfered by the DRP, but the DRP was of the view that the same treatment, which was given in the previous Assessment Year should be extended for the Assessment Year under consideration also and there is no reason given by the TPO for taking a divergent view. The finding that the very same transaction for the previous Assessment Year was subject matter of TP adjustment, has not been disputed by the Tribunal rather not even dealt with by the Tribunal. Therefore, the finding rendered by the Tribunal is utterly perverse. 70.The argument of the learned Senior counsel appearing for the....
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....ty / retrospectivity. Further, the assessee has not challenged the validity of the Explanation nor its applicability with retrospective effect. That apart, even before the DRP, such contention was not raised. The Hon'ble Supreme Court in Gold Coin Health Food Private Limited, while deciding the issue whether an amendment was clarificatory or substantive in nature or whether it will have retrospective effect held as follows: 14. The presumption against retrospective operation is not applicable to declaratory statutes In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is to explain an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended .......An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have r....
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....of Prolifies Corporation Limited. In the said case, the Revenue contended that the transaction of providing Corporate Guarantee is covered by the definition of international transaction after retrospective amendment made by Finance Act, 2012. The assessee argued that the Corporate Guarantee is an additional guarantee, provided by the Parent company. It does not involve any cost of risk to the shareholders. Further, the retrospective amendment of Section 92B does not enlarge the scope of the term international transaction to include the Corporate Guarantee in the nature provided by the assessee therein. The Tribunal held that in case of default, Guarantor has to fulfill the liability and therefore, there is always an inherent risk in providing guarantees and that may be a reason that Finance provider insist on non-charging any commission from Associated Enterprise as a commercial principle. Further, it has been observed that this position indicates that provision of guarantee always involves risk and there is a service provided to the Associate Enterprise in increasing its creditworthiness in obtaining loans in the market, be from Financial institutions or from others. There may not....
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....larified to be applicable only with prospective effect from 01-04-2021 only, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore. 4.1. The assessee succeeds on the instant latter issue in the corresponding substantive grounds raised in both these instant appeals. 5. We are now left with the assessee's third and second substantive grounds in both these assessment years seeking to reverse sponsorship fee(s) paid disallowance of Rs. 17,30,400/- each; respectively. The CIT(A)'s detailed discussion upholding the impugned disallowance reads as under: "6. Ground nos. 11 to 13 are with regard to disallowance of sponsorship fees under section 37(1) of the Act. The AO has stated the following on this issue in the assessment order, "Assessee has debited an amount of Rs. 50 Lakhs towards 'Sponsorship Fees'. The details have been called for and the assessee submitted that as part of business development, the company has partnered with M/s The New Indian Express Group for promotion of 'Devi Uttar Pradesh Awards' to be conferred upon 10 exceptional women who have displ....