2021 (4) TMI 1321

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....aised in these appeals, hence, they were heard together and are being disposed of by this consolidated order. 3. The solitary issue argued is whether the CIT(A) has erred in confirming the A.O./TPO's action in holding that there was international transaction insofar as bank guarantee is concerned and assuming the said value at 2% of guarantee value. 4. The brief facts of the case are as follow: The assessee is a company engaged in the business of manufacture and sale of pharmaceutical formulations. The assessee has a 100% subsidiary / Associate Enterprise (AE) in United Kingdom by the name Medreich PLC, UK (Medreich PLC). The Medreich PLC is engaged in the marketing abroad the products manufactured by the assessee. The assessee during....

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.... also not charged its AE any amount for doing so. The same involves an element of commercial cost and the same will not be provided to any third party, irrespective of the presence of a commercial relationship or otherwise with the said party, free of cost. There is a huge commercial risk that is run by the provider, in this case., the appellant. The appellant has relied upon the decision of the Mumbai ITAT in the case of Nimbus Commercials & Godrej Household Products Ltd. In both these cases the ITAT looking into the facts involved sustained addition @ 0.5% of the Value of Bank Guarantee. In the present case, the AO has determined the cost @ 2% of the bank Guarantee Value, which is found not to be unreasonable. The addition made by the AO,....

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....stood by the assessee's in those case on behalf of its AE. 9. We have heard rival submissions and perused the material on record. The learned AR has not disputed the fact that corporate guarantee commission is an international transaction. The AR only disputes 2% attributed for imputing ALP of corporate guarantee commission. On identical facts in the case of Manipal Global Education Services Pvt. Ltd. v. DCIT (supra), the Bangalore Bench of the Tribunal had imputed 0.50% as cost, instead of 2% arrived by the TPO. (A copy of TPO's order u/s 92CA in the case of Manipal Global Education Services Pvt.Ltd. is placed on record). The TPO in the cited case also arrived at 2% by taking the credit rating of the tax payer just like this case. The r....