TaxTMI 
TaxTMI 
2023 (2) TMI 292
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....learned CIT (A) has erred in confirming the additions of Rs.3,80,00,000/- to the appellant's income on account of the alleged difference in arm's length price of international transactions undertaken by the appellant on the basis of finding in the order passed by the Transfer Pricing Officer ('TPO') under section 92CA(3) of the Act. 2.02 That on the facts and in the circumstances of the case and the legal position, the learned CIT (A) has erred in confirming an addition of Rs.3,80,00,000/- allegedly on the ground that no commission has been charged by the appellant for providing corporate guarantee to the lenders on behalf of its associated enterprises. 2.03 That on the facts and in the circumstances of the case and the legal position, the learned CIT(A) has erred in arriving at the arm's length price of service provided by the appellant in the form of corporate guarantee to AEs; whereas:- i) Providing corporate guarantee is in the nature of shareholders' activities and is not an 'international transaction' as investment in subsidiary Company is not an 'international transaction' as held in the case of Vodafone Indi....
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.... the AE reproduced as under:- S.No. International Transaction Amount in Rs. 1 Export of Finished Goods to AE 45,62,75,037 2 Import of lighting fixture and fans 18,05,05,332 3 Import of raw material 3,06,30,354 4 Purchased of fixed assets 1,32,23,434 5 Provision of Support services 24,94,050 6 Corporate guarantee given 1,95,92,93,950 7 Reimbursement of Expenses by AEs 1,03,04,458 8 Reimbursement of Expenses to AEs 6,87,087 5. The assessee in its TP study has benchmarked CFL and switchgear sales and business support services treating them as a separate business segment and by using TNMM as the most appropriate method and OP/OC is taken as PLI. For both the segments, PLI of the assessee exceeded average PLI of the comparables, therefore, the assessee concluded that the international transaction is at ALP. 6. Apropos issue of Corporate Guarantee Charges : The TPO in this case treated corporate guarantee as an international transaction in view of amendment made u/s 92B. He determined arm's length price of providing corporate guarantee @ 1.15% of Rs.193.98 crores being the balance amount of loan outsta....
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....be compared with. 7. The ld. DR argued that Hon'ble Madras high court's latest decision in Redington India Pvt. Ltd., Vs. DCIT, Tax Appeal No.590 and 591 of 2019, dt.10- 12-2020 has settled the law that a corporate guarantee indeed forms an international transaction. Relying on the order of the TPO, the ld. DR argued that corporate guarantees given by the assessee is indeed an international transaction amenable to adjustment. 8. Rebutting the argument of the ld. DR, the ld. AR alternatively argued that determination of the corporate guarantee at 1.3% is on a higher side and relied on the judgment of Hon'ble High Court of Bombay in the case of C IT Vs. Everest Kento Cylinders Ltd . 58 Taxmann 254 and also on the judgment of Hon'ble High Court of Bombay in the case of CIT Vs Thomas Cook (India) Ltd. in ITA No. 712 of 2017 order dated 26.08.2019. Keeping in view, the judgments of the Hon'ble Bombay High Court and in the absence of any other judgment contrarily brought to our notice, we hereby direct that the adjustment in respect of corporate guarantee provided to AEs be determined at date of 0.5% instead of 1.3% determined by the revenue." 11. Upon careful consid....
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....me" to be on scientific basis. Before us, no material has been placed by the Revenue to point out any ITA No.6194/Del/2015 ITA No.463/ Del /2016 M/s. Havells India Ltd. vs DCIT A.Y. 2009- 10 14 distinguishing feature in the facts of the case in the year under consideration and that of earlier years. Further Revenue has also not placed any material to demonstrate that the decision of the Tribunal in assessee's own case in A.Y.2006-07, 2007- 08, 2008- 09 has been set aside/ stayed or over ruled by the higher judicial forum. Considering the totality of the aforesaid facts and following the order of the Co-ordinate bench in the assessee's own case and for similar reasons, we hold that the Revenue w as not justified in making the addition. We therefore set aside the action of AO. Thus the g round of the assessee is allowed." 17. Respectfully following the aforesaid precedent in assessee's own case, we direct that the disallowance in this regard is to be deleted. 18. Apropos ground no.4 of issue of deduction/rejection allowable u/s 80IC : On this issue, AO noted that in the preceding year, the assessee was disallowed section 80IC deduction on interest income and held the same was n....
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....e accepted. Accordingly, the action of the assessing officer is hereby concerned. As a result, this ground of appeal is dismissed." 20. Against the above order, the assessee is in appeal before us. 21. We have heard both the parties and perused the record. Ld. counsel of the assessee submitted that entire addition in this regard was deleted by the ITAT in AY 2009-10 and also for AY 2014-15. We note that this Tribunal in assessee's own case for AY 2009-10 has decided the issue in favour of the assessee and concluded as under :- "26. We have heard the rival submissions and perused all the materials available on record. The issue in the present ground is with respect to the denial of claim of deduction u/s 80IC on the interest income earned by the assessee. Before us it is Learned AR's contention that the interest income earned is inextricably linked to the main business activity of the assessee as it was earned from fixed deposits which was required to be maintained as per the statutory requirements. The aforesaid contentions of the assessee have not been controverted by the Revenue. We find that the Hon'ble Delhi High Court in the case of PCIT vs. Bharat Sanchar Nigam....