TaxTMI 
TaxTMI 
2023 (2) TMI 498
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....ssessment was selected for scrutiny and notice u/s 143(2) of the I.T.Act was issued on 09.08.2018. During the course of assessment proceedings, the matter was referred to the Transfer Pricing Officer (TPO) to determine the Arm's Length Price (ALP) of the international transactions undertaken by the assessee. The TPO passed an order dated 29.01.2021 u/s 92CA of the I.T.Act. The TP adjustment proposed by the TPO in the said order, are as under:- Description Amount (Rs.) SWD segment 6,36,89,932 Corporate Guarantee fee 66,71,892 Interest on delayed receivables 1,95,78,321 Total adjustment u/s 92CA of the I.T.Act 8,99,40,145 4. Pursuant to the TPO's order, the Assessing Officer passed draft assessment order dated 08.04.2021 incorporating the TP adjustments of Rs.8,99,40,145 proposed by the TPO. The A.O. also proposed to disallow a sum of Rs.4,53,000 u/s 14A of the I.T.Act r.w.r 8D(2) of the I.T.Rules, 1962. The A.O., accordingly, proposed to assess the income of the assessee at Rs.30,22,80,075 against the returned income of Rs.21,18,86,930. The A.O. also proposed to make adjustment u/s 14A of the I.T.Act to the book profits u/s 115JB of the I.T.Act. 5....
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....led the present appeal before the Tribunal raising 42 grounds. The grounds are exhaustive and elaborative. The gist of the issue raised ground-wise, which were pressed before the ITAT, are as under :- Ground No.1 to 5 - Validity of assessment order without giving effect to DRP directions Ground No.9 - Arithmetical error in computing operating margin of assessee. Ground No.18 - Turnover filter. Ground No.19 - Exclusion of comparables. Ground No.20 - Working capital adjustment. Ground No.21 to 27 - Rate of corporate guarantee fee. Ground No.28 to 33 - Interest on outstanding receivables. Ground No.34 to 39 & 42 - Disallowance u/s 14A of the I.T.Act. 8. No specific plea was raised by the learned AR with reference to ground 1 to 5 as regards validity of assessment. With reference to ground 9, 18, 19 and 20 regarding TP adjustment of software development segments, the limited submission of the learned AR is that the A.O. has not given effect to the directions of the DRP and the A.O. may be directed to incorporate the relief granted in the order of TPO giving effect to the DRP's directions. 9. The learned Departmental Representative, on the other hand, furni....
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....sessee NIL Adjustment 66,71,892 13. The DRP rejected the objections of the assessee and upheld the addition made by the AO / TPO in computing corporate guarantee fee at 1.75%. 14. The learned AR confined his submission only to the rate that is to be adopted (ground 26). The learned AR submits by relying on the order of the Tribunal in assessee's own case for the immediately preceding assessment year, namely, A.Y. 2016-2017 in IT(TP)A No.233/Bang/2021 (order dated 30.05.2022) that fee of 1.75% adopted by the TPO may be modified to 0.50%. 15. The learned DR was duly heard. 16. We have heard rival submissions and perused the material on record. The Tribunal in assessee's own case for assessment year 2016-2017(supra) had held that 0.50% of the amount of loan for which the assessee stood as guarantee would be appropriate arm's length guarantee commission the assessee ought to have earned, and accordingly, restricted the addition of corporate guarantee commission to 0.50% of the total loan amount. The relevant finding of the Tribunal with reference to the same reads as follows:- "6. We have considered the rival submissions. We have perused the decision cited....
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.... order passed for assessment year 2015-2016. Both the learned AR and the DR had submitted that a similar course may be adopted for this assessment year also. The relevant finding of the Tribunal for assessment year 2016-2017, which in turn had followed the Tribunal order in assessee's own case for assessment year 2015-2016, reads as follows:- "9. Aggrieved by the order of the AO incorporating the directions of the TPO, assessee has raised ground Nos.8 to 11 before the Tribunal. At the time of hearing, it was agreed by the parties that identical issue had come up for consideration in assessee's own case in Assessment Year 2015-16, in IT(TP)A No.2639/Bang2019, the Tribunal in its order dated 16.11.2021 remanded the issue to the AO/TPO for fresh consideration. The following were the relevant observations of the Tribunal in this regard: "5.2 Aggrieved, the assessee has raised this issue before the Tribunal. The gist of the submissions made by the learned AR are as follows:- (a) The weighted average method adopted by TPO is incorrect. (b) The assessee has not charged interest on outstanding receivables, both from AEs and Non-AEs and hence the Benchmar....