TaxTMI 
TaxTMI 
2023 (2) TMI 1159
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....ring the time of Pandemic of Covid-19, which has been excluded by the Hon'ble Supreme Court in the case of Suo moto Writ Petition (C) No. 3 of 2020 dated 10.01.2022 by which the period from 15.03.2020 to 28.02.2022 has been directed to be excluded for the purpose of limitation. Vide this order a further period of 90 days has been granted for providing the limitation from 01.03.2022. Accordingly, we condone the delay and proceed to adjudicate upon the matters. 3. Grounds of appeal taken by the Revenue are reproduced as under:- Assessment Year: 2015-2016 (1) That on the facts and circumstances of the Case, the Ld. CIT(A) has erred in deleting the Transfer Pricing adjustment of INR 7,53,60,879 (later on rectified at 7,71,77,867) made on account of Corporate guarantee given by the assessee on behalf of its AE. (2) That on the facts and circumstances of the Case, the Ld. CIT(A) has erred in not following a recognised approach for arriving at the CG Fee and further erred in arbitrarily adopting a rate of CG Fees based on judgments which are factually distinguishable. (3) That on the facts and circumstances of the Case, the Ld. CIT(A) has erred in not appreciating that the Inter....
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....e, as receipts, were to be treated as income. The inclusion of a class of receipt, i.e., amounts received (or deducted from the employees) were to be part of the employer/assessee's income. Since these amounts were not receipts that belonged to the assessee, but were held by it, as trustees, as it were, Section 36(1)(va) was inserted specifically to ensure that if these receipts were deposited in the EPF/ESI accounts of the employees concerned, they could be treated as deductions. Section 36(1)(va) was hedged with the condition that the amounts/receipts had to be deposited by the employer, with the EPF/ESI, on or before the due date. The last expression "due date" was dealt with in the explanation as the date by which such amounts had to be credited by the employer, in the concerned enactments such as EPF/ESI Acts. Importantly, such a condition (i.e., depositing the amount on or before the due date) has not been enacted in relation to the employer's contribution (i.e., Section 36(1)(iv)). The significance of this is that Parliament treated contributions under Section 36(1)(va) from those under Section 36(1)(iv). The latter (hereinafter, "employers' contribution") is ....
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....treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions - especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee's income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of "income" amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time - by way of contribution of the employees' share to their credit with th....
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.... provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated ....
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.... judicial precedents, ld. CIT(Appeals) deleted the addition made in this respect. While giving relief to the assessee, ld. CIT(Appeals) dealt with the proposition of treating the Corporate Guarantee as an International Transaction within the meaning of section 92B of the Act. He also dealt with the proposition relating to Corporate Guarantee being purely owner-shareholder activity in respect of the adjustment so made. Ld. CIT(Appeals) also analyzed the manner and methodology adopted by the ld. TPO for the purpose of arriving at an upward adjustment towards fees for Corporate Guarantee after considering plethora of judgments including those stated above. Ld. CIT(Appeals) held that since the assessee has already charged Corporate Guarantee Fee @ 0.50% from its AE, no upward adjustment is called for and thus deleted the same. Detailed and analytical observations and findings given by the ld. CIT(Appeals) are reproduced as under:- 11.1. Aggrieved, Revenue is in appeal before the Tribunal. 12. Before us, ld. Sr. D.R. vehemently argued and supported the "interest saved approach" applied by the ld. TPO, which according to him is a well recognized method. Ld. Sr. D.R. also referred to th....