TaxTMI 
TaxTMI 
2023 (8) TMI 209
X X X X Extracts X X X X
X X X X Extracts X X X X
....the order passed U/s. 143(3) r.w.s 144C of the Income Tax Act, 1961 for the AY 2016-17. 2. Brief facts of the case are that the assessee-company is engaged in the business of manufacture and trading of edible oils and agro-based products, filed its original return of income on 30/11/2016 for the AY 2016-17 declaring an income of Rs. 39,53,75,920/-. Thereafter, the assessee filed the revised return on 27/11/2017 admitting a total income of Rs. 39,53,75,920/-. The return was initially processed U/s. 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS and a notice U/s. 143(2) was issued to the assessee and in response the assessee's Authorized Representative Mr. M.S. Venu Gopal, Asst. General Manager (Accounts) appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted, Ghana (3F Ghana) in the capacity of a holding company. The guarantee provided by the company is due to the AEs being subsidiaries to 3F India, which is provided for the benefit of the Group and not as a revenue earning service and hence no guarantee fee should be computed. Accordingly, the assessee does not agree that the Shareholders Corporate Guarantee fall within the definition of International Transaction. The assessee's contention before the Ld. TPO was in order to attract the ALP adjustment, the transaction has to qualify as an 'international transaction' in the first stage. Referring to section 92(1) the assessee submitted before the Ld. TPO that the said section provides for computation of income arising from international tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orked out the ALP to 2% for the corporate guarantee of above Rs. 10 Crs. Accordingly, the Ld. TPO computed the corporate guarantee at Rs. 1,24,27,379/- and made the adjustment u/s. 92CA of the Act. The Ld. TPO also made addition of Rs. 13,94,456/- on account of capitalization. Thus, the Ld. AO giving effect to the order of the Ld. TPO passed the Assessment Order U/s. 143(3) on 30/12/2019. Thereafter, the Ld. AO passed rectification order U/s 154 r.w.s 143(3) of the Act dated 09/09/2021 rectifying the errors crept in while passing the assessment order in respect of the figures in MAT credits, refund claimed and demand raised in ITBA. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). On appeal, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. Levy of interest U/s. 234B of the Act. 3. Levy of interest U/s. 234C of the Act. 4. Initiating penalty proceedings U/s. 271(1)(c) of the Act." 5. In the grounds of appeal, though the assessee has raised four grounds, but the main issues involved are: (i) Whether the corporate guarantee given by the assessee company to its AEs for the loan taken by the AEs can be considered as an international transaction as per the provisions of section 92B of the Act or not? (ii) Whether the TP adjustment made by the Ld. TPO in the corporate guarantee commission @ 2% and restricted by the Ld. CIT(A) @ 1% on the amount guaranteed as corporate guarantee given to AEs is justifiable or not? 6. On these issues, at the outset, the Ld. AR submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bank of India on the issuance of financial guarantees given for the computation of ALP and the tested party with respect to the guarantees given to the AEs. The Ld. TPO has thus concluded that the median of the ALP works out to 1.60% on the corporate guarantee given to AEs. In the case of CIT vs. Redington India Ltd [2021] 430 ITR 298, Hon'ble Madras High Court held that corporate guarantee given to the AE is covered by the retrospective amendment made by the Finance Act, 2012. In the case of CIT vs. Everest Kanto Ltd reported in 378 ITR 57 the Hon'ble Bombay High Court held that the corporate guarantee commission is an international transaction and should be charged @ 50% on the corporate guarantee amount given to the AEs. In the case of ....