TaxTMI 
TaxTMI 
2023 (8) TMI 367
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....2. Briefly stated the facts are that the assessee filed e-return of income for the AY 2017-18 on 27/11/2017 and revised the same on 7/12/2017 and once again revised on 15/9/2018 admitting a total loss of Rs. 74,15,83,058/-. The case was selected for scrutiny under CASS and notice u/s. 143(2) was issued on 9/8/2018 and duly served on the assessee along with a detailed questionnaire issued on 18/11/2019 calling for various details. In response to the said notices, the assessee uploaded its submissions through ITBA from time to time and furnished the details called for. During the course of assessment proceedings, the submissions made by the assessee have been verified and a reference was made to the Ld. TPO U/s. 92CA(1) of the Act for determi....
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....ii) Interest on Share Application Money and investment in Preference Shares being re-characterized as interest free unsecured loans for Rs. 67,17,88,665/- upheld by the Ld. DRP. 5. Before us, at the outset, the Ld. AR submitted that this Bench has held the Corporate Guarantee Commission as an international transaction and has upheld the commission @ 0.50% on the outstanding guarantees issued. The Ld. AR relied on the decision of this Bench in the case of M/s. Devi Sea Foods Limited vs. DCIT in ITA No. 156/Viz/2022 (AY: 2018-19), dated 16/12/2022. Further the Ld. AR also submitted that in assessee's own case in ITA No. 553/Viz/2018 (AY: 2014-15), dated 3/4/2019 this Bench has considered the commission @ 1.90% based on the TP study for that ....
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..... Following the principle of consistency and the ratio held in Everest Kanto Cylinder Limited (supra) we are of the considered view that the ALP for Corporate Guarantee Commission shall be benchmarked @ 0.50% of the Corporate Guarantee issued to the AEs. We therefore direct the Ld. TPO to adopt 0.50% as the Corporate Guarantee Commission and accordingly this issue raised by the assessee in the relevant grounds of appeal is partly allowed. 7. On the second issue with respect to notional interest on Outstanding Guarantee Commission, the Ld. AR in his written submissions before us, submitted that there is no organized activity of delay in receivable and the outstanding guarantee commission is one off transaction. The Ld. AR further submitted ....
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....) Ltd (2018) 164 DTR (Del.) 299 and considering the decision in the case of Bechtel India (P) Ltd, held that disallowance of notional interest on delayed payments shall be deleted from the additions made by the Ld. TPO. In the assessee's own case for the AY 2013-14, relied on by the Ld. AR, we find that the interest on the outstanding receivables has not accrued or crystallized in the year under consideration and hence it does not support the facts in the instant case. However, we find merit in the argument of the Ld. AR that the assessee has not indulged in any systematic or organized activity of allowing the undue credit to the AEs. In the light of the facts and circumstances discussed above, we deem it fit and appropriate to consider the....
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....de in the AEs. The Ld. DR also relied on the order of the Ld. DRP and pleaded that it may be upheld. Considering the above, the Ld. AR submitted that the assessee has subscribed to share capital of AE and has not given any kind of financing. 10. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. We find from the submissions made by the Ld. AR that the assessee has invested in the 8% of the preference share capital in the AE companies. Accordingly 8% preference shares were allotted to the assessee for Rs. 2,64,79,39,036/-. The balance amount of Rs. 3,99,80,12,401/- is held by AE's as share application money pending for future allotments. The Ld. AR in his submissions ha....
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....g that the TPO had re- characterized the transaction of subscription of shares into advancing of unsecured loans. The Tribunal did not accept such conclusion, inter alia on the grounds that the TPO cannot disregard the apparent transaction and substitute the same without any material of exceptional circumstances pointing out that the assessee had tried to conceal the real transaction or that the transaction in question was sham. The Tribunal observed that the TPO cannot question the commercial expediency of the assessee entered into such transaction. 3. We are broadly in agreement with the view of the Tribunal. The facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Noth....