2020 (2) TMI 1708

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....ly ground of appeal: 3. The assessee company is in the business of promotion of infrastructure development and investments in the shares and securities, and filed the Return of Income on 29.11.2014 with total loss of Rs.35,66,74,072 under the normal provisions of Income Tax and Book Profits u/sec 115JB Rs.211,85,82,199. The case was selected for scrutiny and Notice under Section 143(2) of the IT Act was issued. The Assessing Officer as per Form 3CB Report filed by the assessee, found that the assessee has international transactions, and referred the matter for determination of Arm's Length Price (ALP) to the Transfer Pricing Officer (TPO). Whereas the TPO made an adjustment of Rs.15,45,49,138 on transaction of Stand By Letter of Credit (....

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....e nature of shareholders operations and on commercial expediency,and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of CIT (Appeals). 5. We heard the rival contentions and perused the material on record. The sole matrix of the disputed issue as envisaged by the learned Authorized Representative that there is no requirement of TP Adjustment, as the standby letter of credit (SBLC) was issued in Group Concerns, where the AE was allowed to utilize the non-fund base limits of the assessee, which are in the nature of a shareholder activity and satisfy the test of commercial expediency. We found the CIT(Appeals) has made observations at page 10 and para 6.1.4 of the order which is read as un....

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....35,56,787/- and USD 44,868.08 and out of which an amount of USD 44,868.08 was directly charged by the bank from the respective AES while an amount of Rs. 35,56,787/- in respect of ISG was charged from the appellant and the appellant in turn has recovered the amount of commission to the extent of Rs. 11,07,050/- charged by the bank from its ISG AE. However, the AO on completion of TP assessment has made adjustment of Rs. 15,45,49,138/- holding that the appellant should have also recovered the similar amount for utilization of its non-fund based limits. It is noticed that the banks have directly charged an amount of USD 44,868.08 and hence here is no involvement of the appellant while in respect of SBLC issued for I....