AI Drafter 
TaxTMI 
TaxTMI 
2024 (6) TMI 978
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....ew Delhi [hereinafter the "ld. DRP"] dt. 09/06/2022, passed u/s 144C(5) of the Income Tax Act, 1961 ("the Act") for the Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeal:- "1. Order is bad in law and on facts (Refer our detailed grounds of appeal on this issue) 2. Determination of arm's length price by the Ld. AO, Ld. TPO and Hon'ble DRP for Corporate guarantee commission received (Refer our detailed grounds of appeal on this issue) 3. Rule of consistency (Refer our detailed grounds of appeal on this issue) 4. Negative figure of Loss on investment classified at FVTPL shown under 'Other Income' considered as positive figure thereby resulting in double ta....
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....s. 1,25,00,000/- is restored to the file of the ld. AO for necessary verification. Accordingly, Ground No. 8 is allowed for statistical purposes. 5. The remaining effective issues are raised in Ground No. 2 & 3 which pertains to Transfer Pricing (TP) adjustment on account of corporate guarantee amount of Rs. 1,54,31,081/-. 6. Facts in brief are that the assessee is a limited company and has provided corporate guarantee on behalf of its subsidiary/step down subsidiary, namely, Tega Holding Pte Ltd., Singapore ('Tega Singapore') and Tega Industries Chile SpA, Chile ('Tega Chile'). It is submitted that the original transaction took place in AY 2011-12 wherein the appellant set up Tega Singapore as a Special Purpose Vehicle ('SPV') for ac....
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....laced before us. So far as the first issue as to whether the alleged transaction of providing corporate guarantee to its associate enterprise i.e., Tega Singapore and Tega Chile will fall into the category of international transactions or not, we find that Section 92B of the Act provides for the meaning of international transactions and the same is reproduced below:- "92B. (1) For the purposes of this section and sections 92, 92C, 92D and 92E, "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction ....
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....gible property, including the transfer of ownership or the provision of use of rights regarding land use, copyrights, patents, trademarks, licences, franchises, customer list, marketing channel, brand, commercial secret, know-how, industrial property right, exterior design or practical and new design or any other business or commercial rights of similar nature; (c) capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other ^99debt arising during the course of business; (d) provision of services, including provision of market research, market development, marketing ....
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.... are dealing specifically with the transactions of corporate guarantee and that with the help of such corporate guarantee, the AE has gained and then as per the TP provisions, the assessee is required to offer the corporate guarantee fee as income. Therefore, in view of the provisions of Section 92B of the Act, the alleged transactions of corporate guarantee with the AE falls in the category of international transactions. Our view is further supported by the judgment of the Hon'ble Madras High Court in the case of Principal Commissioner of Income Tax 5 vs. M/s. Redington (India) Limited in T.C.A.Nos.590 & 591 of 2019 judgment dt.: 10.12.2020. Accordingly, ground raised by the assessee that the alleged transactions is not an international tr....