TaxTMI 
TaxTMI 
2024 (12) TMI 820
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....(hereinafter referred to as 'the Act') for the assessment year 2018-19. 2. The assessee is one of the 'venture business' segments of the Jubilant Bhartia group and through its alliance with international companies, provides business, marketing and technical support related to oil and gas services, power and infrastructure services. The assessee had provided two loan arrangements through corporate guarantee for its AEs in 2011 and 2014 which were defaulted by the AE in May, 2016. The corporate guarantee was provided in favour of EXIM Bank and the assessee had admitted a liability of guarantee that the guarantee shall not exceed the amounts realized first by investments of JEPL in its subsidiary JEHBV and assets and investments held by its....
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....E. Thus, the assumption of the TPO that the assessee is liable to pay interest cost is not correct. It was submitted that thus, there was no question of any reduction in income or increase of loss out of this transaction of guarantee. 4. It was submitted that in assessee's own case for AY 2017-18 the coordinate Bench has held vide ITA No.513/Del/2022 that as the guarantee has been invoked, so, there is no more any international transaction in existence from AY 2017-18 onwards. 5. The ld. DR has relied the orders of the ld. tax authorities below. 6. We have given thoughtful consideration to the matter on record and have gone through the audited financial statement of the assessee for AY 2018-19 and the tax audit report for AY 2018-1....
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....ee in the past, as per records, the assessee has collected Rs. 2.7 crores in the AY 2013-14. It was adjudicated in AY 2013-14 that this transaction falls within definition of the international transaction. However, the facts are different in this AY considering the fact that the step down subsidiaries had not serviced the obligation towards the loan taken by them and the same were classified as non-performing assets (NPA) by EXIM bank. The same was intimated to the assessee on May 2016 and initiated the recovery proceedings from the assessee being the primary guarantor. The assessee being the holding company, it is aware of the situation prior to the intimation received from the bank ie., in the previous year itself. Once the situation is a....
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....o enfore it, irrespective of the situation, the transaction has to be bench marked. After considering the facts on record, what is relevance is whether the guarantee existed at the commencement of the impugned AY, in this case, in our opinion, the assessee was aware as well as the intimation received from the bank in the month of May itself, therefore, there was no guarantee existed as soon as the intimation of classification of NPA. It is crystallized/non-existence of the guarantor in the beginning of the year itself, therefore, we cannot presume that the corporate guarantee existed, hence, there is no possibility that the assessee has continued the guarantee, in our view for this AY, there is no international transaction. Therefore, the T....
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...., for the purpose of section 92B(2), the assessee's transaction with EXIM Bank is, no doubt, the outcome of a prior agreement in relation to the relevant transaction of guarantee between the assessee and the EXIM Bank. 11. Thus, the finding of a coordinate Bench in favour of the assessee holding that there is no more any international transaction left with regard to assessee providing guarantee to AE is actually not relevant to examine the alleged international transaction of loan, between the assessee and the AE, arising out of invocation of guarantee by the EXIM Bank. In this context we are of considered view that this question of deemed loan would be dependent on discharge of debt of AE towards EXIM Bank after any payment is made by a....