TaxTMI 
TaxTMI 
2025 (2) TMI 189
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd modelling etc are in the nature of 'Knowledge Process Outsourcing (KPO) services. 3) The Ld. TPO/DRP/A.O. has erred in proposing/confirming the addition of Rs. 11,77,81,629/- on account of corporate guarantee fee in respect of guarantees given by the assessee in favour of A.E. The Ld. TPO/DRP/A.O. has erred in proposing/confirming the rate of guarantee fee of 1.95% based on the rates charged by the banks to its customers as against 0.53% charged by the assessee to its AES. 4) The Ld. TPO/DRP/A.O. has erred in proposing/confirming the addition of Rs. 1,03,338/- on account of interest on outstanding trade receivable and reimbursement receivable beyond the 90 days credit period. 5) The Ld. TPO/DRP/A.O. has erred in not appreciating that the transaction of outstanding receivables was already benchmarked by the assessee while benchmarking the transaction of provision of IT services. The Ld.TPO/DRP/AO, ought to have aggregated the outstanding receivable transaction along with the provision of the IT services. 6) The Ld. TPO/DRP/A.O. has erred in not providing copy of the information gathered by the TPO u/s. 133(6) of the Act from various banks. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion of the ITAT Hyderabad Bench in assessee's own case for A.Y. 2020-21 in ITA No.913/Hyd/2024 (supra), this issue is kept open to be decided in subsequent years, if need arises. Accordingly, ground no.2 of the assessee is treated as allowed for statistical purpose. Ground No.3 8. The learned counsel for the assessee submitted that this issue is also covered in favour of the assessee by the decision of Hyderabad Bench, in assessee's own case for A.Y. 2020-21 in ITA No.913/Hyd/2024, wherein the Tribunal after considering the facts has directed the TPO / Assessing Officer to benchmark the Corporate Guarantee Fee @ 0.53% on total corporate guarantee given by the assessee and also restrict the commission / fees to the period of actual guarantee given by the assessee. 9. Per contra, the ld.CIT-DR fairly agreed that this issue is covered in favour of the assessee by the decision of Hyderabad Bench in assessee's own case for A.Y. 2020-21 in ITA No.913/Hyd/2024. 10. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. We find that an identical issue has been considered by the Tribunal in assessee's own case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved on ECB is as under: Sl.No Description Amount 1. ECB loan / financial commitment Rs.59,05,85,810/- 2. Interest Received by the assessee (A) NIL 3. Arm's Length Interest rate 1.67% 21. Now the question arises whether the ALP computed for external commercial borrowing @1.67% can be juxtapose or applied to the corporate guarantee @1.9%. In our view the answer is no, and this Tribunal while deciding the issue in the case of Hetero Labs Limited, v. ACIT (supra), as relied upon by the assessee, held that the rate of interest required to be applied is 0.53% and not 1.9%. For that purpose, the Tribunal has relied upon another Co-ordinate Bench decision in the case of Mylon Laboratories Ltd v. ACIT in ITA No.2123/Hyd/2011 and held that 0.5% is required to be applied. Accordingly, respectfully following the decision of the Co-ordinate Bench in the case of Hetero Labs Limited, v. ACIT (supra) we direct the TPO to compute the charges at 0.53% as corporate guarantee charges. 22. The question whether the approach of the Tribunal by restricting the corporate guarantee at 0.53% is correct. For that purpose, we have to see what benefit the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cer called upon the assessee to file necessary evidences and also explain why TDS has not been deducted. Since the assessee did not respond to the show cause notice, the Assessing Officer has disallowed 30% of Rs. 1,28,52,83,944/- and made addition of Rs. 38,55,85,183/- u/s 40(a)(ia) of the Act. 13. The assessee filed objections against draft assessment order before the Dispute Resolution Panel - 1, Bangalore and filed certain additional evidences, including details of salaries paid without TDS, employees names, addresses and their PAN numbers and also explained that in all those cases, the total income of the employees does not come under tax bracket and therefore, the question of deduction of TDS does not arise. 14. The DRP forwarded the additional evidence field by the assessee to the Assessing Officer asking for remand report, however, the said remand report was not received by the DRP. Therefore, the DRP on the basis of reasons given by the Assessing Officer / TPO, rejected the explanation of the assessee and sustained addition towards 30% of disallowance of salary u/s 40(a)(ia) of the Act on the ground that the assessee could not substantiate the claim with evidence lik....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o issued Form 16 to the employees. This evidence has been filed before the DRP, which is evident from the additional evidence filed by the assessee, however, the DRP although called for remand report from the Assessing Officer, but because the Assessing Officer has not submitted remand report, has upheld the addition made by the Assessing Officer. 18. We find that the assessee has furnished list of names of employees, their addresses and PAN numbers and the DRP without verifying the facts, simply sustained addition. We find that as per Section 192 of the Act, the employer / payer is required to deduct TDS on estimated income of the employees. Unlike other TDS provisions, like provisions of Section 194C to 194I of the Act, where the assessee is required to deduct TDS on the total payments made by the payee but under provisions of Section 192 only, in case payment comes under taxable net, then TDS needs to be deducted. Since the assessee claims that in many of the employees' cases, the income does not exceed the taxable net, the assessee has not deducted TDS. In our considered view, the Assessing Officer and the DRP completely erred in disallowance of 30% of salary expenses under ....