TaxTMI 
TaxTMI 
2026 (3) TMI 793
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....t of Rs. 4,46,66,174/- without appreciating the detailed analysis carried out by the assessee in terms of determination of arm's length value of guarantee transaction; 1.2. The TPO/ AO/ DRP has erred in not prescribing any specific method of benchmarking and usage of non-comparable data; 1.3. The TPO/ AO/ DRP has erred in not appreciating the fact that no scientific tool has been applied by the TPO to determined arm's length commission percentage; 1.4. The TPO/ AO/ DRP has erred in not appreciating the fact that no structured search process process data has been adopted by the TPO thus resulting into cherry picking of comparable data; 1.5. The TPO/ AO/ DRP has erred in making erroneous use of data collected u/s 133(6) of the Income Tax Act, 1961; 1.6. The TPO/ AO/ DRP has disregarded the fact that the fresh search is not conducted on the basis of contemporaneous data available in the public domain; 1.7. The AO/DRP has erred in determining arm's length guarantee rate at 1.80% for benchmarking guarantee transaction; 1.8. The AO/ DRP has erred in disregarding the downward adjustment of 0.25% as proposed by the ....
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....n and directed to compute the ALP for the same by applying a rate of 1.80%. Pursuant to the said directions, final assessment order was passed, determining the total income at nil but with the balance losses at a reduced amount, for carry forward at Rs. 190,23,98,545/-. 4. At the outset, ld. Counsel for the assessee pointed out that identical issue arising from the same leg of transaction has been dealt by the Coordinate Bench in assessee's own case for Assessment Year 2018-19 in ITA No.2502/MUM/2022 for which the order was yet to be pronounced. The matter was heard before the same Constituing Bench, for which subsequently, the order has been pronounced on 12.02.2026. 5. The issue in the present appeal is identical to the one already dealt by this bench in assessee's own case for Assessment Year 2018-19. In this respect, reference was made to Para 5.1 of the order of ld. TPO passed u/s. 92CA(3) for Assessment Year 2018-19 which is similarly worded in the present case before us, having the same Para number at 5.1 in the order of ld. TPO. Relevant portion from the order of ld. TPO contained in Para 5.1 for the year under consideration is extracted below for ready ref....
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....support services to FRB SA. In this regard, it has been submitted that the assessee performs very limited functions such as processing the request of guarantee from AE, seeking confirmation from the AE for cancellation/extension of the guarantee etc. Also, it does not perform any function apart from issuing the guarantee in favour of the beneficiary and it does not undertake any separate evaluation of the beneficiary and all background and creditworthiness checks were performed by the AE only. Thus, FRB India performs minimal function pertaining to execution/processing of the guarantee. Further, in case a guarantee is invoked, assessee is fully protected by the counter guarantee issued by the AE and associated cost and risk is passed on back-to-back by the assessee to its AE. Therefore, the entire risk of default by the borrower is completely assumed by the AE and the assessee does not bear any risk in the entire arrangement or transaction. Thus, in view of the above, as per the assessee, the said transaction is considered to be arm's length, and no further adjustment is warranted." 6. Ld. TPO rejected the benchmarking done by the assessee and issued a show cause on the assessee....
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....arantee was supposed to be from a local commercial bank in India. FRB-SA reached out to its correspondent banks in India including FRB India and requested for feasibility of reissuance of the guarantee. The pricing quoted by FRB India was based on the rating and risk associated with FRB-SA and was at par with the market pricing for a similarly rated and similar value transaction. Basis response time, ease of doing business and pricing provided, FRB-SA awarded the reissuance to FRB India. In this regard, assessee received a counter guarantee from FRB-SA and reissued the guarantee locally in favour of MIAL. The fee arrangement was structured in line with market practice, as per which assessee raised quarterly fee claims on FRB-SA, which in turn recovered the same from ACSA and remitted the amount to the assessee. 8. On the above factual position, we note that this issue is squarely covered by the decision of the Coordinate Bench in assessee's own case for Assessment Year 2018-19 (supra) which has elaborately dealt with it. Relevant observations and findings on this issue from the order for Assessment Year 2018-19 is extracted below. 11. The moot point contested by the....