TaxTMI 
TaxTMI 
2025 (5) TMI 2271
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....red to as "Acqueon" or "the Appellant"], respectfully submits that: 1. The Assessment order passed by the learned Assessing Officer ("AO") and the order of the Dispute Resolution Panel ("DRP") under Income tax Act, 1961 ("the Act") are not in accordance with the law and are contrary to the facts and circumstances of the present case. Grounds on Transfer Pricing Adjustments Recharacterization of outstanding trade receivables as separate international transaction : 2. The learned AO and the Transfer Pricing Officer ("TPO") has erred in imputing notional interest on the outstanding receivables from the Associated Enterprise ("AE") and thereby making a TP adjustment. 3. The learned AO / TPO has erred in law and on facts in holding the alleged delay in the realization of the receivables from AE as an international transaction ignoring the fact that the same is not an international transaction in terms of Section 92B of the Act but arises only as a consequence of an international transaction with its associated enterprise. 4. Without prejudice to the above grounds that the delay in receivables is not an international transaction, the ....
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....n the profits, incomes, losses or assets of the company. 13. The Ld. AO/TPO ought to have appreciated that the issuance of corporate guarantee is a transaction of routine nature and the AE does not derive any direct benefit from such guarantee in terms of reduced interest rate, or any other benefit. 14. The Ld. AO/TPO erred in incorrectly applying the most appropriate method while attributing corporate guarantee. 15. Without prejudice to the above, the rate of 2.24% of Corporate Guarantee is very high and arbitrary. 16. Without prejudice to the above, the AO/TPO erred in imputing an ad-hoc notional fee of 2.24% on the value of corporate guarantee provided to the AEs. 17. Without prejudice to our grounds that the corporate guarantee is not an international transaction, the learned AO has erred in law and on facts by considering average fee on Bank Guarantee as per market rates as against 0.5% as held by this Hon'ble Tribunal in Assessee's own case for AY 2018-19 in I.T.(TP)A.No.60/Chny/2022 for AY 2018-19. Upward adjustment on international transaction relating to short term advances given: 18. The learned AO and the Tra....
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....ant had disallowed the CSR donations under Section 37(1) while computing the income from business or profession and that the same has no correlation for claiming deduction under section 80G of the Act. 27. Consequent to the above disallowances/ adjustments, the AO erred in levying excess interest under Section 234B and Section 234C of the Act. 3. The brief facts of the case are that the assessee filed its Return of Income for the assessment year 2020-21 on 15.02.2021, declaring total income of Rs. 18,51,66,820/-. The case was selected for scrutiny and during the course of assessment proceedings, a reference was made to Transfer Pricing Officer (TPO) in terms of section 92CA of the Act, for computing ALP in respect of International Transactions undertaken by the assessee during the financial year 2019-20 relevant to assessment year 2020-21. The TPO vide their order u/s. 92CA(3) of the Act, dated 21.07.2023 proposed an upward adjustment of Rs. 3,86,70,879/-. Also, the Assessing Officer had proposed an addition towards disallowance on deduction claimed u/s.80G of the Act made by the Assessee. Subsequently, the Assessing Officer passed draft assessment order u/s. 144C of th....
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....e orders of the lower authorities along with the paper books filed and case laws relied upon. We find that an identical issue has been considered by the Tribunal in assessee's own case for assessment year 2014-15 in IT(TP)A No.46/Chny/2019, where under identical set of facts the Tribunal held that deferred payment or receivables arising during the course of business is international transactions and thus, outstanding receivables beyond credit period from AE is an international transactions which needs to be benchmarked and that the appropriate rate for benchmarking was LIBOR + 200 basis points. However, we find that the subsequent decision of this Tribunal on the same issue of benchmarking interest on outstanding receivables in the case of ACIT V. Saipem India Projects Private Limited - ITA No. 2264/CHNY/2024 and ITA No. 2319/Chny/2024 dated 15.01.2025, average LIBOR rate was held appropriate for imputing interest. In this view of the matter and by following the decision of ITAT Chennai Benches in assessee's own case and the subsequent decisions rendered by this Tribunal, we direct the Assessing Officer to compute interest by adopting Average LIBOR as the basis for imputing inte....
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....ferent and thus, by following the decision of Hon'ble Bombay High Court in the case of CIT vs Everest Kanto Cylinders Ltd [2015] 378 ITR 57 (Bom), held that 0.5% is appropriate rate for benchmarking corporate guarantee. The relevant findings of the Tribunal are as under: "9. We have considered relevant materials on record. As regards the arguments of the Ld.AR for the assessee that corporate guarantee per se itself is not an international transaction, we find that after amendment of definition of international transaction, corporate guarantee given by any entity to its AE falls under the definition of international transactions in terms of sec. 92B of the Act and thus, any corporate guarantee given by the assessee to its AE is an international transaction, which needs to be bench marked. Further, when it comes to rate, at which, such guarantee commission needs to be benchmarked, then bank guarantee given by the commercial banks cannot be ayardstick to apply to corporate guarantees given by an entity. Further, the guarantee commission rate is depending upon the facts of each case and the risk involved in the transactions between the assessee and its AE. The Hon'ble Madras H....
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....n placed his reliance on the decision of this Tribunal in the case of ACIT V. Saipem India Projects Private Limited- ITA No. 2264/CHNY/2024 and ITA No.2319/Chny/2024 dated 15.01.2025 and Plintron Global Technology Solutions (102 Taxmann.com 684) in ITA No.532/Chny/2017. 15. Per contra, the Ld. CIT(DR) strongly supported the order of the lower authorities. 16. We have heard the rival contentions perused the material available on record gone through the orders of the lower authorities along with the paper books filed and case laws relied upon. Since, the issue involved and the arguments advanced are similar to ground no.2 to 9 discussed above, by following the decision of ITAT Chennai Benches in assessee's own case and the subsequent decisions rendered by this Tribunal, we direct the Assessing Officer to compute interest by adopting average LIBOR as the basis for imputing interest on short term advances to AE. 17. Apart from the above grounds, for the appeal of AY 2020-21, the Assessee had raised grounds 24 to 27 which are on the issue of disallowance of donation claimed under Section 80G of the Act. 18. We have perused the order of the AO, and find that the AO had disall....
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.... 6. We also find that Finance Act, 2015 has allowed tax benefits u/s.80G for donations made to Swachh Bharat Kosh and Clean Ganga Fund. The amendment and explanatory statement read as under: - Tax benefits for Swachh Bharat Kosh and Clean Ganga Fund Under the existing provisions of section 80G of the Income-tax Act, a deduction is allowed in computing the total income of a person in respect of donations made to certain funds and charitable institutions. The deduction is allowed at the rate of fifty percent of the amount of donations made except in the case of donations made to certain funds and institutions formed for a social purpose of national importance, where it is allowed at the rate of one hundred percent, such as the National Defence Fund set up by the Central Government, the Prime Minister's National Relief Fund, the Prime Minister's Armenia Earthquake Relief Fund, the Africa (Public Contributions-India) Fund, the National Children's Fund, the National Foundation for Communal Harmony etc. "Swachh Bharat Kosh" has been set up by the Central Government to mobilize resources for improving sanitation facilities in rural and urban areas and....
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....(TP) No. 115/CHY/2024 for the A.Y. 2021-22: 23. We now take up the Appeal of the assessee for AY 2021-22 for disposal: 24. The assessee has raised the following grounds of appeal: "Based on the facts and circumstances of the case, Acqueon Technologies Private Limited (formerly Serviont Global Solutions Limited) [hereinafter referred to as "Acqueon" or "the Appellant"], respectfully submits that: 1. The Assessment order passed by the learned Assessing Officer ("AO") and the order of the Dispute Resolution Panel ("DRP") under Income tax Act, 1961 ("the Act") are not in accordance with the law and are contrary to the facts and circumstances of the present case. Grounds on Transfer Pricing Adjustments Recharacterization of outstanding trade receivables as separate international transaction : 2. The learned AO and the Transfer Pricing Officer ("TPO") has erred in imputing notional interest on the outstanding receivables from the Associated Enterprise ("AE") and thereby making a Transfer Pricing ("TP") adjustment. 3. The learned AO / TPO has erred in law and on facts in holding the alleged delay in the realization of the receiva....
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....cts by considering LIBOR plus 350 BPS (i.e. 4.19%) as against LIBOR plus 200 BPS as held by this Hon'ble Tribunal in Assessee' s own case in ITA No. 1974/Chny/2016 for AY 2009-10 and I.T.(TP)A.No. 22/Chny/2020 for AY 2012-13, and IT(TPA) No.60/Chny/2022 for AY 2018-19 Upward revision on account of provision of corporate guarantee to AEs: 12. The Ld. AO/TPO has erred in law and on facts in considering corporate guarantee as a separate international transaction under Section 92B of the Act. 13. The Ld. AO/TPO ought to have appreciated that provisions of corporate guarantee is not in the nature of shareholder activity and as such it will cannot be regarded as international transaction. 14. The Ld. AO/TPO ought to have appreciated that the Appellant does not incur any cost for extending such guarantee and hence the transaction does not have any bearing on the profits, incomes, losses or assets of the company. 15. The Ld. AO/TPO ought to have appreciated that the issuance of corporate guarantee is a transaction of routine nature and the AE does not derive any direct benefit from such guarantee in terms of reduced interest rate, or any other b....
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....imputing notional interest on the short-term advances, trade payables has not been considered when arriving at the quantum of short term advances resulting in incorrect transfer pricing adjustment. 26. Without prejudice to the above grounds, the Ld. TPO/ AO has erred in law and on facts in not following consistent positions (allowed/ adopted during AY 2020-21) by not deducting outstanding payables to be made to the AEs while computing notional interest on short term advances. 27. Without prejudice to the above grounds that the Ld.AO has erred in imputing notional interest on the short-term advances, the Ld.AO has erred in law and on facts by considering LIBOR plus 350 BPS (i.e 4.19%) as against LIBOR Rate. 28. Without prejudice to the above grounds that the Ld.AO has erred in imputing notional interest on the short-term advances, the Ld.AO has erred in law and on facts by considering LIBOR plus 350 BPS (i.e 4.19 % ) as against LIBOR plus 200 BPS as held by this Hon'ble Tribunal in Assessee' s own case in ITA No. 1974/Chny/2016 for AY 2009-10 and I.T.(TP)A. No. 22/Chny/2020 for AY 2012-13, and IT(TPA) No. 60/Chny/2022 for AY 2018-19." 25. The brief fact....