TaxTMI 
TaxTMI 
2026 (6) TMI 1069
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....ct'], as per directions, dated 19/12/2025, issued by the CIT(DRP 1), Mumbai-1 (hereinafter referred to as 'the DRP') under Section 144C(5) of the Act for the Assessment Year 2010-2011. 4. Ground No. 1 to 1.3 4.1. Ground No. 1 to 1.3 raised by the Assessee pertain to Transfer pricing adjustment on account of corporate guarantee commission. 4.2. In the first round of proceedings, the Transfer Pricing Officer ['TPO'] had computed Arms Length Price (ALP) of Guarantee Commission at 4.03% and which was reduced to 0.70% by the first appellate authority. Vide Order, dated 04/12/2023, the Tribunal set aside the said issue of determination the ALP on corporate guarantee commission to the files of the TPO by applying the interest saving approach. 4.3. In the set-aside proceedings, applying the interest savings approach, the TPO arrived at interest saving of 1.10% and allocated it entirely to corporate guarantee rejecting the contention of the Assessee that the interest saving was attributable to other factors also. Thus, vide Transfer Pricing Order, dated 26/06/2025, passed under Section 92CA(3) of the Act giving effect to the Order passed by the Tribunal, the TPO proposed....
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....sideration the decision of Co Ordinate Benches of the Tribunal, we direct the TPO/Assessing Officer to adopt split of 50:50 for determining ALP of the Guarantee Commission using the interest saving method. 4.9. However, it is clarified that, in view of the following observations by the Rangachary Committee in its Report [Second Report of the Committee to Review Taxation of Development Centres and the IT Sector - Safe Harbour, 13/10/2012] 50:50 split should not be considered as a standard by either the assessee or the TPO and the same is required to be determined as per facts and circumstances of each case: "5.7.6 Whether there should be splitting of savings between guarantor and guarantee? 5.7.6.1 The Committee is of the view that that a guarantee fee can be charged when there is an explicit benefit arising due to guarantee provided by the Guarantor to the borrower. Besides, this benefit may need to be split between the Guarantor and the borrower, as at arm's length, parties to the guarantee transactions bargain to share the benefit arising out of such transaction, keeping in view the relative bargaining power of each party. However, there are practical difficulties to ....
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....the question referred to us in favour of assessee by holding that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962." 5.4. Accordingly, the addition of INR. 74,05,261/- made by the Assessing Officer to Book Profits is set-aside with the direction to the Assessing Officer to make computation in terms of Clause (f) of Explanation 1 to Section 115JB(2) as per the decision of the Special Bench of the Tribunal in the case of Vireet Investment Pvt. Ltd. (supra) and re compute 'Book Profits' accordingly. In terms of the aforesaid, Ground No. 2 to 2.3 raised by the Assessee are allowed for statistical purposes. 6. Ground No. 3 6.1. Ground No. 3 raised by the Assessee pertaining to computation of interest under Section 234D of the Act is disposed off as consequential in nature. 7. Ground No. 4 7.1. Ground No. 4 raised by the Assessee relating to excessive levy of interest under Section 244AA of the Act is disposed off with the directions to the Assessing Officer to re-compute the same as per law. 8. In result, the appeal preferred b....
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....t. Ltd. (supra) and re-compute 'Book Profits' accordingly. In terms of the aforesaid, Ground No. 2 to 2.3 raised by the Assessee are allowed for statistical purposes. 13. Ground No. 3 to 3.2 13.1. Ground No. 3 to 3.2 raised by the Assessee is directed against the computation of total income by the Assessing Officer. In this regard, the Assessee had made following submission: "1. The Assessing Officer while passing the impugned Order dated 14 October 2025 u/s. 143(3) r.w.s. 144C(13) r.w.s. 254 has started with 'Gross Total Income as per the Order dated 30 December 2016 u/s. 143(3) r.w.s. 144C(13) and has made additions/disallowance in the set-aside proceedings instead of starting with the returned income. 2. Be that as it may, even if the Assessing Officer has started as aforesaid he should have reduced the additions/disallowance made in the 1" round of the proceedings which were set-aside by the Hon'ble Tribunal before making addition for those issues in the 2 round of the proceedings - tabulated hereunder is the correct working by the Appellant vis-à-vis the working by the Assessing Officer made in the impugned Order: Particulars Comput....
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....nder Section 144C(5) of the Act for the Assessment Year 2012-2013. 16.1. During the course of hearing both the sides had agreed that our finding/adjudication on the grounds raised in appeal for the Assessment Year 2010-2011 shall apply mutatis mutandis to the corresponding grounds raised in appeal for the Assessment Year 2012-2013. Further, Ground No. 3.3. raised in appeal for the Assessment Year 2012-2013 are identical to Ground No. 3 to 3.3 raised in present appeal for the Assessment Year 2013-2014. Therefore, keeping in view identical facts and circumstances, and adopting the reasoning given while appeal for the Assessment Year 2010-2011 and 2013-2014 hereinabove, we proceed to adjudicate the grounds raised in the present appeal. 17. Ground No. 1 to 1.3 17.1. Ground No. 1 to 1.3 raised by the Assessee, pertaining to transfer pricing adjustment of INR. 25,58,318/- on account of corporate guarantee commission, are identical to Ground No. 1 to 1.3 raised in appeal for the Assessment Year 2010-2011, keeping in view paragraph 4 to 4.10 above, we direct the TPO/Assessing Officer to adopt split of 50:50 for determining ALP of the Guarantee Commission using the interest saving ....