TaxTMI 
TaxTMI 
2026 (9) TMI 613
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.... Ld. AO erred in passing the final assessment order without considering the legal position that time limit for completion of assessment u/s 153 has lapsed, therefore the order passed is erroneous and bad in law. Technical ground 2.2 The Ld. AO ought to have considered the law position that the time limit for passing the order has elapsed on 31.03.2025, as per section 153, so the impugned order is erroneous and bad in law. Technical ground 2.3 The Ld. AO ought to have considered that the time limit prescribed u/s 153 would prevail over time limit prescribed u/s 144C. Therefore, the order passed is liable to be quashed. Technical ground 2.4 The Ld. AO ought to have fairly appreciated the fact that, the assessment has to be completed within 12 months (shall be extended by 12 months in case of TPO reference is made) as per Sec 153 of Income Tax Act. Technical ground The Ld. AO Erred in making the upward adjustment of Arm's Length Price for Rs. 54,28,500/- towards fee on corporate guarantee. 3 3.1 The Ld. AO Erred in upholding the adjustment on account of corporate guarantee of Rs. 54,28,500/- without appreciating the fact that the transaction r....
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.... AO Erred in not appreciating the fact that the comparison should be based on real transactions of similar nature and it cannot be based on the hypothesis as to what would have happened if the assessee was to have similar transactions with non-AEs. As Stated Above 3.12 The Ld. AO Erred in not appreciating the fact that no comparison can be made between guarantee issued by commercial bank and the corporate guarantee issued by the holding company for the benefit of AE. As Stated Above 3.13 With Prejudice to the other grounds, the Ld. AO Erred in not following the decision of the Hon'ble ITAT Chennai in the assesses own case wherein the Hon'ble ITAT vide IT(TP)A no. 86/CHNY/2019, IT(TP)A no. 30/Chny/2021, IT(TP)A no. 21/Chny/2022, IT(TP)A no. 5/Chny/2019, & IT(TP)A no. 40/Chny/2022 for the AY 2015-16, AY 2016-17, AY 2017-18, AY 2014-15 & AY 2018-19 respectively has restricted the corporate guarantee fee to 0.5%. As Stated Above 3.14 The Ld. AO Erred in not appreciating the fact that when two divergent views are possible, the view which is favourable to assessee should be adopted. As Stated Above 3.15 Without prejudice to the other grounds, ought to ....
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....dered the guarantee rates of the Indian Banks to arrive at the 1% commission and has applied the said rate for making the TP adjustment. The Ld. AR further submitted that the rates of the banks in India are not the correct comparable for CUP method. The Ld. AR brought to our attention that this is a recurring issue in assessee's case, and the coordinate bench of the Tribunal has been consistently holding that the commission for corporate guarantee to be restricted to 0.5%. We in this regard notice that the coordinate bench in assessee's own case for AY 2013-14 (ITA No.2757/Chny/2017 dated 08.11.2023) has considered an identical issue and held that: "8.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. An identical issue has been considered by the tribunal in assessee's own case for earlier assessment year and by, considering relevant facts and also by following the decision of Hon'ble Bombay High Court in the case of CIT vs Everest Kento Cylinders Ltd (Supra), directed the TPO to compute corporate guarantee commission @ 0.5% to total corporate guarantee given by the assessee to their AE. The relevant fi....
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....5] 58 Taxmann.com 254 (Bom.). The Hon'ble High Court has considered the issue in the light of provision of Section 92B and explanation, to come to the conclusion that guaranteeissued by an entity on behalf of its AEs, a SUBSIDIARY is international transaction. However, while benchmarking the rate of commission, no comparison can be made between guarantee issued by the commercial bank as against corporate guarantee issued by holding company for benefit for its AE subsidiary company for computing ALP of guarantee commission. The relevant observation of the Hon'ble Bombay High Court (supra) is reproduced as under: "The adjustment made by the TPO was based on instances restricted to the commercial banks providing guarantees and did not contemplate the issue of corporate guarantee. No doubt, these are contracts of guarantee, however, when they are commercial banks that issue bank guarantees which are treated as the blood of commerce being easily encashable in the event of default and if the bank guarantee had to be obtained from commercial banks, the higher commission could have been justified. In the present case, it is assessee company that is issuing corporate guarantee to t....