9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (6) TMI 1560 - AT - Income TaxTPA - determination of arms length price(ALP) u/s 92C - commission chargeable by the assessee from its AE on international transaction entered into u/s 92B with its associated enterprises (AE) - Held that - Tribunal for AY 2009-10 in assessee s own case held that corporate guarantee provided by the assessee brought certain benefits to its AE by way of credit facility and therefore the same was required to be compensated by its AE. Our view is duly supported by the decision of this Tribunal rendered in Everest Kanto Cylinders Ltd. Vs. DCIT 2012 (11) TMI 1099 - ITAT MUMBAI as affirmed by Hon ble Bombay High Court 2015 (5) TMI 395 - BOMBAY HIGH COURT wherein the rate of commission has been adopted @0.5%. Respectfully following the same we estimate the impugned additions @0.5% per annum. The Ld. AO is directed to quantity the addition and re-compute the income of the assessee in terms of our above order - decided partly in favour of assessee
Issues:
Appeal against addition of commission on corporate guarantee. Analysis: The appeal was against the CIT(A)'s confirmation of the AO's addition of commission on a corporate guarantee. The AO computed the guarantee commission at 1.75% following a decision of the Bombay High Court. The assessee argued that the subsidiary charged lower margins, and any commission should be at 0.3% based on bank guarantee rates. The CIT(A) upheld the AO's decision, stating that the guarantee commission worked out by the TPO was justified. The assessee cited a previous order by the Tribunal restricting the disallowance to 0.5%. The Tribunal agreed with the assessee, directing the AO to recompute the commission at 0.5%, partially allowing the appeal. In conclusion, the Tribunal partially allowed the appeal, directing the AO to recompute the corporate guarantee commission at a rate of 0.5% per annum, following a previous order and citing benefits brought to the AE by the corporate guarantee. The decision was based on the principle of compensating the AE for credit facility benefits.
|
