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2024 (1) TMI 543 - AT - Income TaxTP Adjustment - international transaction involving corporate guarantee - HELD THAT - We observe from the record that assessee has entered into international transactions of giving corporate guarantee to its AE s. It is fact on record that assessee has collected guarantee commission from its AE @0.65% at the same time we also observe that assessee was given a sanction facility by IDBI bank and ICICI bank which has quoted the average bank guarantee fee of 0.65%. However, Transfer Pricing Officer has collected information regarding guarantee commission from HDFC bank and SBI bank. Since Transfer Pricing Officer has collected the above said information by issuing notice under section 133(6) of the Act it is normal for the banks to give card rate of charges without considering the financials of the tested parties. As assessee has received the quote of sanction of credit facility as well as bank guarantee facility from IDBI bank and ICICI bank, from perusal of the documents submitted by the assessee relating to IDBI bank and ICICI bank we observe that assessee has received the above said quotes from IDBI bank and ICICI bank based on actual utilization of bank guarantee by the assessee. Since assessee has also passed on the above burden to its AE. Therefore, Internal CUP is already available in this transaction. It is unwarranted to rely on External CUP by Transfer Pricing Officer which were not based on actual exposure. In our considered view, ALP adjustment proposed by the Transfer Pricing Officer is not proper. Accordingly, Ground No. 1 raised by the assessee is allowed. Addition of premia income on forward contracts to the total income of the Appellant - Gain/loss on settlement of the transaction - whether the said amount represents income already taxed in earlier years? - HELD THAT - No doubt assessee has followed method of accounting to declare the gain / loss in the above said POS Principal Only Swap transaction. However, mere submission of financial records and computation of income does not give clear picture for the Assessing Officer to verify the same. In our considered view assessee has to submit the relevant contract notes and working of the various contracts which has matured on April 2017 before Assessing Officer and submit the gain / loss recorded by the assessee in previous year as well as the loss / gains recorded by the assessee during the current assessment year. Since it is a factual matter and which requires detailed verification, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to verify the same we also direct the assessee to submit the relevant information before Assessing Officer. Accordingly, the Assessing Officer is directed to verify the same before allowing the deduction claimed by the assessee. Accordingly, Ground Nos. 2 and 3 raised by the assessee is allowed for statistical purpose. Reversal of provision for doubtful debts - AO has rejected the claim for the reason that assessee has not filed one to one correlation of the provision of doubtful debts - HELD THAT - After considering the submissions of the assessee we observe from the record that assessee is following method of accounting consistently over the years and assessee creates provision for doubtful debts and reverses the same in computation of income. Therefore, we direct the AO to verify the claim of the assessee that the assessee created the provision for doubtful debts in profit and loss account. However, reverses the same while computing the computation of income for the purposes of taxation in the same assessment year. Therefore, we direct the AO to verify the claim of the assessee and allow the same. Ground No.4 raised by the assessee is allowed for statistical purpose. Interest credit to profit and loss account as required by Accounting standards IND-AS- 109 - claim of the assessee that recognizing the finance instrument at fair value also results in rental expenses which is not incurred but should therefore also be allowed as an expenses on the same principle while computing the total income of the assessee - HELD THAT - Since Ld. DRP has not given clear findings and Assessing Officer also not verified the claim of the assessee, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to verify the claim of the assessee in detail and allow the same after due verification. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments. Ground No. 6 is allowed for statistical purpose. Disallowance u/s 14A - suo moto addition made by assessee - mandation of recording satisfaction - HELD THAT - We observe from the record that Assessing Officer while passing the final assessment order made a small clerical error of determining the net disallowance of ₹. 60,35,270/- instead of ₹. 6,35,270/- after adjusting the suomoto disallowance made by the assessee. Since the mistake is apparent on record we direct the Assessing Officer to make the disallowance of ₹. 6,35,270/- only. With regard to the objections raised by the assessee on the non-recording of satisfaction by the Assessing Officer we are not inclined to accept the above submissions. Accordingly, Ground No. 7 raised by the assessee is dismissed and Ground No. 8 raised by the assessee is allowed. Addition u/s 69C - unexplained sales - non-reporting of export sales of products - HELD THAT - it is brought to our notice that assessee is re-exporting the goods after providing the services. Therefore, these goods re-exported are nothing but the goods imported by the assessee and after providing the services same goods were being re-exported. He agreed that certain documents were filed before Assessing Officer. However, he submitted that additional evidences will prove the nature of transactions. Considering the importance of these documents we deem it fit and proper to admit the additional evidences and remit this issue back to the file of the Assessing Officer to verify the same and after due verification if found proper the claim of the assessee may be allowed. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments - Ground No. 9 raised by the assessee is allowed for statistical purpose. Double taxation relief claimed for not filing any supporting documents of DIT relief - HELD THAT - Before us, assessee has filed Form 67 which requires verification. Accordingly, we direct the Assessing Officer to verify the above Form 67 and claim of the assessee and after due verification as per law. Assessee shall cooperate with the proceedings before the AO without taking unnecessary adjournments. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Accordingly, Ground No. 10 raised by the assessee is allowed for statistical purpose. Credit of dividend distribution tax claimed by the assessee - assessee submitted evidences of remittance and these evidences are against the credit of dividend distribution tax claimed by the assessee - HELD THAT - We deem it fit and proper to remit these evidences to the file of the AO with the direction to verify the same and allow the same as per law. Assessee shall cooperate with the proceedings before the AO without taking unnecessary adjournments. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Accordingly, Ground No. 11 raised by the assessee is allowed for statistical purpose.
Issues Involved:
1. Transfer Pricing Issues 2. Non-Transfer Pricing Issues Summary: Transfer Pricing Issues: 1. Corporate Guarantee Commission: The Dispute Resolution Panel (DRP) confirmed the Transfer Pricing Officer's (TPO) determination of the arm's length rate of guarantee commission at 1.85% per annum, against the 0.65% per annum charged by the appellant company. The TPO used external CUP data from banks, which the appellant argued was inappropriate. The Tribunal allowed the appellant's ground, finding that the internal CUP (quotes from IDBI and ICICI banks) should be considered for benchmarking. Non-Transfer Pricing Issues: 2. Premia Income on Forward Contracts: The Assessing Officer (AO) added premia income to the total income without appreciating that it had already been offered to tax in earlier years. The Tribunal remitted the issue back to the AO for verification of the appellant's claim that the income was already taxed in previous years. 3. Reversal of Provision for Doubtful Debts: The AO did not allow the deduction claimed for the reversal of provision for doubtful debts. The Tribunal directed the AO to verify the appellant's claim that the provision was disallowed in the earlier years and allow the deduction if verified. 4. Interest Credited to Profit and Loss Account: The AO added interest credited as per Ind AS-109, which the appellant argued was merely an accounting treatment. The Tribunal remitted the issue back to the AO for verification. 5. Disallowance Under Section 14A: The AO disallowed expenses related to exempt income under Rule 8D. The Tribunal corrected a clerical error in the AO's calculation, reducing the disallowance to Rs. 6,35,270 from Rs. 60,35,270. 6. Unexplained Expenditure Under Section 69C: The AO added an amount as unexplained expenditure for prototypes and demos exported. The Tribunal admitted additional evidence and remitted the issue back to the AO for verification. 7. Double Taxation Relief: The AO rejected the appellant's claim for double taxation relief. The Tribunal remitted the issue back to the AO to verify the appellant's Form 67 and related documents. 8. Dividend Distribution Tax (DDT) Credit: The AO granted partial credit for DDT. The Tribunal remitted the issue back to the AO for verification of the appellant's claim. General Grounds: 9. General Grounds: The Tribunal dismissed the general grounds as they were not specific. Conclusion: The appeal was allowed for statistical purposes, with several issues remitted back to the AO for verification and appropriate action.
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