9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (1) TMI 1002 - AT - Income TaxTP adjustment - corporate guarantee commission addition @ 1.9% on the amount guaranteed as corporate guarantee given to AEs - HELD THAT - As per assessee s own case for the earlier AYs 2014-15 and 2016-17 as well as following the principle of consistency and respectfully following the decision of this Tribunal 2023 (2) TMI 1174 - ITAT VISAKHAPATNAM we hereby hold that the corporate guarantee commission is an international transaction and accordingly should be charged @ 0.50% on the corporate guarantee amount given to the AEs. Therefore we have no hesitation to delete the addition confirmed by the Ld. DRP being 1.9% of the corporate guarantee amount. Thus the grounds raised by the assessee are allowed. 1. ISSUES PRESENTED and CONSIDERED The core legal issues presented and considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justifiability of the TP Adjustment at 1.9% Relevant legal framework and precedents: The relevant legal framework involves the application of sections 92B(1) and 92CA of the Income Tax Act, 1961, which deal with international transactions and the computation of Arm's Length Price (ALP). Precedents include decisions from the Bombay High Court in CIT vs. Everest Kanto Ltd and the Madras High Court in CIT vs. Redington India Ltd. Court's interpretation and reasoning: The Tribunal noted that the TPO had used a median rate of 1.9% for the corporate guarantee fee based on information from commercial banks. However, the Tribunal highlighted its previous decisions in the assessee's own case for AYs 2014-15 and 2016-17, where it had determined that a 0.50% rate was appropriate. Key evidence and findings: The TPO relied on data from commercial banks to determine the 1.9% rate. However, the Tribunal found that in prior cases, a 0.50% rate was deemed appropriate based on judicial precedents and consistent application of the law. Application of law to facts: The Tribunal applied the principle of consistency, emphasizing that the same issue had been decided in the assessee's favor in previous years, thus supporting a 0.50% rate. Treatment of competing arguments: The Tribunal considered the Revenue's argument supporting the TPO's decision but found it unpersuasive in light of its own previous rulings and the principle of consistency. Conclusions: The Tribunal concluded that the corporate guarantee commission should be charged at 0.50% instead of 1.9%, aligning with its earlier decisions. Issue 2: Consistency with Previous Tribunal Decisions Relevant legal framework and precedents: The Tribunal relied on its own previous decisions and the principle of consistency in judicial decisions, referencing the doctrine of res judicata's inapplicability to tax matters. Court's interpretation and reasoning: The Tribunal emphasized that while res judicata does not apply, consistency in decision-making is crucial, especially when facts and circumstances remain unchanged. Key evidence and findings: The Tribunal referenced its prior rulings in the assessee's case, which had established a 0.50% rate for corporate guarantee fees. Application of law to facts: The Tribunal applied its previous rulings to the current case, finding no reason to deviate from the established rate of 0.50%. Treatment of competing arguments: The Tribunal acknowledged the Revenue's position but found the principle of consistency and previous decisions more compelling. Conclusions: The Tribunal upheld its earlier decisions, reinforcing the 0.50% rate for corporate guarantee fees. 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "We hereby hold that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs." Core principles established:
Final determinations on each issue:
In conclusion, the Tribunal allowed the appeal filed by the assessee, thereby reducing the corporate guarantee commission rate to 0.50% and emphasizing the significance of consistency in judicial decisions.
|
