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TMI Blog2016 (5) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer under section 143(3) r.w.s. 144C(1) of the Income Tax Act, 1961 (in short 'the Act') dated 10/01/2012. Grounds of appeal raised by the assessee as well as Revenue read as under:- Assessee's Grounds of Appeal:- "Ground 1: Transfer pricing adjustment of Rs. 18,05,400/- in relation to corporate guarantee on behalf of a foreign subsidiary. On the given facts and circumstances of the case and in law, the Learned Commissioner of Incometax (Appeals) ('CIT(A)') erred in upholding the action of the Assessing Officer (the AO') in making addition of Rs. 18,05,400/to the total income of the Appellant on account of transfer pricing adjustment of guarantee commission on corporate guarantee issued by the Appellant on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % instead of 15% relying upon the decision of Hon'ble Kolkata ITAT in Samiran Majumdar {280 ITR (AT) 74 (Kolkata)]." 2. "Whether on the facts and circumstances of the case whether the CIT(A) is right in allowing depreciation on Switches & Routers at the rate of 60% instead of 15% relying upon the decision of Hon'ble ITAT, Special Bench, Mumbai in the case of Datacraft India Ltd. [ITA No. 7462 & 754/Mum/2007]." . 2. Before we proceed to adjudicate the respective Grounds of appeal, the background of the case is that the assessee is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of tour operator, travel agent, authorized dealer in foreign exchange, global service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this count. During the year under consideration, the assessee had provided a corporate guarantee on behalf of its associated enterprise M/s. Thomas Cook Mauritius Operations Co. Ltd. for banking facilities availed by it from HSBC bank to the extent of Rs. 6,01,80,000/-. The stand of the Transfer Pricing Officer was that in the absence of any guarantee fee commission earned by the assessee from such transaction, the same could not be said to have been recorded at an arm's length price. The Transfer Pricing Officer referred to the information gathered from Allahabad Bank and the State Bank of India with respect to the rate of guarantee commission fee and accordingly determined a rate of 3%, that was liable to be charged as an arm's length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead pointed out that in the following decisions of the Tribunal rate of 0.50% has been considered to be arm's length rate on account of fee for providing corporate guarantee. (1) M/s.Everest Kento Cylinders Ltd. vs. DCIT,ITA No.542/Mum/2012 order dated 23/11/2012. (2) Aditya Birla Minacs Worldwide Ltd. vs. DCIT, 56 taxman.com 317 (Mum-Trib) (3) M/s. Godrej Household Products Ltd. vs. Addl. CIT, ITA No.7369/Mum/2010 order dated 22/11/2013 (4) ACIT vs. Nimbus Communications Ltd., ITA No.3664/Mum/2010 dated 12/06/2013. It was also pointed out that so far as the decision of the Tribunal in the case of Everest Kento Cylinders Ltd.(supra) is concerned, the same has since been affirmed by the Hon'ble Bombay High Court vide ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associated enterprise to avail banking facilities from HSBC Bank in Mauritius. The Hon'ble Bombay High Court in the case of Everest Kento Cylinders Ltd.(supra) was considering a somewhat similar situation, where in the matter of guarantee commission fee the adjustment made by the income-tax authorities was based on instances of commercial banks providing guarantees. The Hon'ble Bombay High Court has explained that instances of commercial banks providing guarantees could not be compared to instances of issuance of corporate guarantee. As per Hon'ble Bombay High Court, when commercial banks issue bank guarantees, the same is quite distinct in character, than the situation where a corporate issues guarantee to the effect that, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and on the basis of the material available on record, we, therefore, proceed to uphold the rate of 0.50% for the purpose of determining the arm's length rate of the guarantee commission fee. In this view of the matter, we set-aside the order of CIT(Appeals) and direct the Assessing Officer to determine the addition in view of our aforesaid direction. Thus, on this aspect assessee partly succeeds. 7. The second Ground in the appeal relates to the action of the income-tax authorities in allowing depreciation @15% on data cable and other computer peripherals as against assessee's claim of depreciation of 60%. In this context, it was a common point between the parties that the aforesaid issue is identical to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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