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TMI Blog2017 (4) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... overed from AE should be 0.50% which would meet the arms length requirement. Thus, under the facts and circumstances of the case, we direct the TPO/Assessing Officer to take the corporate guarantee fee @ 0.50% and make the adjustment accordingly Disallowance of depreciation on intangible assets confirmed Disallowance on account of provisions for post retirement medical scheme - Held that:- As held in assessee’s own case for Ay 2009-10 similar liability has been held to be an unascertained liability which was not allowable as a deduction under section 37(1) of the Act. Disallowance of prior period expenses - Held that:- Assessee has not filed any documentary evidence even before us to substantiate his claim or the payment receipt with regard to service tax for claiming exemption u/s 43B of the Act. However, considering the contention of ld. AR of the assessee, we restore this ground of appeal to the file of AO to examine the issue afresh, if the claim of the assessee is covered by the prevision of section 43B of the Act and passed the order in accordance with law. - ITA No. 269/Mum/2014 - - - Dated:- 15-3-2017 - Sh. Rajendra, Accountant Member and Pawan Singh, Judicial M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A), the adjustment on account of corporate guarantee as well as disallowance was sustained. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. 3. We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. First ground of appeal relates to Transfer Pricing Adjustment of ₹ 2,16,986/- on account of commission on corporate guarantee. The ld. AR of the assessee argued that this ground of appeal is covered in favour of assessee by a number of decision by the Tribunal including the decision of of Everest Kanto Cylinder Ltd. It was further argued by ld. AR of the assessee that the Tribunal in case of Everest Kanto Cylinder Ltd. vs. ACIT upheld the guarantee commission rate by .5% which has been confirmed by Hon ble Jurisdictional High Court in Everest Kanto Cylinder Ltd. (2012) 34 taxman 19. On the other hand, ld. DR for the Revenue argued that each and every case has to be adjudged on its own case and there are various corporate guarantee commissions @ 2 to 3% have been accepted. 4. We have considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between 0.25% and 0.50% and in support of which he relied on various decisions. He has not stressed on this issue, whether corporate guarantee is an international transaction or not. Whence assessee before us is not pursuing the matter, we are also not inclined to adjudicate the issue. On merits, Ld. CIT DR tried to justify the charging of Taxpundit.org ITA No.1310/M/2016 M/s. Videcon Industries Ltd. 11 corporate guarantee commission @ 3% and submitted that there are various decisions wherein corporate guarantee commission of 2% to 3% have been accepted. 11. After considering the rival submissions and on perusal of the impugned orders, we find that it is an undisputed fact that the assessee has given corporate guarantees to financial institution/banks in respect of loan or credit facilities extended to its two AEs and letter of undertaking to the lenders in the case of another AE. For providing such corporate guarantee it has recovered 0.25% as guarantee commission. In support of charging of 0.25%, the assessee, first of all, contended that the loans for which the assessee has given guarantee are primarily covered by pledged securities, hypothecation of debtors balances and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that assessee has opening share capital on free reserve of ₹ 9011.3 Lakhs as against the investment of ₹ 0.01 Lakhs only and closing share capital and free reserve of ₹ 12389.88 Lakhs as per page 9-14 of Paper Book (PB). On the other hand, ld. DR for the Revenue supported the order of authorities below. We have considered the rival contention of the parties and gone through the orders of authorities below 8. We have considered the rival contentions of the parties and noticed that the similar issue was adjudicated by the Tribunal for AY 2009-10 in ITA No. 1310/M/2013 and in cross appeal of Revenue vide ITA No.1822/M/2013 decided on 31.07.2015. Hence, we restore this ground of appeal to the file of AO to decide the issue afresh in accordance with the direction of Tribunal in order dated 31.07.2015. Before, passing order the AO shall grant opportunity to the assessee to provide necessary information and evidences in their possession. In the result this ground of appeal is allowed for statistical purpose. 9. Ground No.4 relates to disallowance of ₹ 7,19,965/- on account of provisions for post retirement medical scheme. The ld. AR of the assessee argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked to give explanation with regard to the said expenses, the assessee filed its reply and contended that although the statutory expenses relates to prior years when those were adopted to P L A/c of FY 2007-08 and crystallizes in the order under reference. It was further contended that these expenses are regular in nature and cannot be disallowed as expenses for this year. The AO not accepted the contention of the assessee holding that assessee is following the mercantile system of accounting and the amount is inadmissible as it does not pertain to the period for which income is being assessed. The ld. CIT(A) while considering this Ground of Appeal concluded that assessee contended that this amount has been paid on 07.05.2007 and claimed deduction u/s 43B of the Act. However, the assessee has not brought on record the evidence that this expenditure was debited to the P L A/c on preceding year and confirmed the action of AO. 13. We have noticed that assessee has not filed any documentary evidence even before us to substantiate his claim or the payment receipt with regard to service tax for claiming exemption u/s 43B of the Act. However, considering the contention of ld. AR o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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