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TMI Blog2018 (2) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rain Cements Ltd. 2. The assessee has raised the following the grounds of appeal: Ground with respect to adjustment on shareholder corporate guarantee 1. Rejecting the submissions of the Company and making TP adjustment by imputing notional fee on Shareholders Corporate Guarantee, by treating it as international transaction Making adjustment on the shareholders corporate guarantee provided to the bank of the AE, without appreciating the fact that guarantee was provided to the AE for the purpose of its business operations Not appreciating that the shareholders corporate guarantee is not covered under the definition of international transaction u/s 92B of the Income-tax Act, 1961("the Act") Not appreciating that the amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate guarantee issued to Rain CII Carbon LLC, USA Inc. wherein the assessee has guaranteed the loans availed by its AEs and TPO noted that no fees was charged for such guarantee. The TPO analysed the interest coverage ratio and the debt equity ratio of the assessee and its AE, observed that the assessee was showing lower debt equity ratio and higher interest coverage and hence enjoys a better credit rating as compared to its AE. Thus, he was of the opinion that the guarantee given by the assessee converted a risky loan into a risk free loan to the bankers, which provided loans to the assessee's AE in USA and therefore, assessee carries huge costs in terms the risks taken and therefore is required to be compensated in the form of fee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that amendment to section 92B is applicable prospectively and accordingly deleted the corporate guarantee addition. Copies of the said orders are on record. 6. The. Ld. DR on the other hand, neither controverted the submission of the AR nor brought any contrary decision in this regard. 7. Considered the rival submissions and perused the material on record. We find that the coordinate bench in assessee's own cases and its group cases held that amendment to section 92B are applicable prospectively from AY 2013-14. Therefore, the amended provision is not applicable to the present AY under consideration. Therefore, the ground raised by the assessee is allowed. 8. As regards ground No. 2 relates to disallowance u/s 14A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emitted this issue back to the file of the AO to verify the contention of the assessee and, if, found correct, the investment should be excluded from the calculation under rule 8D(2)(iii). Therefore, we are also inclined to remit this issue back to the file of the AO to verify the contention of the assessee. 11.1 With regard to investment in Moonglow company, which is overseas investment, we direct the AO to include those investments which have generated exempt income and exclude those which have generated taxable income or not generated any income as per the provisions of section 14A, as per which, we have to exclude those expenses which are connected with the generation of exempt income. Therefore, ground raised by the assessee in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation before the AO and avail the benefit as per the directions of DRP. Therefore, grounds raised by the assessee are dismissed. ITA No. 1728/Hyd/2016 in case of Rain Industries Ltd. 16. Ground No. 1 regarding corporate guarantee is similar to the ground decided in the case of Rain Cements Ltd., (supra). Therefore, following the decision therein, we allow this ground. 17. Ground No. 2 regarding disallowance u/s 14A, is similar to the ground decided in the case of Rain Cements Ltd., (supra). Therefore, following the decision therein, we remit this issue also back to the file of AO. Accordingly, this ground is allowed for statistical purposes. 18. Ground No. 3 relating to not providing credit of prepaid taxes to the tune of Rs. 4,15,20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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