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TMI Blog2019 (4) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... a loan and charged interest thereon on notional basis. No question of law arises. Allowabilty of interest u/s. 36(1)(iii) - HELD THAT:- interest free advances to an AE - HELD THAT:- Tribunal came to the conclusion that the assessee had sufficient interest free loans out of which subject advances are made. The Tribunal referred to and relied upon the decision of this Court in the case of Commissioner of Income-tax V/s. Reliance Utilities and Power Ltd. reported in [2009 (1) TMI 4 - BOMBAY HIGH COURT] and deleted the disallowances. Addition for corporate guarantee commission by TPO - Tribunal restricted addition to 1% as against 5% by TPO - HELD THAT:- This Court in the case of CIT v. Everest Kento Cylinders Ltd. Reported in [2015 (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any capital appreciation ? 2. Whether on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal erred in deleting an adjustment made u/s. 36(1)(iii) towards interest on interest free loans advanced to the companies under the same management, relying on the decision of Hon'ble Bombay High Court decision in the case of M/s. Reliance Utilities and Power Ltd. ignoring the fact that the facts of the case are clearly distinguishable as the Assessing Officer in the assessment order has clearly brought out that the interest free funds of the assessee were invested in share investment and fixed assets and the assessee failed to prove the utilization of borrowed funds for its own business ? 2. Whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction in question was sham. The Tribunal observed that the TPO cannot question the commercial expediency of the assessee entered into such transaction. 3. We are broadly in agreement with the view of the Tribunal. The facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Nothing is brought on record by the Revenue to suggest that the transaction was sham. In absence of any material on record, the TPO could not have treated such transaction as a loan and charged interest thereon on notional basis. No question of law arises. 4. Question no.2 relates to the act of the assessee of making interest free advances to an AE. The Tribunal came to the conclusion that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar lines. The TPO had, however, added 5% by way of commission. 7. The learned Counsel for the assesseee drew our attention to a judgment of this Court in the case of Commissioner of Income-tax, Mumbai v. Everest Kento Cylinders Ltd. Reported in [2015] 58 taxmann.com 254 and submitted that there is a substantial difference between a bank guarantee and a corporate guarantee. He pointed out, that this Court in the said judgment in the case of Everest Kento Cylinders Ltd. (supra) has recognised that in view of inherent differences between the two lines of guarantee, rate of commission to be charged in each cases would be different. We may reproduce the relevant portion of the judgment of this Court : 10. Having considered submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate guarantee are distinct and separate from that of bank guarantee and accordingly we are of the view that commission charged cannot be called in question, in the manner TPO has done. In our view the comparison is not as between like transactions but the comparisons are between guarantees issued by the commercial banks as against a Corporate Guarantee issued by holding company for the benefit of its AE, a subsidiary company. In view of the above discussion we are of the view that the appeal does not raise any substantial question of law and it is dismissed. There will be no order as to costs. 8. It can thus be seen that, the Tribunal applied a lower percentage of commission in the present case considering that, what the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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