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TMI Blog2018 (8) TMI 1816X X X X Extracts X X X X X X X X Extracts X X X X ..... RO INK LIMITED VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX VAPI RANGE, VAPI [ 2015 (12) TMI 143 - ITAT AHMEDABAD] Thus transfer pricing adjustment on account of corporate guarantee fee made during the years under consideration are bad in law. Respectfully following the decision of the coordinate benches [supra] we direct the Assessing Officer to delete the additions - Decided in favour of assessee - ITA No. 4959/DEL/2014, ITA No. 6243/DEL/2014, ITA No. 6244/DEL/2014, CO NO. 167/DEL/2017 A/o ITA No. 4959/DEL/2014, CO NO. 166/DEL/2017 A/o ITA No. 6243/DEL/2014, CO NO. 168/DEL/2017 A/o ITA No. 6244/DEL/2014 - - - Dated:- 17-5-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration, the TPO issued a notice u/s 92C of the Act. The documentation prescribed u/r 10D of the Income tax Act/Rules and other related details were called for and examined by the TPO. 5. While scrutinizing the balance sheet of the assessee, it was found that the assessee has given corporate guarantee to various banks and financial institutions and the same read as under: S.No. Description F.Y.2008-09 (Rs) 1. Corporate Guarantee given to Tashkent Toytepa Textile for deferred payment of purchase consideration on behalf of Spentex Tashkent Toytepa LLC Current Year USD 48,600,000 2,45, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 for purchase of its assets under the privatisation programme of Government of Uzbekistan. The payment consideration was spread over 4 years. STTL was a Special Purpose Vehicle for the assessee s newly started Uzbekistan operations and the company was incorporated on 24.7.2006. Since STTL was only floated afresh, the Government of Uzbekistan required a letter of comfort from the assessee for deferred purchase consideration and hence, there was a corporate guarantee extended by the assessee. This is the same activity as in case of personal guarantee given by a Promoter Director for loan taken by his company for which he otherwise does not charge anything. Without providing this corporate guarantee, the assessee could not expand business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AEs. After discarding the reply/submissions of the assessee, the TPO made upward adjustment of ₹ 9,79,00,282/-. 8. Pursuant to the order of the TPO, the AO framed assessment u/s 143(3) r.w.s 144C of the Act and made addition of ₹ 9,79,00,282/-. 9. The assessee carried the matter before the CIT(A) and strongly contended that the bank guarantee does not come within the purview of international transaction and further pointed out that the bank guarantee fee bench marked by the TPO was excessive. In support, reliance was placed on various judicial decisions of the Tribunal. 10. After considering the facts and submissions and after considering the judicial decisions relied upon by the assessee, the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c)), should also be such as to have a bearing on profits, incomes, losses or assets of such enterprise; (ii) The onus is on the revenue to demonstrate that the transaction has a bearing on profits, income, losses or assets of the enterprise. The said impact has to be on real basis, even if in present or in future, and not on contingent or hypothetical basis. There has to be some material on record to indicate, even if not to establish it to hilt, that an intra AE international transaction has some impact on profits, income, losses or assets; (iii) When an assessee extends assistance to the AE, which does not cost anything to the assessee and particularly for which the assessee could not have realized money by givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave a bearing on profits, incomes, losses or assets of such enterprise; (ii) The onus is on the revenue to demonstrate that the transaction has a bearing on profits, income, losses or assets of the enterprise. The said impact has to be on real basis, even if in present or in future, and not on contingent or hypothetical basis. There has to be some material on record to indicate, even if not to establish it to hilt, that an intra AE international transaction has some impact on profits, income, losses or assets; (iii) When an assessee extends assistance to the AE, which does not cost anything to the assessee and particularly for which the assessee could not have realized money by giving it to someone else during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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