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TMI Blog2017 (11) TMI 1874X X X X Extracts X X X X X X X X Extracts X X X X ..... toline Industries Limited, USA and accordingly making a TP adjustment - HELD THAT:- In our view the benchmarking of the international transaction applying the flat rate of 13.25% of the bank rate is not proper. There is requirement for maintaining the principle of consistency from the Department side. Therefore, we remand this issue also to the file of the AO to verify the set principles of consistency and decide the issue afresh after granting reasonable opportunity of being heard to the assessee. Accordingly, Ground No.4(c) raised by the assessee is allowed for statistical purposes. TP adjustment for Foreign Exchange Loss - HELD THAT:- we perused the ledger extract connection to the foreign rate fluctuations and find the losses are mainly on account of balances linked to the accounts in Kotak Mahendra Bank C/A ₹ 44,76,000/- and Forex Benefit of ECB loan ₹ 10,38,287/-. Prima-facie, we find these amounts does not seem to be the ones relating to the international transaction involving the Associated Enterprises of the assessee. Therefore, we find it relevant to remit this issue also to the file of the AO for fresh adjudication. Assessee is directed to file rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general in nature and they can be dismissed as general. Referring to other Ground 4 which contains sub-grounds (a) to (f), Ld. Counsel read out the same and the same are extracted as under : 4. TPO/AO erred in making following specific TP adjustments (few of them have been erroneously upheld by DRP : (a) The Ld. TPO/AO erred in making a TP adjustment for recovery of management expenses to the tune of ₹ 12,80,000/- when the expenses are incurred by the assessee for his own investment purpose and not for or on behalf of the AE. (b) The Ld. TPO/AO erred in making and adjustment for mark up to be recovered from AE to the tune of ₹ 1,75498/- being the mark @13.71% on aforesaid ₹ 12,80,000/-. (c) The Ld. AO.TPO has erred in taking benchmarking rate of interest @13.25% as against assessee charging interest @8% for the loan given to Autoline Industries Limited, USA and accordingly making a TP adjustment of ₹ 41,16,095/-. The AO/TPO has considered certain components of charges (while calculating ALP) which were not paid or incurred by the assessee during the year under assessment. (d) The Ld. AO/TPO erred in making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AEs and the TPO is forced to arrive at such a decision in the absence of sufficient material before the TPO/AO/DRP. 5. Before us, at the outset, Ld. Counsel for the assessee brought our attention on the above facts and submitted that requisite details were furnished before the authorities. In this regard, he brought our attention to the ledger extract. Despite the same, the TPO wrongly treated the said transactions as international transactions and proceeded to benchmark the same as recoverable from the AEs of the assessee. Further, he submitted that the said issue should be remanded to the file of the AO for fresh adjudication and in the light of the facts that the said transactions are required to be treated as outside the scope of international transactions. In our view, without going into the merits of the same, there is requirement of facts relating to the correctness of the TPO decision of treating the same as international transactions when the transactions are not with the Associated Enterprises of the assessee. 6. On hearing both the parties, we find it is clear from the records that these transactions are independently undertaken with the profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that these losses constitute the result of gains is of the restatement of the existing loans with the banks. The banks are not its AEs and the loan transactions are not the international transactions for benchmarking by the TPO. According to Ld. Counsel, they do not constitute international transactions 11. After hearing both the parties, we perused the ledger extract connection to the foreign rate fluctuations and find the losses are mainly on account of balances linked to the accounts in Kotak Mahendra Bank C/A ₹ 44,76,000/- and Forex Benefit of ECB loan ₹ 10,38,287/-. Prima-facie, we find these amounts does not seem to be the ones relating to the international transaction involving the Associated Enterprises of the assessee. Therefore, we find it relevant to remit this issue also to the file of the AO for fresh adjudication. Assessee is directed to file relevant documents in support of the claim of the assessee. Accordingly, Ground No.4(d) is allowed for statistical purposes. 12. Ground No.4(e) relates to making of TP adjustments for recovery of Guarantee Fees amounting to ₹ 20,25,000/-, Relevant facts include that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) also, the amendment in the definition of international transaction under section 92B, to the extent it pertains to the issuance of corporate guarantee being outside the scope of international transaction cannot be said to be retrospective in effect. (para 18) Amendment in section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from Ist April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of section 92B have no application in the matter and impugned ALP adjustment must stand deleted. (para 22) 16. From the above, it is evident that the amendment to the Explanation to section 92B of the Act, though stated to be clarificatory has to be necessarily treated as effective from at best the A.Y. 2013-14 onwards and not to the A.Y. 2009-10 under consideration. In the current year, such guarantees does not constitute international transactions . Same is the ratio as held by the Delhi Bench of the Tribunal in the case of Bharti Airtel Ltd. (supra). While deciding the above, both the Benches have kept their reliance on the Delhi High Court judgment in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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