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TMI Blog2023 (8) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the AEs. Thus we hereby hold that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. Decided in favour of assessee partly. - SHRI DUVVURU RL REDDY, HON BLE JUDICIAL MEMBER and SHRI S BALAKRISHNAN, HON BLE ACCOUNTANT MEMBER For the Appellant : Smt. Suvibha Nolkha, CA For the Respondent : Sri ON Hari Prasada Rao, Sr. ORDER PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-10, Hyderabad [Ld. CIT(A)], in DIN Order No. ITBA/APL/S/250/2022- 23/1045814173(1), dated 22/09/2022 arising out of the order passed U/s. 143(3) r.w.s 144C of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. The Ld. TPO in his report made U/s. 92CA(3) of the Act observed that during the year, the assessee has provided Corporate Guarantee on behalf of 3F Singapore and 3F Ghana. The Ld. TPO also observed that the assessee has reported the same in Form 3CEB as shareholder activity by using other method. Before the Ld. TPO it is the submission of the assessee that the corporate guarantee given by them does not fall within the definition of international transaction. The assessee further submitted that 3F India has provided shareholder corporate guarantee on behalf of its overseas subsidiaries 3F Global (Singapore) Pte Limited, Singapore (3F Singapore) and 3F Ghana Commodities Limited, Ghana (3F Ghana) in the capacity of a holding company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antee so given and it was the assessee who benefitted as a result of commercial benefits secured for future and that the business strategy should be taken into consideration while making any TP adjustments in respect of such transaction. 3. After considering the submissions of the assessee as well as on perusal of the relevant information obtained from 7 commercial banks u/s. 133(6) of the Act and the fee charged by them on the Financial Guarantee, the Ld. TPO observed that the various banks charge fee ranging from 1.6% to 3%. Hence, for computation of ALP the median of the various rates was adopted as the ALP as provided in Rule 10B of the IT Rules, 1962 and thus the Ld. TPO worked out the ALP to 2% for the corporate guarantee of above Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the benefit of the 3F Group. b. Not appreciating that the shareholder corporate guarantee is not covered under definition of international transaction u/s. 92B of the Act. c. Without prejudice to the above ground, not undertaking an objective analysis for determining the ALP on the shareholders corporate guarantee. d. Further, without prejudice to the above ground, not making adjustments for the differences in the comparable transactions selected vis- -vis corporate guarantee provided by the company. e. Without prejudice to the above, not considering the bank guarantee commission rate charged by the bank to the appellant as a benchmark. OTHER GROUNDS 2. Levy of interest U/s. 234B of the Act. 3. Levy of interest U/s. 234C of the Act. 4. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/Viz/2017, dated 16/2/2023) wherein the Tribunal, after analyzing the issues at length, held that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. For the sake of reference and brevity, we hereby extract the relevant paragraphs of the said Tribunal s order for the AY 2014- 15 (supra) which reads as under: 6. We have heard the rival submissions and perused he material available on record and the orders of the Ld. Revenue Authorities. It is observed from the order of the Ld. TPO that the Ld. TPO has obtained a rate of fees charged by State Bank of India on the issuance of financial guarantees given for the computation of ALP and the tested par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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