ITAT ruled in favor of the assessee on TP adjustment for guarantee commission & ESOP expense. No disallowance u/s 14A as no exempt income earned.

The ITAT upheld the CIT(A)'s decision to restrict TP adjustment on guarantee commission to 0.2% for one financial year, finding TPO's 0.77% adjustment unjustified. The ITAT also supported CIT(A)'s deletion of 0.25% mark-up without basis. Regarding ESOP expenses, ITAT agreed with CIT(A) that discount on ESOP shares was deductible u/s 37(1) as it was not a capital expenditure. Disallowance u/s 14A was rejected as no exempt income was earned, following precedents that disallowance cannot exceed exempt income. Revenue's appeal was dismissed. .....

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