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TMI Blog2024 (7) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... saction's arm's length nature. For A.Y. 2009-10, the Tribunal had deleted a similar addition, justifying the payment of guarantee commission. This decision was upheld by the Hon ble Gujarat High Court [ 2018 (7) TMI 2349 - GUJARAT HIGH COURT] which noted the consistency of the assessee's operating margin and the benefit of lower borrowing costs compared to bank rates, thereby justifying the guarantee fee. The present case mirrors the facts and circumstances of A.Y. 2009-10, where the addition was deleted by the Tribunal and upheld by the Hon ble Gujarat High Court. Consistency in judicial decisions is crucial to maintain legal certainty and fairness. Thus, we find that the TP adjustment made by the AO/TPO and upheld by the DRP i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee. It was further pointed out that the Tribunal while confirming the order of the lower authorities did not appreciate the fact that similar addition made by the Department for the A.Y. 2009-10 was deleted by the ITAT by holding that the payment for guarantee commission was justifiable, and therefore, the finding of the Tribunal for the impugned year is contrary to its earlier decision on the similar issue. Therefore, this being a mistake apparent on record of the case and the Tribunal found merit in the contention of the assessee decided to reconsider the issue and decided to recall the order of Tribunal qua ITA No.930/Ahd/2015 dated 31-5-2023 to the limited purposed of adjudication of Ground No. 4 only. 3. Therefore, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest rate on account of guarantee and the transaction sought to be propagated by the assessee as comparable adopting CUP method was not comparable. Accordingly, the transaction of the AE giving guarantee on behalf of the assessee company was benchmarked at NIL, as no service of any value was found rendered and upward adjustment to the extent of Rs. 52,91,667/- was proposed to be made by the TPO. The relevant finding of the TPO in this regard at para 6 of his order are as under: 6. As clearly brought out in the show cause letter issued to the assessee and the discussion made above following distinct features are noted in respect of this transaction. i. The loan has been taken from a related party Bosch India. The guarantee has also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The nature of the loan transaction was short term funding while the loan from related party is in the nature of long-term funding. x. Without prejudice, it is seen that the bank has provided the funds in the nature of guarantee for bank guarantees, shipping guarantees, bid bonds, performance bonds and export guarantees to the assessee, after obtaining the counter guarantee from the assessee. This clearly means that the bank has covered is risk and after coverage of such-risk, no guarantee fees has been charged from the assessee. In the case of loan from related party it is very clear that the risk of granting the loan to the assessee was negligible on account of the healthy reserves, and working capital position of the assessee and thus th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Bosch Ltd. Lender being listed company wanted guarantee / security. The assessee availed this guarantee from the AE - Robert Bosch Gmbh by paying 0.75% guarantee fees. Thus, the effective rate of interest at which it paid interest to the group company was 11.75% including guarantee fee of 0.75% paid to AE. This arrangement has which has benefited the assessee. 5.1. The Ld.Senior Counsel for the assessee also contended that the Tribunal has deleted the addition made by the Department in A.Y. 2009-10 on similar facts in assessee s own case. He further stated that the said order of tribunal was challenged by the Revenue in Hon ble Jurisdictional High Court in Tax Appeal No. 886 of 2018 and the Hon ble High Court vide order dated 23.7.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in earlier assessment year, where no adjustment was made by the AO / TPO. Another undisputed fact is that the operating margin of the assessee company is at 18.21% which is much better as compared to the average margin of 10.36% of the other comparables. On this account also, the payment of guarantee commission is justifiable. Considering the facts in totality in the light of the previous history of the assessee, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground no.4 is accordingly dismissed. Considering the aforesaid facts and circumstances, it cannot be said that the learned ITAT has committed any error in deleting the addition made on account of Transfer Pricing Adjustment of Rs. 23,51,667/- . No sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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