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TMI Blog2024 (12) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee: Shri Anish Thacker a/w Shri Pranay Gandhi Shri Lekh Mehta, A/Rs For the Revenue: Shri Uodal Raj Singh, Sr. D/R ORDER PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 31/05/2024 framed u/s 143(3) r.w.s. 144C(13) of the Act pertaining to AY 2020-21. 2. Representatives of both the sides were heard at length. Case records were carefully perused and the relevant documentary evidence duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 3. Briefly stated the facts of the case are that the assessee is an engineering procurement and construction contracting company established in 1979. It provides turnkey solutions for the construction of roads, bridges, fully integrated rail metro systems, commercial building airports and setting up power generation plants, power transmission distribution systems, chemical process plants, water and waste management and complete mining and metal purification systems. 3.1. Return for the year was filed electronically on 15/02/2021 declaring total income of Rs. 174,06,88,920/-. The return was selected for scrutiny and accordingly statutory notices were issued and served upon the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Nesma Telecom and Technology Company Ltd., has taken a loan from Alawwal Bank against which the assessee had extended corporate guarantee in proportion to its shareholding. The facility with banks includes both fund- based and non-fund-based facilities. The TPO noticed that the assessee has not charged any Corporate Guarantee fee from its AE NESMA TPL. 5.1. The TPO issued notice u/s 133(6) of the Act to different banks and collected data pertaining to the guarantee fee that has been charged during the relevant year. The result of the notices sent u/s 133(6) of the Act is as under:- Bank Name Rate Standard Chartered Bank 0.75% CITI Bank 0.90% Union Bank of India 1.20% HDFC 1.80% IDBI 2.00% State Bank of India 2.10% ICICI 2.50% Count 7 Median 1.80% 35th Percentile 1.20% 65th Percentile 2.00% 5.1.1. The TPO found that the average bank guarantee rates are 1.80%. Accordingly, a show cause notice was issued to the assessee explaining it to show cause as to why adjustments should not be made @1.80% on corporate guarantee provided by the assessee to its AE. The assessee filed detailed reply strongly contending that the relationship between the parent and the subsidiary is significant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TS-43-ITAT- 2016(Mum)-TP, ITA:: 1424/Mum/2014; ITA:. 1332/Mum/2014 2009-10 0.50% Everest Kanto Cylinder Ltd. vs ACIT TS-105-ITAT-2015(Mum)-TP ITA NO.550/Mum/2014 ITA NO. 1386/Mum2014 2008-09 0.50% Manugraph India Lid: OME TS-113-ITAT-2015(Mum)-TP ITA No. 4761/Mum/2013 2007-08 0.50% Aditya Birla Minacs Worldwide Ltd. vs DCIT TS-114-ITAT-2015(Mum)-TP ITA No. 7033/Mum/2012 ITA No. 7142/Mum/2012 2008-09 0.50% Rain Commodities Limited TS-594-ITAT-2015(HYD)-TP ITA No. 157/Hyd/2014 ITA No. 276/Hyd/2014 2009-10 and 2010-112008-09 0.50% Cox and Kings Ltd TS-540-ITAT-2015(Mum)-TP I.T.A. No. 1354/M/2014 I.T.A. No. 7770/M/2014 2010-11 0.50% Manugraph India Ltd vs DCIT TS-463-ITAT-2015(Mum)-TP ITA No. : 491/Mum/2015 ITA No. : 1072/Mum/2015 2007-08 0.50% M/S Everest Kento Cylinders Ltd TS-200-HC-2015(BOM)-TP INCOME TAX APPEAL NO. 1165 OF 2013 2006-07 And 2007-08 0.50% Godrej Sara Lee Ltd vs. ACIT ITA No. : 7227/Mum/2011 2005-06 0.50% Godrej Household Products Ltd. (TS-330-ITAT-2013(Mum)-TP) 2006-07 0.50% Reliance Industries Limited vs. ACIT in ITA No.4475/Mum/2007 2006-07 0.38% M/s. Asian Paints Ltd. v. ACIT, LTU ITA No. 408/Mum/2010 2005-06 0.25% M/s. Everest Kanto Cylinder Ltd. vs. DCIT ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that corporate guarantee commission is an international transaction. The AR only disputes 2% attributed for imputing ALP of corporate guarantee commission. On identical facts in the case of Manipal Global Education Services Pvt. Ltd. v. DCIT (supra), the Bangalore Bench of the Tribunal had imputed 0.50% as cost, instead of 2% arrived by the TPO. (A copy of TPO's order u/s 92CA in the case of Manipal Global Education Services Pvt.Ltd. is placed on record). The TPO in the cited case also arrived at 2% by taking the credit rating of the tax payer just like this case. The relevant finding of the ITAT in the case of Manipal Global Education Services Pvt. Ltd. v. DCIT (supra), reads as follow:- 8. We have heard the parties on this issue and perused the record. We notice that the Tribunal is consistently holding the transaction of providing Corporate Guarantee as an international transaction. Hence the same is required to be examined under Arms length principles. There should not be any dispute that the provision of Corporate guarantee to its subsidiary in order to enable it to avail loans would bring benefit to the subsidiary, in which case, it is proper to compensate the assessee ..... 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