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TMI Blog2025 (1) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the guidelines laid down in the Act and the Rules were followed by determining the arm's length price. There can be no absolute proposition that the range of corporate guaranteed fees or determining the arm's length price should follow a particular range or formula.
Addition of interest expenditure/s 36(1)(iii) - commercial expediency in advancing interest free loans to sister concern - HELD THAT:- We are satisfied that it must be decided against the Revenue and in favour of the assessee, given the decision of South Indian Bank Limited [2021 (9) TMI 566 - SUPREME COURT] X X X X Extracts X X X X X X X X Extracts X X X X ..... ax-2(3), Mumbai & Ors [2016] 67 taxmann.com 42. The Hon'ble Supreme Court has expressly approved this decision in the case of South Indian Bank Limited (supra). Therefore, question (b) is answered favouring the assessee and against the Revenue. 5. In so far as question (a) is concerned, we find that the Tribunal, after referring to this Court's decision in Commissioner of Income-tax vs. Everest Kento Cylinders Ltd (2015) 378 ITR 57. has held that the charges for issuing the corporate guarantee by a parent to its subsidiary should be within the range of 0.20% to 0.50%. Based on such a reading of this Court's decision, the Tribunal has taken the fees at 0.50%. 6. The entire discussion on the above issue reads as follows:- "We have heard r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal has not discussed why the facts in the present case were comparable to those in Everest Kento Cylinders Ltd. (supra). The Tribunal has also not discussed the method, if any, adopted for determining the arm's length price. The Tribunal did not benefit from the Hon'ble Supreme Court's decision in Sap Labs India (P.) Ltd. vs. Income-tax Officer [2023] 149 taxmann.com 327 (SC). On these grounds, the Tribunal's impugned order warrants interference followed by a remand for reconsidering the matter in the light of the decision in Sap Labs India (P.) Ltd. (supra). In Sap Labs India (P.) Ltd. (supra), the Hon'ble Supreme Court did not approve the adoption of some straitjacket formula in all cases. However, this does not mean that comparable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged before the High Court, it is always open for the High Court to consider and examine whether the arm's length price has been determined while taking into consideration the relevant guidelines under the Act and the Rules. Even the High Court can also examine the question of comparability of two companies or selection of filters and examine whether the same is done judiciously and on the basis of the relevant material/evidence on record. The High Court can also examine whether the comparable transactions have been taken into consideration properly or not, i.e., to the extent non-comparable transactions are considered as comparable transactions or not. Therefore, the view taken by the Karnataka High Court in the case of Softbrands In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove reasons, we answer substantial questions of law at (a) favouring the Revenue and against the assessee. 10. Further, we set aside the Tribunal's impugned order to the extent that it concerns a substantial question of law (a) and remand the matter to the Tribunal for fresh consideration, given our above observations and the observations of the Hon'ble Supreme Court in the case of Sap Labs India (P.) Ltd. (supra). However, we clarify that we have not examined the merits of the matter. Therefore, all parties' contentions are left open to be determined by the Tribunal afresh considering the above. 11. The Appeal is partly allowed in the above terms. There shall be no order for costs. 12. The parties must file an authenticated copy of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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