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2021 (4) TMI 203 - AT - Income TaxTP Adjustment - Arm's length price of the corporate guarantee fee - international transaction u/s 92B or not? - HELD THAT:- A corporate guarantee indeed forms an international transaction u/s. 92B of the Act. And that Explanation to section 92B; inserted by the Finance Act 2012 w.e.f. 01/04/2002 is applicable with retrospective effect. As assessee's reliance on Bharthi Airtel [2014 (3) TMI 496 - ITAT DELHI] and other catena of case law (supra) in this regard stand overruled. We thus decline the assessee's argument against the corporate guarantee as an international transaction in principle. Lower authorities have also included a letter of comfort as part of corporate guarantee which goes against the case law PCIT Vs. Redington (India) Ltd., Chennai [2020 (12) TMI 516 - MADRAS HIGH COURT] Therefore, we find prima-facie merit in assessee's instant latter argument. The fact also remains that the learned TPO is yet to examine the corporate guarantee fee amount as segregated by the so called letter of comfort amount. We thus affirm the impugned corporate guarantee adjustment addition in principle and leave it to open for the TPO to finalize consequential computation in above terms. We are also of the considered opinion that the issue should be examined by the TPO calling for information from the Bank that what is the impact of the counter bank guarantee given by the assessee whether is there any liability fasten on the company in case of counter bank guarantee. If found yes, then the DRP's decision is correct. If there is no liability as submitted by the ld. AR or the assessee, then, it is a mere letter of comfort and no addition is called for. The case law relied upon by the ld. AR of the assessee is distinguishable on fact to the case of the assessee and the same are not of any help to the assessee' case. We reject the submissions of the ld. AR of the assessee that the issue of corporate guarantee by the assessee to its AEs is not an international transaction and direct the AO/TPO to decide the issue - Appeal of the assessee is treated as allowed for statistical purposes.
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