Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 1298 - ITAT BANGALORETP Adjustment - assessee had advanced loan to its overseas subsidiary and assessee charged interest at the rate of 3.24% per annum - interest was charged at LIBOR plus 300 points - HELD THAT:- As submitted that the assessee charged interest on loan at 3.24% p.a. This fact is also evident which is the notes to Audit report in Form No 3CEB. During the year under consideration, average USD LIBOR was 0.58%. Interest rate considering LIBOR + 300 bps would be 3.58%. This rate is within +/- 5% range applicable for the year under consideration as per second proviso to section 92C(2). Hence, the interest received from loan given to Sasken Inc, USA should be considered at arm’s length price. The TP addition should therefore be deleted. We direct the Ld.AO/TPO to consider the claim of the assessee based on the observation hereinabove. Accordingly this ground raised by the assessee stands allowed. Corporate guarantee given in respect of loan from banks availed by Sasken OY came to an end in September 2011 - There is a consistent approach taken by this Tribunal in adopting the rate of corporate guarantee at 0.5% in assessee’s own case. We direct the Ld.AO/TPO to restrict the corporate guarantee adjustment at 0.5% based on the outstanding payables from Nordea Bank during F.Y. 2011-12. Adjustment made on use of trademark “sasken” as royalty - Assessee contended that question of AE’s paying royalty does not arise - HELD THAT:- As decided in assessee own case [2021 (8) TMI 1359 - ITAT BANGALORE] passive association should be distinguished from active promotion of the MNE group's attributes that positively enhances the profit-making potential of particular members of the group. Each case must be determined according to its own facts and circumstances. Ld.TPO shall carry out necessary verification based on the which it must first be determined whether there is any Royalty that could be attributed. In the event Royalty is to be attributed, proper benchmarking needs to carried out the accordance with section 92CA of the Act, by selecting an authorised method and comparables. Adjustment proposed on software development segment - TPO rejected the TP analysis of the assessee in respect of the software services rendered and received by assessee which was done based on internal comparables - HELD THAT:- As margins of comparables as per the TPO for provision of services and receipt of services is 20.5% and 19.22% respectively and the above details have been not considered by the Ld.TPO/AO. In the interest of justice, we remand this issue to the Ld.AO/TPO to verify the above details. In the event, the margins computed at segmental levels are found to be within +5%, no adjustment is warranted. The Ld.AO/TPO is directed to consider the claim of assessee based on the above observations in accordance with law. Accordingly, this ground raised by assessee stands allowed for statistical purposes. Disallowance computed u/s. 14A r.w.r.8D - HELD THAT:- AO has not made any disallowance under Rule 8D(2)(ii) whereas the disallowance has been computed under Rule 8D(2)(iii). There is a conscious application of mind by the Ld.AO because of which no disallowance has been made under interest. We therefore cannot agree with the submissions of assessee that there needs to be an expressed satisfaction recorded by the Ld.AO. The act of the Ld.AO in computing the disallowance reveals that the accounts of the assessee has been verified. No merit in the Ld.AR’s argument that an expressed satisfaction has to be recorded by the Ld.AO. Computation of disallowance under Rule 8D(2)(iii), the ratio laid down by Hon’ble Special Bench of Delhi Tribunal in case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has to be followed. We direct the Ld.TPO to restrict the disallowance only to the extent of the investment that has yielded exempt income during the year under consideration under Rule 8D(2)(iii).
|