TMI Blog2014 (2) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. to disturb the same and make re-allocation on adhoc basis. We, therefore, delete the addition made by the A.O. by restricting the claim of the assessee for deduction u/s 80IB/80IC by reallocating the common indirect expenses and allow ground No. 1 2 of the assessee s appeal. TP Adjustment - treating the guarantee to a banker as an international transaction within the meaning of Section 92B - HELD THAT:- The issue covered in the grounds are covered by the decision of the Coordinate Bench in its own case in [ 2014 (4) TMI 520 - ITAT MUMBAI ] wherein take the rate of guarantee commission at 0.5% as ALP by respectfully following the decision of coordinate Bench of this Tribunal in the case of Nimbus Communications Ltd. [ 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) erred in confirming the action of the Assessing Officer in treating the guarantee to a banker as an international transaction within the meaning of Section 92B of the Act. 4. The Learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to consider the aggregate rate charged by ICICI bank at 2.25%, being 1.45% as financial guarantee and 0.8% as performance guarantee, instead of considering only the financial guarantee of 1.45%. 5. Without prejudice to Ground Nos. 3 and 4 above, the Appellant submits that the adjustment is arbitrary and excessive and ought to be deleted or reduced substantially . 2. At the time of hearing, the AR pointed out that the two issues involved in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible units being directly attributable to the said segment. The balance amount of overheads to the extent of Rs. 12.72 crores representing the indirect expenses were allocated by the assessee between the eligible business and non-eligible business in the ratio of turnover and this basis adopted by the assessee was accepted by the A.O. except in the case of advertisement publicity expenses amounting to Rs. 4.23 crores, schemes and promotions expenses amounting to Rs. 0.83 crores, miscellaneous expenses amounting to Rs. 0.72 crores, conveyance and traveling expenses amounting to Rs. 0.47 crores and rent, rate taxes amounting to Rs. 0.48 crores. As explained by the ld. counsel for the assessee before us, the expenditure on advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged by the A.O. since the gross profit ratio as shown by the assessee in the trading segment was 12.92% and even after allocating advertisement, schemes and promotions expenses on the basis of turnover, the profit of trading segment was 6.59%. 9. Similarly, the other indirect expenses on conveyance and traveling, rate and taxes and miscellaneous were incurred by the assessee during the normal course of its business of selling the finished goods, whether manufactured or procured from third party and since the said expenses were incurred equally for the benefit of eligible business as well as non-eligible business of trading, we are of the view that the basis of turnover adopted by the assessee to allocate the said expenses was more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are covered by the decision of the Coordinate Bench in its own case in ITA No. 7369/M/2010 and at para 15 of this order, the ITAT has held 15. We have considered the rival submissions and also perused the relevant material available on record. It is observed that a similar issue relating to determination of Arm s Length Rate of guarantee commission was involved in the case of Nimbus Communications Ltd. (supra) and the same was decided by the Tribunal vide para No. 10 of its order as under:- 10. As regards the rate of guarantee commission, it is noted that the arm s length price of guarantee commission was determined by the TPO by applying CUP method and the arithmetic mean of 1.5% of the guarantee commission charged by the HSBC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal s order reproduced above shows that the ALP of guarantee commission was determined by the TPO in the case of Nimbus Communications Ltd. (supra) by applying CUP method and the arithmetic mean of 1.5% of the guarantee commission charged by the HSBC Bank in the range of 0.15 to 3% was taken as ALP. The ld. CIT(A) upheld the CUP method applied by the TPO but adopted the rate of 0.25% of guarantee fee as Arm s Length Price relying on the decision of French Court in the case of Societe Carrefour. The Tribunal, however, adopted the rate of guarantee commission at 0.5% as the ALP after taking into consideration the rates of guarantee commission charged by the various banks including the guarantee commission charged by HSBC Ltd. in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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