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2018 (12) TMI 1647 - AT - Income TaxTP Adjustment - addition on account of Arm’s Length Price adjustment - Corporate Guarantee and Interest on loan - HELD THAT:- As decided in assessee's own case [2018 (10) TMI 1629 - ITAT DELHI] we deem it fit to modify the order of the CIT (A) in this regard to the extent that corporate guarantee fee @1% should be applied in the case of the assessee in place of 0.5% as has been applied by the CIT (A) . We accordingly direct the Assessing Officer to re-compute the ALP for corporate guarantee fee @1%. Thus, this ground stands partly allowed CIT (A) held that interest of both the loans was to be charged at LIBOR plus1.5%. We also note that the DRP for immediately preceding assessment year 2006-07 has held that the foreign loan given to UK subsidiary was to be benchmarked at LIBOR plus 100 bps plus certain risk adjustment and accordingly, rate of LIBOR plus 300 bps was proposed by the DRP. Although the CIT(A) has duly made a mention of this direction of the DRP for assessment year 2006-07, it is apparent that he has not considered the directions of the DRP while deciding this issue. We also note that the assessee has not filed any appeal against this direction of the DRP for assessment year 2006-07. Accordingly, in view of the factual matrix, this issue needs to be restored to the file of the CIT (A) to be decided afresh after considering the directions of the DRP in this regard in assessment year 2006-07 and after giving the assessee a proper opportunity present its case. Accordingly, this ground stands allowed for statistical purposes. Addition of excess claim of depreciation u/s 32 - capital subsidy under West Bengal Incentive Scheme, 2000 as part of interest fixed asset - AO reduced the cost of the fixed assets by the capital subsidy and consequently reduced depreciation - HELD THAT:- As decided in assessee's own case , [2018 (10) TMI 1629 - ITAT DELHI] CIT (A) has noted that he has examined the documents relating to West Bengal Incentive Scheme, 2000 and that further this subsidy is a one-time receipt. It has also been mentioned that nowhere on the perusal of the documents it was found that the subsidy was to be related to the reduction of the cost of fixed assets and, further the recipient of the subsidy was free to use the subsidy in any manner. We find that an identical issue had arisen in Bhagwati Sponge (P) Ltd. vs. DCIT [2016 (7) TMI 608 - ITAT KOLKATA] and the co-ordinate Bench held that the capital investment subsidy received from state government could not be reduced from the cost of capital asset for allowing depreciation - decided against revenue
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