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2018 (5) TMI 1945 - AT - Income TaxTransfer Pricing Adjustment - As argued assessee as well as its AE have incurred losses and hence no Arm’s Length Price adjustment can be made in respect of the international transactions with its AE - HELD THAT:- We find that in the case of Apollo Health Stree [2014 (12) TMI 515 - ITAT HYDERABAD] the Tribunal was considering the case of an assessee, who is the parent company of the group, and all the profits were flowing back to India and the DRP had given a finding that the TP adjustment could not be higher than the consolidated profits of the group. On appeal by the assessee against the order of the A.O not giving effect to the direction of the DRP, the Tribunal had held that the directions of the DRP have to be given effect to by the A.O. There is no finding of the Bench as to whether the global profits have to be considered for reference to the TPO for the determination of the Arm’s Length Price. Therefore, said decision is not applicable to the facts of the case before us. There was no decision as to correctness of the order of the DRP, and therefore it cannot be said to have been be decided on merits of the issue. In view of the same, the assessee’s ground of appeal No. 4(l) is rejected. MAM - method adopted by the TPO - assessee has adopted CPM method, whereas the TPO has adopted TNMM as the most appropriate method - HELD THAT:- At the time of hearing, the Ld. Counsel for the Assessee submitted that the assessee has no objection to the adoption of TNMM as the most appropriate method but submitted that only the segmental results of the comparable companies should be considered. He sought for such a direction to the TPO. In view of the agreement of the both parties, we remit the issue to the file of the TPO with a direction to consider only the segmental results of the assessee as well as the comparables, for determining at the Arm’s Length Price of the international transaction.. In the result, the ground of appeal No. 4 is partly allowed. Corporate guarantee as an international transaction - HELD THAT:- In the case of Dr. Reddy’s Laboratories Vs. ACIT [2017 (5) TMI 529 - ITAT HYDERABAD] wherein it has been held that before the amendment of Sec. 92B of the IT Act w.e.f A.Y 2013-14 , thus corporate guarantee cannot be considered as an international transaction Corporate guarantee is not an international transaction for the A.Y 2012-13 and the ground of appeal No. 5 is accordingly allowed. Advances to subsidiary companies - HELD THAT:- In the case before us, the nature of advances and the purpose of advances are not mentioned. Respectfully following the decision of the Coordinate Bench of this Tribunal in the case of GSS Infotech Ltd. Vs ACIT [2016 (7) TMI 243 - ITAT HYDERABAD] we remit the matter back to the A.O for consideration of the purpose of the advances and if it is a trade advance, thus no interest shall be leviable, but if it is treated as a loan, then the rate of interest would be at LIBOR plus percentage as directed by the Tribunal in the case of GSS infotech Ltd. Vs ACIT. Thus, the ground of appeal No. 6 is treated as partly allowed for statistical purposes. Interest on outstanding receivable - HELD THAT:- In the case before us the amount was received within a period of one year from the date of advance. Therefore, respectfully following the decision of the GSS INFOTECH LIMITED [2016 (7) TMI 243 - ITAT HYDERABAD], BARTRONICS INDIA LTD. VERSUS DY. COMMISSIONER OF INCOME TAX, CIRCLE – 1 (2) , HYDERABAD. [2017 (9) TMI 1649 - ITAT HYDERABAD] we hold that no interest is chargeable on the receivables. The ground of appeal No. 7 is accordingly treated as allowed.
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