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2021 (9) TMI 1393 - AT - Income TaxCorporate guarantee adjustment @2% commission rate - AR contention before us is that the assessee has not derived any income since the corresponding corporate guarantee’s object was to help the overseas associated enterprise ‘AE’ which nowhere yielded any returns thereupon - HELD THAT:- We express our inability to accept the assessee’s instant former substantive grievance. We make it clear that we are dealing with Chapter-X of the Act which is in the nature of a “Special Provision” not dependent upon actually derived income component; whatsoever. Coupled with this, hon'ble Madras high court’s decision PCIT Vs. M/s.Redington (India) Ltd., [2020 (12) TMI 516 - MADRAS HIGH COURT] holds that a corporate guarantee to be an international transaction u/s.92B, Explanation-(c) with retrospective effect from 01-04-2001. We thus, affirm the impugned corporate guarantee adjustment in principle. Quantification of the impugned guarantee - We affirm the impugned adjustment @0.875% as against the assessee’s stand that the same ought to be taken as 0.5% only. We therefore partly accept both the learned representatives’ arguments against and in favour @2% commission in issue to this limited extent. The assessee’s instant former substantive ground succeeds in above terms. ALP adjustment pertaining to interest on receivables emanating from the order of TPO’s and DRP’s directions going by interest rate @7.5% as per SBI domestic term deposits returns - As we need not delve much deeper qua the relevant facts pertaining to the instant issue. We find that assuming but not accepting that the ld.lower authorities have rightly found the assessee’s interest receivables as beyond the period involving uncontrolled transactions, the impugned adjustment is not liable to be sustained for the sole reason that the same has not only been made as per ‘LIBOR’ rate applicable in case of international transactions after taking State Bank of India’s term deposit(s) rate only but also no comparable to this effect in the very segment has been found so as to form the necessary benchmarking in uncontrolled circumstances. The impugned ALP adjustment is directed to be deleted therefore.
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