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2022 (3) TMI 1463 - AT - Income TaxTP Adjustment - transaction of ‘Payment for Corporate Guarantee Fees’ - international transaction or not? - TPO treated ‘Provision of Corporate Guarantee’ as a shareholder’s functions - HELD THAT:- TPO/AO/CIT(A) considered the provision of corporate guarantee only as a shareholder’s function being not in the nature of any service rendered by the A.E. and thus no payment was required to be paid to the A.E. As the TPO/AO rejected the combined benchmarking analysis conducted by the assessee and did not consider the said transaction as an international transaction, as claimed by the assessee, and benchmarked the same accordingly, we are of the view that matter be remanded to TPO only to benchmark the transaction of ‘Payment for Corporate Guarantee Fees’ as an international transaction. As in the present case, TPO/AO wrongly treated ‘Provision of Corporate Guarantee’ as a shareholder’s functions instead of treating the same as an international transaction under the provisions of Explanation (i) to section 92B of the Act and accordingly computed the ALP of the same at NIL. This is not a case where TPO computed the ALP by applying incorrect benchmarking method. Rather, in the present case, the TPO/AO erred in characterisation of the transaction resulting in erroneous conclusion and benchmarking. It is also not been disputed by the assessee that ‘‘Payment for Corporate Guarantee Fees’ is an international transaction as per Explanation (i) to section 92B of the Act. Thus, in view of the settled legal position and also the relevant statutory provisions, we deem it appropriate to restore the matter to the TPO/AO only to benchmark the transaction of ‘Payment for Corporate Guarantee Fees’ after considering the same as an international transaction. Needless to mention that before passing the order the AO/TPO shall grant opportunity of hearing to the assessee.
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