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2023 (4) TMI 1254 - AT - Income TaxTP Adjustment - determining the ALP of corporate guarantee commission - whether the corporate bank guarantee given by the assessee on behalf of its AE is an international transaction or not? - HELD THAT:- The issue of whether the corporate bank guarantee given by the assessee on behalf of its AE is an international transaction or not, is no more res integra, as the explanation to section 92B of the Act itself had made it abundantly clear that if the assessee is providing the capital financing, including any type of long term or short term borrowing, lending or “guarantee” , purchase or sale etc., then such transaction shall be considered as international transaction. Undoubtedly, the assessee has given Corporate Guarantee on behalf of its AE, which fact has not been disputed by the assessee either before the TPO or before the DRP and, therefore, we are of the opinion that the corporate guarantee given by the assessee is an international transaction and, therefore, the same has rightly been held so by the lower authorities. Whether the corporate guarantee estimated by the DRP to the tune of 1% on the amount guaranteed as a corporate guarantee commission as against 0.10% was justified or not? - In our view, no third party would provide similar type of services/corporate guarantee on behalf of its AE and expose itself to the risk of giving the corporate guarantee. Therefore, the charges paid by the assessee to SBI cannot be compared for the purpose of determining the ALP of corporate guarantee commission. The Co-ordinate Bench in the case of Vivimed Labs [2022 (4) TMI 1514 - ITAT HYDERABAD] had adjudicated corporate guarantee commission @ 0.5% qua the extent of the amount of the assessee’s corporate guarantee actually utilised in these four assessment years. Thereafter, similar view had been taken by various Tribunals restricting the addition to 0.5% of the amount guaranteed as corporate guarantee commission. Thus we partly allow the ground of the assessee and restrict the addition to the tune of 0.5% on the amount guaranteed as corporate guarantee commission. Interest on Receivables - assessee had outstanding receivables during the year, which arise in the usual course of business of the assessee on sale of its products and being trade transactions, the assessee had extended normal credit for payment by trade debtors -directions of DRP to the Assessing Officer to charge of interest on so-called delayed realisations from AE debtors and recompute the TP adjustment - HELD THAT:- As relying on own case [2023 (4) TMI 521 - ITAT HYDERABAD] we direct the Assessing Officer to determine the ALP and compute the same by adding notional interest @ 6% on the receivable beyond a period of 60 days. Disallowance of weighted deduction claimed u/s 35(2AB) of the IT Act on R&D expenditure - HELD THAT:- Admittedly the tribunal in its earlier order had decided this identical issue in favour of the assessee [2018 (7) TMI 1867 - ITAT HYDERABAD] thus respectfully following case of assessee for the earlier years and more particularly when the approval in Form 3CL had been granted by the DSR (requisite authority) approving the expenditure for clinical trial expenses incurred outside approved R & D facilities, the assessee is entitled to weighted deduction u/s 35(2)(AB) and accordingly, the grounds raised by the assessee are allowed.
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