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2017 (5) TMI 7 - AT - Income TaxTransfer pricing adjustment suggested by the TPO on corporate guarantee provided - Held that:- Brief facts relating to this issue are that during the financial year under consideration, the assessee through a common set of agreement, dated 17.07.2007 has provided a corporate guarantee for a combined loan of USD 150 million. The assessee did not charge any fee for the corporate guarantee given, whereas the TPO was of the opinion that the assessee has to charge guarantee fee. We find that the very same issue had arisen in the assessee’s own case for the A.Y 2009-10 and this Tribunal by order above has held the corporate guarantee fee at 0.50% to be reasonable. Computing the deduction u/s 10B AO has set off of the business loss of co generation unit before allowing the deduction u/s 10B - Held that:- As decided in Commissioner of Income-tax Versus Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] the deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression "total income of the assessee" in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression "total income of the assessee" in Section 10A as 'total income of the undertaking'. For the aforesaid reasons we answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly. Disallowance u/s 14A r.w.r 8D - Held that:- We find that the assessee has earned dividend income and the A.Y being 2011-12 the provisions of Rule 8D r.w.s 14A are applicable. The only question to be considered now is whether the investment in APGPCL is to be excluded while computing the disallowance u/r 8D(iii) of the Act. The assessee’s contention that APGPCL does not declare dividend to its shareholders and further that the benefit of subsidized rate of power is taxed in the hands of the company has not been verified by the authorities below. The benefit derived by the assessee by virtue of the investment is not dividend income but is subsidized rate of power. This subsidy is not exempt from tax. Further, if the benefit has resulted in enhanced business income/profits and has been taxed, then, no disallowance u/s 14A r.w.r. 8D can be made. Therefore, this limited issue is remitted to the file of the AO to verify the contention of the assessee and exclude the investment if the assessee’s contention is found to be correct. TP adjustment on Interest on funds advanced to WOS - Held that:- It is an international transaction and to adopt LIBOR as the rate of interest for T.P. Adjustment. TP adjustment on shareholder corporate guarantee - Held that:- This issue is covered in favour of the assessee by the decision of the Coordinate Bench at Mumbai in the case of Siro Clinpharm Pvt Ltd [2016 (5) TMI 633 - ITAT MUMBAI] wherein it was held the corporate guarantee was not international transaction prior to the amendment of section 92B by the Finance Act of 2012. Thus, ground of appeal is allowed and other grounds 5 & 7 to 12 are not adjudicated at this stage.
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