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2017 (5) TMI 208 - AT - Income TaxTransfer pricing adjustment - Corporate guarantee addition - Held that:- The difference in interest charged on the loan cannot be considered as a guarantee commission fee as the parameter for obtaining a loan at a particular interest rate is different from providing Corporate guarantee. Thus there is no basis for determining @ 6% by the DRP. In the above referred case of Asian Paints Ltd [2014 (5) TMI 880 - ITAT MUMBAI], after analyzing the various guarantee Commissions charged by banks and also relying on the order for the A.Y 2006-07 in that Assessee’s case, the ITAT has held that the guarantee commission can be charged at 0.25%. Respectfully following the same, we also direct the TPO/AO to restrict the adjustment to 0.25% of the amount. Disallowance u/s 14A - Held that:- Considering the submissions made by the Assessee we notice that the dividend income earned by Assessee was not exempt from tax and offered as income, therefore the provisions of Sec. 14A of the IT Act does not apply to these investments. AO is directed to delete the disallowance on the above issue Addition towards excise duty on closing stock - Held that:- We are of the opinion that the A.O has not followed the directions of the DRP stating that the contentions of the Assessee appears to be correct and if such contentions are correct there is no double deduction of Excise duty in view of the above submission of the Assess, the A.O is directed to verify the claim. Thus A.O is directed to examine the details furnished by Assessee and if the contentions are found correct as stated by the DRP the amount has to be deleted. Interest on loan to AE - Held that:- As the loan was given in foreign currency outside India and accordingly the LIBOR rate should be the basis for calculation of interest rate. Since Assessee has charged more than of the LIBOR rate at 8%, we are of the opinion that no adjustment is required to be made and accordingly the amount confirmed by the DRP stands deleted. Addition on Reimbursement of Expenditure - Held that:- No ALP adjustments can be made to the reimbursement expenditure, which is only reimbursement of traveling and other miscellaneous expenditures and is not charged to profit and loss account. Accordingly grounds of the Assessee on this issue are allowed. Disallowance of expenditure on sales promotion, office maintenance, corporate expenses and site maintenance - Held that:- A.O is correct in the disallowing certain expenditure as the vouchers are not verifiable, being self-made. However, we are of the opinion that 5% of the said expenditures can be disallowed as A.O has adopted 10% on certain expenditure and 5% on certain other expenditure. We direct the A.O to disallow the expenditure uniformly at 5% on sales promotion expenses of 53,13,003/-, office maintenance expenses of ₹ 28,74,687/-, out of pocket expenses of 20,71,280/-. 5% on site maintenance expenses of ₹ 4,93,27,915/- does not require any modification. The grounds are accordingly considered partly allowed.
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