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2017 (5) TMI 636 - AT - Income TaxArm’s length compensation paid @2.5% on account of corporate guarantees - Held that:- AO had made the addition purely on ad-hoc basis without making any study of comparables whereas assessee has carried out proper transfer pricing study and had arrived at the benchmarking value at Nil. Our attention was also drawn on the transfer pricing study report submitted by the assessee before the lower authorities. According to the Ld. Counsel, no addition was required to be made as per the transfer pricing study report. Thus, the addition @1% has been made by the assessee voluntarily with a view to curtail the litigation. Under these circumstances, Hon’ble ITAT has accepted the claim o the assessee in right spirit and as a matter of consistency; the same view should be allowed to be adopted in this year also. We agree with the submissions of the Ld. Counsel since a view has already been taken by the Tribunal after proper deliberations and analysis of facts of this case. Thus, as a matter of consistency, we hereby follow the view taken by the Tribunal for AYs 2009-10 2010-11 and direct the AO to accept the addition @1% as has been proposed by the assessee. Determining the arm’s length price pertaining to subscription and redemption of preference share capital by re-characterising the same as interest from loan and thereby computing notional interest thereon - Held that:- In this ground assessee is aggrieved by the action of the lower authorities in denying the benefit of carry forward of current year’s capital loss on account of preference shares. This ground is consequential to the issue of characterization of preferential shares as interest free loans. Therefore, this ground is restored back to the file of the AO with the direction to verify the facts and follow the aforesaid order of the Tribunal for AYs 2009-10 & 2010-11. This ground may be treated as allowed, for statistical purpose. Disallowance of interest u/s 36(1)(iii) - Held that:- Tribunal decided this issue in favour of the assessee for AYs 2009-10 & 2010-11 wherein held where the assessee has substantial own funds, then presumption is that assessee has given advance to its sister concern from its own funds. The view taken by the Tribunal is applicable on the facts of this year as well. Therefore, respectfully following the order of the Tribunal, this ground is allowed in favour of the assessee and the AO is directed to delete the disallowance on account of interest. Short credit of TDS - as submitted by assessee that the AO should be directed to grant additional TDS credit of the said amount as per form 26-AS filed by the assessee along with rectification application date 23-03-2017 - Held that:- We find force in the request of the assessee and, therefore, direct the AO to verify the facts and grant the benefit of TDS, as per law. The AO should also dispose of the rectification application pending in this regard.
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