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2019 (11) TMI 357 - AT - Income TaxTP Adjustment - addition made on account of ALP transaction on corporate guarantee - HELD THAT:- Sanction letter issued by the Bank of Baroda, London which is also placed on record by the assessee also reveals that the corporate guarantee was to be given in accordance with the applicable R.B.I. guidelines and it further stipulated that no guarantee commission was payable by Ganesh Shipping Inc. Panama it to the guarantors. It is thus seen that the guarantee has been given in terms of sanction letter issued by Bank of Baroda and the non-charging of guarantee commission is also as per the conditions stipulated by the Bank. It is also a fact that the corporate guarantee has been given by the assessee as well as B.G. Shirke Construction Technology Pvt. Ltd., and no addition on account of guarantee commission has been made in the hands of B.G. Shirke Construction Technology Pvt. Ltd. It is only in the hands of the assessee that the addition has been made by the AO. When the guarantee has been given by two concerns and on similar terms and conditions arising out of the same transaction, two different and contradictory stands cannot be taken by the Revenue i.e., no addition is made on account of guarantee commission in the case of B.G. Shirke Construction Technology Pvt. Ltd., and addition is made only in the hands of the assessee. Since the non-charging of guarantee commission is pursuant to the conditions stipulated by the sanctioning Bank, we are of the view that no addition on account of non-receipt of guarantee commission is called for in the present case. - Decided in favour of assessee. Amount earned on interest as income from other sources and therefore held by the AO to be as income earned from non-tonnage activity and accordingly taxable at normal income - HELD THAT:- Interest received from the bank. It is assessee’s contention that assessee had availed loan from Bank of India for purchase of vessel “Maha Padmaja” and as per the terms and conditions, the assessee was required to maintain a minimum balance of 0.186 mln USD throughout the tenure of the loan. On such balance maintained by the assessee it had earned interest. It is also a fact that assessee had paid interest of ₹ 6,42,99,091/- on loan for purchase of vessels and which has been claimed as expenditure in the Profit and Loss account. It is a fact that if the interest paid and earned are considered in totality, the assessee has paid net interest. Assessee was required to maintain the deposits as per the sanction terms of the bank and in view of the facts cited hereinabove, we are of the view that AO was not justified in considering the interest to be non tonnage activity. We therefore set aside the order of AO and direct the AO to consider it as income from shipping business and thus, the grounds of assessee are partly allowed.
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