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2020 (2) TMI 558 - AT - Income TaxTP Adjustment - corporate guarantee provided by assessee company to its subsidiaries - international transaction - interest on receivables for extra credit period - ALP adjustment on sale of instant coffee - HELD THAT:- As decided in own case [2019 (4) TMI 1820 - ITAT VISAKHAPATNAM] assessee had given corporate guarantee to its 100% subsidiary and the AE for the purpose of business. The assessee had not incurred any expenditure towards the corporate guarantee. The revenue could not bring any evidence to establish that the assessee had incurred any expenditure for extending the corporate guarantee. As stated by the Ld.AR it is the obligation on the part of the assessee to extend the support and assistance to its subsidiaries for business development. Since the facts are identical, respectfully following the view taken by coordinate benches in the case laws cited, we hold that the corporate guarantee given by the assessee on behalf of its AE would not constitute an international transaction within the meaning of 92B of the Act. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Interest on receivables - HELD THAT:- In the instant case also it is established that the transactions with the AEs are at arms length price. All the AEs are 100% subsidiary companies and the assessee is debt free company having large amount of reserves. The department has not made out a case of undue advantage of allowing credit. The Ld.CIT(A) has given finding that the receivables were received in reasonable period and there was no delay. The department did not place any evidence to controvert the finding given by the Ld.CIT(A). Therefore, we hold that there is no case for making adjustment of interest on receivables in the assessee‟s case. ALP adjustment suggested by the TPO in respect of difference in price charged to assessee’s AE when compared sale to non-AE - HELD THAT:- After considering the submissions and data, the TPO has suggested and worked out the adjustments on sale of instant coffee to the AE and computed the same at ₹ 1,09,42,509/- which is charged less to the AE compared to the non-AE and called explanation from the assessee. The assessee has submitted that TPO has taken only two sizes out of 11 sizes i.e. 100 grams and 200 grams and suggested adjustment which is not correct. Out of 11 sizes in 6 cases, the assessee has charged higher price. It was further contended before the TPO that comparing the product size-wise is unfair and incorrect and also unscientific and requested the TPO to adopt weighted average method and find out the ALP and submitted that weighted average method is applied difference is only less than 3% which is permissible according to law. The TPO rejected the request of the assessee and suggested the adjustment of ₹ 1,09,42,509/- u/sec. 92CA(3) of the Act. On appeal, ld. CIT(A) directed the Assessing Officer to delete the addition. As per proviso to sub-section (2) of section 92C, the difference to the extent of 3% is permissible. We further find that the assessee by submitting all the details explained before the TPO that the assessee has charged for AE as well as non-AE similar prices for the supply of instant coffee and no profit has been shifted to AE, however, the TPO not accepted the explanation given by the assessee and suggested TP adjustment without giving any reasons. The TPO has not given what is the reason for choosing only two sizes 100 grams and 200 grams, when the assessee specifically submitted before the TPO that out of 11 sizes, 6 sizes the assessee has charged high price and submitted that average has to be taken. Without considering the same, the TPO simply suggested adjustment by taking only two sizes, in our opinion, the assessee has discharged the burden casted upon him to show that it has not shifted profits to AE, therefore it is the duty of the TPO to establish that the assessee has shifted profits to AE. In this case, without giving any reason simply suggested TP adjustment by the TPO. We find that TPO is not correct. Thus, we find that the ld.CIT(A) has considered the facts and directed the Assessing Officer to delete the addition. We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.
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