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2020 (11) TMI 334 - AT - Income TaxTP Adjustment - treating provision of corporate guarantee by the appellant to its AE as an "international transaction" - appellate authority upheld the findings of TPO in treating corporate guarantee as international transactions and the rate of commission was reduced from 3% to 2.5% - HELD THAT:- The contentions raised by ld. Counsel are unsustainable in the light of decision rendered by Hon'ble Jurisdictional High Court in the case of Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT]. Thus, we hold Corporate Guarantee facility provided to overseas AE by the assesse is an international transaction. In so far as the rate of commission is concerned, the Hon'ble High Court in the aforementioned decision has upheld corporate guarantee commission at 0.5%. The corporate guarantee rate in the present case is accordingly restricted to 0.5%. The ground No. 1 of the appeal is partly allowed in the terms aforesaid. ALP of the corporate guarantee commission should be restricted to the extent of facility availed by assessee's A.E. - HELD THAT:- In the case of Corporate Guarantee there is no commitment of financial or capital assets of the entity. The guarantee is issued without any security or underlying asset. Corporate guarantee is extended by one corporate entity to a third party for or on behalf of its subsidiary/group entity/associated enterprise. It is in the nature of contingent liability. Keeping in view, the nature and extent of exposure and liability of guarantor in the case of corporate guarantee, it would be justified if guarantee commission is charged to the extent of actual exposure of facility availed instead of gross amount of facility extended. See BS LTD. case [2018 (4) TMI 1742 - ITAT HYDERABAD]. In the instant case, the assessee has purportedly availed facility of ₹ 2.48 crores as against corporate guarantee of ₹ 15.19 crores. For the purpose of determination of corporate guarantee commission in line with our observations and for the purpose to ascertain/verify the extent of corporate guarantee exposure, we deem it appropriate to restore this issue to the Assessing Officer. The ground No. 2 of the appeal is allowed for statistical purpose in the above said terms. Addition on account of unexplained paintings - paintings found during search operation at the premises of the assessee - HELD THAT:- We have examined the evidence on record in respect of only three paintings, as test check. The Assessing Officer has failed to rebut the evidences furnished by the assessee. The Assessing Officer has rejected the evidences furnished by the assessee by making generic remarks. We find merit in the contentions of ld. Counsel, these paintings were acquired by the assessee in assessment years much prior to the date of search. Hence, addition in respect of said paintings cannot be made in search proceedings. There are other 37 paintings in respect of which documents/evidences on record are required to be examined. The factual matrix, manner of addition and nature of evidence in the present case is similar to the case of Ms. Kavita Singh [2017 (12) TMI 581 - ITAT MUMBAI] - we deem it appropriate to restore this issue to the file of AO with a direction to decide the issue in line with the Tribunal decision in the case of Ms. Kavita Singh (supra). Appeal of the assessee is partly allowed.
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