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2021 (10) TMI 453 - AT - Income TaxTP Adjustment - benchmarking of guarantee commission - HELD THAT:- As decided in own case [2021 (4) TMI 254 - ITAT MUMBAI] no reason to dislodge the ALP of corporate guarantee determined by the assessee at 0.43% p.a by adopting Internal CUP method. In the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the determination of the ALP of the corporate guarantee at 2% p.a by the A.O/TPO. We, thus, uphold the ALP of corporate guarantee as determined by the assessee at 0.43% p.a and direct the A.O/TPO to vacate the upward transfer pricing adjustment. Benchmarking done by assessee on the basis of internal CUP was to be accepted. Respectfully following earlier decisions of Tribunal, taking the same view, we would hold that benchmarking done by the assessee by adopting internal CUP was in order. The assessee has followed similar methodology in this year. Therefore, the adjustment as confirmed by Ld. DRP, in this regard, stand vacated. The Ld. AO is directed to delete the same. - Decided in favour of assessee. Benchmarking of loan transaction - HELD THAT:- The bench in own case [2021 (4) TMI 254 - ITAT MUMBAI] has approved the benchmarking of these transactions on the basis of internal CUP. We find the facts to be similar in this year. The assessee has followed same methodology to benchmark the loan transactions. Therefore, the adjustment as confirmed by Ld. DRP would stand deleted. Disallowance u/s 14A - assessee had suo motto offered a disallowance u/s 14A - HELD THAT:- As decided in own case [2021 (4) TMI 254 - ITAT MUMBAI] wherein a suo-motto disallowance offered by the assessee was rejected by the A.O, and was thereafter substituted by an enhanced amount of disallowance as per the methodology contemplated in Sec. 14A r.w Rule 8D matter setˇaside the matter to the file of the A.O for the purpose of re-adjudicating the disallowance afresh in light of the law laid down in the case of Maxopp Investment Ltd. Vs. CIT [2018 (3) TMI 805 - SUPREME COURT] - the matter of disallowance u/s 14A stand restored back to the file of Ld. AO with similar directions. Taxation of foreign exchange gains on loan transactions - Business income or capital income - AO has held the gain to be “Business Income" by virtue of Section 28 (iv) of the Act which provide that value of any benefit or perquisite, whether convertible into money or not, arising from the business or the exercise of profession would be chargeable as Profit and Gains of business or profession - HELD THAT:- The reasoning of Ld. DRP that foreign exchange differences would represent component of interest overlook the fact that loan transactions were in capital field and any accretion on capital account, unless specifically taxed, would not be liable to tax. Another aspect of the matter is that Ld. AO has invoked the provisions of Sec. 28(iv) to make the additions. However, as per the decision of Hon‟ble High Court in Mahindra & Mahindra Ltd.[2018 (5) TMI 358 - SUPREME COURT] the provisions of Sec. 28(iv) are not applicable to a benefit that arose in cash or monetary terms. In the present case, the benefit received by the assessee upon repayment of loan is in the form of cash and therefore, the provisions as invoked by Ld. AO do not have any applicability to the facts of the case - we would hold that foreign exchange gains as arisen to the assessee were in capital field and hence, not liable to tax.
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