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2024 (2) TMI 1279 - AT - Income TaxTP Adjustment - adjustment made to the ALP of the international transaction of corporate guarantee charges - AO/TPO had proposed adjustment on account of corporate guarantee by applying rate of 2.52% which was confirmed by the DRP - HELD THAT:- As in assessee own case 2012-13 and 2013-14 ITAT had held, corporate guarantee fees charged at 1% on the international transaction with AEs was at ALP. DR was unable to distinguish the decisions of the ITAT in the preceding years in any way before us; whether on facts or in law. In view of the same, the decision of the ITAT in the preceding years in the case of the assessee itself, will apply in the present case also, following which, we hold that the ALP of the bank guarantee charged by the assessee at the rate of 1% is justified. The adjustment, therefore, made to the same by adopting 1.5% rate is directed to be deleted. Adjustment made to the international transaction of Optionally Convertible Loans (OCL) issued by the assessee to its AE on account of charging of interest - HELD THAT:- Going through the decision of the ITAT in the preceding year, which is reproduced in the order of the ITAT for AY 2014-15 [2022 (9) TMI 1560 - ITAT AHMEDABAD]we have noted that the ITAT held the convertible loans advanced to the assessee to be in the nature of quasi-capital in the sense that, substantive reward or true consideration for such loan was not interest simplicitor on the amount advanced, but was an opportunity to own the capital on certain favourable terms. ITAT also noted the fact that whenever the assessee’s right to exercise option on conversion of the loans into equity came to an end, it was entitled to interest on commercial rates and noting that it was not even the case of the authorities below that the interest so charged by the assessee in a situation in which the right of exercising the option had come to end, is not at an arm’s length; that ITAT held that in such facts and circumstances, where the loans given by the assessee was found to be in the nature of quasi-capital and in the scenario of non-conversion of the loans into equity, the assessee was entitled to interest at commercial rate which was at arm’s length, no TP adjustment on account of interest on such loans was warranted. ITAT in the case of the assessee itself, in the preceding assessment years, as noted by us, and in the light of the fact that no distinguishing facts has been brought to our notice by the Revenue, the issue, we hold, stands covered in favour of the assessee by the consistent decision of the ITAT, in its own case in preceding years. TP adjustment made on account of alleged reimbursement of expenses to its AE - HELD THAT:- Since no distinguishing facts have been pointed out by the ld.DR from the facts of the preceding years, the decision rendered by the ITAT in Asst. Year 2014-15 [2022 (9) TMI 1560 - ITAT AHMEDABAD] will apply to the impugned year also, following which, we direct deletion of the adjustment made to the transaction of reimbursement of the expenses by AE to the assessee. Nature of expenses - Product Registration Expenses and expenses product for Registration Support Services - revenue or capital expenses - HELD THAT:- As issues have been decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment years i.e. Asst. Year 2014-15, [2022 (9) TMI 1560 - ITAT AHMEDABAD] and no distinction having been made before us either on facts or on law by the DR we see no reason to confirm the order of the AO treating the impugned expenses as capital in nature. Entitlement of weighted deduction for expenditure on Scientific Research u/s. 35(2AB) in respect of Clinical Trials and Bio-equivalence Study - HELD THAT:- Issue decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment year i.e. Asst. Year 2014-15; that the issue relating to the claim of weighted deduction under section 35(2AB) of the Act on activities carried outside the R&D facility of the assessee pertaining to clinical trial and bio-equivalence study, had been allowed by the ITAT in Asst. Year 2006-07 to 2010-11, which order had been confirmed by the Hon’ble Gujarat High Court holding that no question of law arose on the point. Disallowance u/s 14A added to the book profits of the assessee u/s 115JB - HELD THAT:- we have no reason to uphold the order of the AO in this regard, as the finding of the AO is not in consonance with the ratio laid down by the Special Bench in Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] nor with the decision of the ITAT in case of the assesse in the immediately preceding A.Y 14-15. Therefore, the addition made to the book profits of the assessee on account of expenses disallowed under section 14A of the Act is directed to be deleted. Decided in favour of assessee.
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