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2020 (3) TMI 799 - AT - Income TaxTP Adjustment - International transaction u/s 92B - "Letter of Comfort" by the Appellant to the Banks - CIT(A) concluded that there is a fundamental between guarantee and Letter of Comfort and Guarantee is a legal enforceable; however, Letter of Comfort is not - HELD THAT:- Hon’ble Karnataka High Court in United Braveries (Holding) Ltd. vs. Karnataka State Industrial Investment and Development Corporation (2011 (8) TMI 1331 - KARNATAKA HIGH COURT) held that Letter of Comfort merely indicates the appellant’s assurance that respondent would comply the term of financial transaction without guaranteeing performance in the event of default. The co-ordinate bench of Tribunal in India Hotels Co. Ltd. [2019 (9) TMI 1340 - ITAT MUMBAI] on similar ground of appeal by following the decision of Hon’ble Karnataka High Court held that Letter of Comfort does not constitute international transaction. So far as contention of ld. DR for the revenue that after amendment in Explanation to section 92B is concerned, we have noted that co-ordinate bench in SIRO Clinpharm P. Ltd (2016 (5) TMI 633 - ITAT MUMBAI) held that amendment in Explanation to section 92B by Finance Act, effective from 01.04.2002 is to be treated as effective at the best from A.Y. 2013-14. Thus, in view of the aforesaid discussion, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Disallowance u/s 14A - HELD THAT:- In assessee’s own case on identical issues have been considered by Tribunal from A.Y. 2000-01 to 2002-03 and 2004-05 wherein the Assessing Officer is directed to compute the disallowance under section 14A at 5% of the exempt income. No material change in the fact is brought to our notice for the year under consideration. Therefore, following the order of Tribunal for A.Y. 2000-01 to 2002-03, which was followed in A.Y. 2004-05, hence, we direct the Assessing Officer to compute the disallowance under section 14A at 5% of exempt income. In the result, this ground of appeal is partly allowed.
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