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2021 (8) TMI 1210 - ITAT HYDERABADTP Adjustment - corporate guarantee forms an international transaction or not? - Retrospective amendment to Section 92B - HELD THAT:- All the legal arguments fail to convince us as per Hon'ble Madras high court’s recent decision in Pr.CIT Vs. M/s.Redignton (India) Limited, [2020 (12) TMI 516 - MADRAS HIGH COURT] holds that Explanation to Section 92B inserted vide the Finance Act, 2012 with retrospective effect from 01-04-2002 also includes a corporate guarantee. We thus hold that the tribunal’s all foregoing orders must make way for higher wisdom and decline the assessee’s first and foremost legal plea. Quantification of the impugned corporate guarantee adjustment - As relying on own case [2016 (1) TMI 936 - ITAT HYDERABAD] adopt judicial consistency and direct the TPO to adopt 0.53% rate in both these assessees’ cases in all these respective assessment years. Quantification of the corporate guarantee adjustment itself in all these three assessment years - There is no dispute between the parties that the TPO herein had himself made it clear that “in case of guarantees covering more than one financial year the fee is charged by the banks at the beginning of the financial year on the outstanding amount”. As against this, the Revenue fails to dispute that case law BS LTD. [2018 (4) TMI 1742 - ITAT HYDERABAD], MANUGRAPH INDIA LTD. [2015 (3) TMI 1103 - ITAT MUMBAI] and M/S ACG ASSOCIATED CAPSULES PVT. LTD[2012 (2) TMI 101 - SUPREME COURT] hold that such a corporate guarantee adjustment could only be made to the extent of actually utilized amount during the year than that of the full value of the guarantee itself. We adopt the very reasoning herein as well and directing the TPO to re-compute the impugned adjustment after taking into consideration only the actually utilised amount of the corresponding corporate guarantees in these three cases. The assessees’ identical first and foremost ground in all these three appeals is partly accepted in foregoing terms. Disallowance u/s 14A r.w.r. 8D - proof of sufficient non-interest bearing funds - HELD THAT:- Section 14A read with Rule 8D applies only in relation to an assessee’s exempt income than having any independent exigibility. It is an admitted fact that the assessee has not derived any exempt income in the relevant previous year. We therefore direct the Assessing Officer to delete the impugned disallowance for this precise reason alone.
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