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2023 (1) TMI 17 - AT - Income TaxTP Adjustment - corporate guarantee for a working capital term loan availed by its AE - TPO concluded that the corporate guarantee provided by the assessee to HSBC Bank, for the loan availed by DIPL, is an international transaction and commission from such corporate guarantee would be taxable in India in the hands of the assessee under Article 21 of the Double Taxation Avoidance Agreement ('DTAA') between India and Germany - HELD THAT:- DRP having given categorical finding that as per the DTAA with Germany, guarantee commission which falls under ‘other income’ is taxable only in Germany as per Article 21. We find that decision relied by the ld. TPO on Delhi Tribunal in the case of Johnson Matthey Public Limited is factually distinguishable as it pertains to India UK DTAA wherein under Article 23, it specifically provided for taxability of other income in source state i.e. India. Whereas under India- Germany DTAA, Article 21 provides for taxability of other income only in Germany and not in India. We find that the ld. AO in final assessment order had held that objections raised by the assessee before the ld. DRP were rejected and accordingly, added the transfer pricing adjustment made on account of guarantee commission - This action of the ld. AO is merely erroneous in view of the fact that against the categorical finding of ld. DRP on objections 6-7, which were allowed in favour of the assessee, the Revenue had not preferred any appeal before us. Hence, in view of the aforesaid observations we have no hesitation in directing the ld. AO to delete the transfer pricing adjustment made on account of guarantee commission income - Accordingly, the grounds raised by the assessee are allowed.
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