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2024 (5) TMI 484 - ITAT MUMBAITP Adjustment - addition on account of corporate guarantee - international transaction or not? - HELD THAT:- This issue is decided against assessee by the Coordinate Bench in earlier assessment year [2020 (9) TMI 1101 - ITAT MUMBAI] for the A.Y.2012-13 the arguments that the said transactions could not be considered to be international transaction do not convince us and therefore, we hold that the same was to be benchmarked on ALP principles.As assessee’s risk in such a case would be very low since both the AEs were assessee’s subsidiaries only. Therefore, considering the fact that it was a corporate guarantee for which no fees was paid by the assessee we estimate the TP adjustments against both the transactions @0.20% - Decided against assessee. Short credit for the taxes paid in Kenya u/s 90 - HELD THAT:- During the course of the assessment proceedings the assessee submitted proof of tax paid in the foreign countries based on which corresponding Double Taxation Avoidance Relief was allowed to the assessee. The assessee also claimed relief in respect of tax paid at Kenya but the same was denied invoking Rule 128 of the I.T. Rules wherein it has been provided that the tax paid in foreign countries on such income will be allowed only on furnishing of Form No. 67 for availing tax credit. We find that Rule 128 of I.T. Rules has been inserted by income tax 18th Amendment Rules, 2016 and has made applicable w.e.f 01.04.2017. We fail to understand how the Rule which came into effect from 01.04.2017 be made applicable to the return filed on 27.11.2015. Thus set-aside this issue to the file of the AO as directed to allow the credit of tax paid in Kenya after due verification. Short credit of TDS credit arising on account of payment made by Madhya Pradesh Government to KEC TNR Infra JV - tax credit has been denied to the assessee on finding that the impugned income has not been shown as its income by the assessee - It is the say of the counsel that the impugned income belongs to KEC TNR Infra JV and the TDS has been deducted in the name of KEC TNR Infra JV - HELD THAT:- We have given a thoughtful consideration to the orders of the authorities below, in the interest of justice and fair play, we deem it fit to set-aside this issue to the file of the AO. AO is directed to verify in whose hands the income has been shown and allow the credit of Tax Deducted at Source as per the relevant provisions of the law. This ground is allowed for statistical purpose. Disallowance u/s 14A while computing the book profits u/s 115JB - HELD THAT:- As decided by this Tribunal in assessee’s own case in A.Y. 2014-15 [2023 (12) TMI 1312 - ITAT MUMBAI] we find that this issue is squarely covered in favour of the assessee by the decision of special bench in case of Vreet investments private limited [2017 (6) TMI 1124 - ITAT DELHI] Even otherwise it is stated that assessee has not received any exempt income during the year and therefore there is no question of making any disallowance under section 14 A of the income tax act even in the normal computation of total income and therefore the same also cannot be imputed while computing the book profit under section 115JB - Decided in favour of assessee. TP adjustment in respect of business advances given to EJP KEC Joint Venture, South Africa - HELD THAT:- As decided in own case A.Y. 2013-14 [2023 (5) TMI 1324 - ITAT MUMBAI] advances were more in the nature of capital contribution and by advancing the same, the assessee had protected its own business interest which is evident from the financial statements of JV. The advances were towards fulfilment of the assessee’s obligation of being a JV partner as any financial incapacitation of JV would adversely affect the continuation of the project and ultimately jeopardize the interest of the assessee. Therefore, the said advances could not be put in the category of loans as done by the lower authorities. Further, it could not be said that JV entity derived / gained certain benefits out of such advances but rather it was the assessee who would ultimately gain by continuing with the projects and taste the fruits of the success of project. Hence, not convinced with impugned adjustments. Decided in favour of assessee. Restricting guarantee commission in respect of guarantee given to ICICI Bank, U.K. in favour of U.S. subsidiaries at 0.2% of the guarantee - HELD THAT:- Respectfully following the latest decision of the Coordinate Bench [2023 (9) TMI 1466 - ITAT MUMBAI] for the A.Y. 2018-19 we direct the Assessing Officer to apply corporate guarantee rate @0.6%. This ground is partly allowed.
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