TMI Blog2017 (2) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the PLI of the assessee. Corporate guarantee adjustment made in the hands of the assessee - Held that:- The facility provided by the assessee to its AE under which Corporate Guarantee was given by the assessee on behalf of the subsidiary. The Transfer Pricing Officer while benchmarking the international transaction of the assessee was of the view that against the provision of Bank Guarantee, the assessee should have charged some amount as Guarantee fee and he worked out the above in the hands of the assessee by adopting the Guarantee fee @1%, i.e. resulting in addition of ₹ 6,40,000/-. The assessee is in appeal against the order of the Assessing Officer/ Transfer Pricing Officer. Thus we direct the Assessing Officer to apply the rate of 0.5% as charges for providing Bank Guarantee to the Associate Enterprise and restrict the addition accordingly. Grounds raised by the assessee are thus partly allowed. Deduction allowable in view of the provisions of section 43B - Held that:- Under the provisions of section 43B of the Act, it is provided that in case the assessee does not deposit certain sums within the stipulated period, then the said amount is to be disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going, the assessing officer has erred in selecting the comparables under TNMM and rejecting the comparables selected by the Company without giving justifiable reasons for the same. 5. On the facts and circumstances of the case, proposed addition of ₹ 2,70, 22,100/- in respect of purchase/sale of traded/ finished goods from/to the associate enterprises is bad in law. 6. On the facts and in the circumstances of the case and in law, addition of ₹ 6,40,000/- in respect of issue of guarantee to the associate enterprise is bad in law. 7. Without prejudice to the foregoing, an addition of ₹ 6,40,000/- in respect of issue of guarantee to the associate enterprise is excessive and unreasonable. 8. Without prejudice to the foregoing, the addition of ₹ 6,40,000/- in respect of issue of guarantee to the associate enterprise is double addition, as the another proposed addition of ₹ 2,70,22,100/- is in respect, of the entire business of the assessee Company and therefore, this addition is over and above the aforesaid addition. 9. Allowance under Section 43B of ₹ 11,14,602/- is not allowed and is not in keeping with the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. The PLI of the assessee was 2.85% whereas the PLI of the 8 comparables selected by the TPO worked out to 7.93% and he proposed an adjustment of ₹ 25,56,49,000/-. The Assessing Officer passed the draft assessment order against which the assessee filed objections before the DRP. However, the objections of the assessee were rejected but the DRP directed the Assessing Officer to calculate the Arm s Length Price with respect to transactions with Associate Enterprise and not the entire turnover. Accordingly, the Assessing Officer in the final assessment order made an adjustment of ₹ 2,76,62,100/- on account of international transaction relating to its export of spares and on account of guarantee of ₹ 6,40,000/-. The assessee is in appeal against the order of the Assessing Officer. 5. The Ld. Authorised Representative for the assessee fairly admitted before us that the limited issue which needs adjudication in the case is that in case TNMM is held to be most appropriate method, then the concern Bosch Chassis System India Ltd. is to be excluded from the final set of comparables having different financial year ending. He further pointed out that even M/s. Escorts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain companies as comparables which are enlisted at page 10 of the Transfer Pricing Officer s order. 8. The Ld. Authorised Representative for the assessee before us fairly admitted that in case the concern Bosch Chassis System India Ltd. is excluded from the final list of comparables, while applying TNMM method, then the margins shown by the assessee in the mean margins of the comparables were within the +/-5% range and no adjustment is to be made in the hands of the assessee on account of Transfer Pricing provisions. He fairly agreed to adoption of TNMM for benchmarking international transaction of the assessee. 9. The grounds of appeal No.1 and 2 raised by the assessee are general in respect of the entire Transfer Pricing adjustment and the same are dismissed. 10. The issue raised vide ground of appeal No.3 is for application of CUP method which is also dismissed because of the admission of the Ld. Authorised Representative for the assessee. 11. The issue raised by way of ground of appeal No.4 is against exclusion of Bosch Chassis System India Ltd. and non-inclusion of Escorts Ltd. The assessee has placed on record the financials of Bosch Chassis System India Ltd. wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables, its margin would be within +/-5% and no adjustment is to be made on account of Arm s Length provisions. Accordingly, we direct the Assessing Officer to work out the margins of the comparables and compare it with the PLI of the assessee. The Ground of appeal No.4 raised by the assessee is thus partly allowed. 12. The Ground of appeal No.5 raised by the assessee is general in nature is dismissed. 13. The additional ground of appeal raised by the assessee is against disallowance of working capital adjustment while applying the Transfer Pricing provisions. The Ld. Authorised Representative for the assessee pointed out that complete financial data of the assessee and also the comparables picked up by the Transfer Pricing Officer applied for benchmarking the international transaction are available on record and in view of the various decisions of the Pune Bench of the Tribunal the said plea of the assessee may be accepted. 14. We find merit in the plea of the assessee wherein complete facts are available on record and the Assessing Officer/Transfer Pricing Officer need to verify the same. Accordingly, we admit the additional ground of appeal raised by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer/ Transfer Pricing Officer. 20. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is with regard to the facility provided by the assessee to its AE under which Corporate Guarantee was given by the assessee on behalf of the subsidiary. The Transfer Pricing Officer while benchmarking the international transaction of the assessee was of the view that against the provision of Bank Guarantee, the assessee should have charged some amount as Guarantee fee and he worked out the above in the hands of the assessee by adopting the Guarantee fee @1%, i.e. resulting in addition of ₹ 6,40,000/-. The assessee is in appeal against the order of the Assessing Officer/ Transfer Pricing Officer. The Ld. Authorised Representative for the assessee has placed reliance on the ratio laid down by the Mumbai Bench of the Tribunal wherein vide para 11 after referring to the decision of Hon ble Bombay High Court, the Tribunal had held that rate of 0.5% is justified. Applying the same ratio, we direct the Assessing Officer to apply the rate of 0.5% as charges for providing Bank Guarantee to the Associate Enterprise and restrict the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l contentions and perused the record. The plea of the assessee before us is regarding allowance of certain deductions on payment basis under section 43B of the Act, which were not claimed in the return of income. The assessee had claimed that it had deposited the excise duty, bonus and sales tax relating to assessment year 2007-08, during the current financial year and in view of the provisions of section 43B of the Act the assessee was entitled to claim the said deduction since they were inadvertently disallowed in the earlier year. The total deduction which are claimed by the assessee are ₹ 11,24,602/-. Under the provisions of section 43B of the Act, it is provided that in case the assessee does not deposit certain sums within the stipulated period, then the said amount is to be disallowed in the hands of the assessee but the assessee is entitled to claim the same as deduction in the year of payment. The assessee claims that the provisions made on account of excise duty, bonus and sales tax were offered to tax in assessment year 2007- 08 since the amounts were not deposited, however, the said amounts have been paid in the year under consideration but by an inadvertent error ..... X X X X Extracts X X X X X X X X Extracts X X X X
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