TMI Blog2018 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... s of share application - Held that:- There was a delay in issuing the shares against the share application money given by the assessee to its AE, however, the assessee has duly explained the cause of delay and it was not a deliberate delay for using the money by subsidiary in the garb of share application money or by providing the fund by the assessee in the garb of share application money. The delay was due to obtaining necessary approval from the securities and Exchange Commission, Phillipines. Finally, the shares were issued as per the share certificate dated 25.05.2008 which has been produced by the assessee as additional evidence. Since the document of issuance of equity shares in the name of the assessee by the subsidiary/AE vide share certificate were not before the authorities below, therefore, to the extent of limited purpose of considering the said document, we set aside this issue to the record of AO/TPO to consider the same. - INCOME TAX APPEAL NO. 303 OF 2016 - - - Dated:- 4-9-2018 - S.C. DHARMADHIKARI B.P. COLABAWALLA, JJ. Mr. Arvind Pinto for the Appellant. Mr. Atul K. Jasani for the Respondent. JUDGMENT [ Per B. P. Colabawalla J. ]: 1. This a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting off of losses against the profits of the STPI units according to the provisions of the Act? . (6) Whether in law and on the facts of the instant case was the Tribunal right in ignoring the decision of the Karnataka High Court in CIT Vs. Himatasingike Seide Ltd. (286 ITR 255 , on the issue of set off losses; that was upheld by the Apex Court in CA 1501 of 2008? . 3. As far as question No.1 is concerned, namely, whether the Tribunal was justified in directing the AO/TPO to adopt 0.5% as the Arms' Length Price ( ALP ) of the guarantee commission charges provided by the Respondent Co., we find that this question is squarely covered by a decision of this Court in The Commissioner of Income Tax, Mumbai Vs M/s Everest Kento Cylinders Ltd. decided on 8th May, 2015, and reported in (2015) 378 ITR 57 (Bom.). In this decision, question No.3 was, whether the ITAT Bombay was right in deleting the addition of ₹ 28,50,353/- on account of Transfer Pricing Adjustment on guarantee commission. On this issue, the Division Bench of this Court held that there was a distinction between the guarantees provided by the commercial banks, namely, bank guarantees and a corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of a Corporate guarantee are distinct and separate from that of bank guarantee and accordingly we are of the view that commission charged cannot be called in question, in the manner TPO has done. In our view the comparison is not as between like transactions but the comparisons are between guarantees issued by the commercial banks as against a Corporate Guarantee issued by holding company for the benefit of its AE, a subsidiary company. In view of the above discussion we are of the view that the appeal does not raise any substantial question of law and it is dismissed. There will be no order as to costs. 4. This decision in the case of M/s. Everest Kento Cylinders Ltd. (supra) has been subsequently followed by this Court in the case of Commissioner of Income Tax Vs Glenmark Pharmaceuticals Ltd. Reported in (2017) 398 ITR 439 (Bom). Taking all this into consideration and since we find that question No.1 has already been answered in favour of the assessee and against Revenue, we do not find that the same gives rise to any substantial question of law which would require us to admit an appeal filed by the Revenue on this question. 5. As far as question Nos. 3,4,5 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of authorities below and submitted that the TPO has specifically pointed out that the money given by the assessee was enjoyed and used by the subsidiary without issuing the shares for about more than two years, therefore, so long the money was lying with the AE without issuing the shares, the same will be deemed as loan. 4.5 We have considered the rival submissions as well as relevant material on record. Though there was a delay in issuing the shares against the share application money given by the assessee to its AE, however, the assessee has duly explained the cause of delay and it was not a deliberate delay for using the money by subsidiary in the garb of share application money or by providing the fund by the assessee in the garb of share application money. The delay was due to obtaining necessary approval from the securities and Exchange Commission, Phillipines. Finally, the shares were issued as per the share certificate dated 25.05.2008 which has been produced by the assessee as additional evidence. Since the document of issuance of equity shares in the name of the assessee by the subsidiary/AE vide share certificate were not before the authorities below, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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