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TMI Blog2020 (1) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the Revenue') by filing the present appeal sought to set aside the impugned order dated 26.10.2015 passed by the Commissioner of Income-tax (Appeals) - 44, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :- "On the facts and circumstances of the case, the ld. CIT (A) has erred in law and on facts in directing the AO to take Arms Length Price of compensation for providing corporate guarantee @ 1% which determined as Rs. 2,89,13,635/- as against Rs. 7,45,97,179/- (@ 2.58%) computed by AO/TPO and thereby allowing a consequential relief of Rs. 4,56,83,544/-." 3. The Objector, M/s. Spentex Industries Limited, by filing the present cross objections challenged the impugned order dated 26.10.2015 passed by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch plan for restructuring dated 13.11.2009 had been approved by the competent authority and the dues of the unsecured creditors have been reduced to 29.15%. AO sought to apply mark up of 2.58% on the corporate guarantee given by the assessee by following the order passed in AY 2009-10. Declining the contentions raised by the assessee, AO made adjustment in Arm's Length Price (ALP) @ 2.58% for the corporate guarantee on the ground that the assessee has exposed itself to greater risk without charging any amount from its AE and thereby computed the same as under :- S. No. Transaction Amount of corporate guarantee (Rs.) Arm's Length Compensation @ 2.58% 1. Tashket Toyepa Textile 192,85,17,500 4,97,55,751 2. Lehman Brothers 87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee with its AE qua corporate guarantee as an international transaction. Ld. CIT (A) followed the decision of his predecessors of earlier years in restricting the ALP of compensation for providing corporate guarantee @ 1% as against 2.58% assessed by the AO. 11. It is brought to the notice of the Bench that identical issue has been decided in favour of the assessee by the coordinate Bench of the Tribunal in its own case for AYs 2008-09, 2009-10 & 2010-11 in ITA Nos. 4959/Del/2014, 6243/Del/2014 & 6244/Del/2014 respectively vide order dated 17.05.2018. 12. Bare perusal of the order (supra) passed by the coordinate Bench of the Tribunal in assessee's own case goes to prove that identical issue has been decided in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transaction has a bearing on profits, income, losses or assets of the enterprise. The said impact has to be on real basis, even if in present or in future, and not on contingent or hypothetical basis. There has to be some material on record to indicate, even if not to establish it to hilt, that an intra AE international transaction has some impact on profits, income, losses or assets; (iii) When an assessee extends assistance to the AE, which does not cost anything to the assessee and particularly for which the assessee could not have realized money by giving it to someone else during the course of its normal business, such an assistance or accommodation does not have any bearing on its profits, income, losses or assets, and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said impact has to be on real basis, even if in present or in future, and not on contingent or hypothetical basis. There has to be some material on record to indicate, even if not to establish it to hilt, that an intra AE international transaction has some impact on profits, income, losses or assets; (iii) When an assessee extends assistance to the AE, which does not cost anything to the assessee and particularly for which the assessee could not have realized money by giving it to someone else during the course of its normal business, such an assistance or accommodation does not have any bearing on its profits, income, losses or assets, and, therefore, it is outside the ambit of international transaction u/s 92B (1)." 11 17. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ALP of international transactions qua corporate guarantee has been determined by the AO as well as by the ld. CIT (A) merely by relying upon the amendment vide which Explanation to section 92B of the Act by the Finance Act, 2012 has been introduced by treating the same having retrospective effect, which is no more a valid and sustainable legal proposition. So, when explanation to section 92B of the Act is not applicable to the year under assessment, ALP of international transaction qua corporate guarantee cannot be determined. Furthermore, assessee company has filed the return of income declaring loss of Rs. 1,35,26,955/- as on 27.09.2011 and the flagship of the assessee company has accumulated brought forward losses to the tune of about ..... X X X X Extracts X X X X X X X X Extracts X X X X
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