TMI Blog2022 (4) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] there is no need for the ld. TPO to take a divergent stand when there is no change in the facts and circumstances during the year with that of earlier years. Hence, we direct the ld. TPO to delete the adjustment made in respect of guarantee fees - Decided in favour of assessee. - ITA No. 1106/Mum/2017 - - - Dated:- 13-4-2022 - Shri Vikas Awasthy, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Shri. P.J. Pardiwala Sr. Advocate with Shri Madhur Agrawal. For the Revenue : Shri Milind Chavan. ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.1106/Mum/2017 for A.Y.2012-13 preferred by the order against the final assessment order passed by the Assessing Officer dated 14/12/2016 u/s.143(3) r.w.s. 144C(13) of the Income Tax Act, hereinafter referred to as Act, pursuant to the directions of the ld. Dispute Resolution Panel (DRP in short) u/s.144C(5) of the Act dated 05/12/2016 respectively for the A.Y.2012-13. 2. The ground No.1 raised by the assessee is with regard to determination of Arm s Length Price (ALP) of the international tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said services. The assessee chose seven comparables and applying single year updated margins of seven comparable companies arrived at the arithmetic mean of 3.07% applying Operating Profit / Operating Cost (OP/OC) as Profit Level Indicator (PLI). This arithmetic mean margin of 3.07% was compared with assessee s margin of 237.32% and accordingly, assessee concluded that its transaction is at arm s length. 3.3. The assessee was asked to provide the details relating to the amount of guarantee issued by it on behalf of the clients based on counter guarantee issued by overseas branches of ANZ. Assessee was also asked to provide back-up document in respect of the above transaction and the average rate at which guarantee fees has been charged by the assessee to its AEs. All these details were submitted by the assessee vide its submissions dated 28/10/2015, 16/12/2015, 17/12/2015 and 18/12/2015. The ld. TPO observed that assessee had earned processing fees for issuing guarantees on behalf of its AEs at an average rate of 0.02%. The ld. TPO observed that assessee had used comparables that are pertaining to support services industry which are not comparable with the activity of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ANZ are situated in India. The overseas branches of ANZ request the assessee to provide such guarantees to the beneficiaries and inturn provide a back to back inter-bank guarantee / indemnity to assessee to cover any financial liability that assessee may incur in connection with guarantees issued to Indian beneficiaries on behalf of overseas ANZ branches. This is the prime function / activity carried out by the assessee with regard to the impugned international transaction. In case where the client of the overseas branch defaults and the guarantee would be invoked then, under the back to back guarantee issued to assessee, the overseas branch would make payments to assessee which would onward then make the payment to the beneficiary in India. 3.6. Hence, from the aforesaid modus operandi, it could be concluded that assessee acts as a beneficiary bank i.e. issue guarantee in India on behalf of clients of overseas branches of ANZ based on the counter guarantee issued by such overseas ANZ branches. Since assessee is acting as the beneficiary, the entire risk of discharging the bank guarantees is borne by overseas ANZ branch issuing the counter guarantee. The assessee merely prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n services. Effectively all these services could be loosely termed as business support services. Hence, when the data under CUP method is not available and data of margins under TNMM is readily available, then it would be appropriate to apply TNMM method as the Most Appropriate Method (MAM) in the facts and circumstances of the instant case. 3.7. We find that assessee had explained the entire transactions and the modus operandi applied by it in respect of the guarantee transactions before the ld. TPO which are evident vide letter dated 09/10/2015 together with the fee charged for each type of services rendered by it. These details are enclosed in pages 316 to 322 of the paper book filed before us. We also find the assessee vide its letter dated 28/10/2015 had filed a detailed annexure enclosed in pages 328-331 of the paper book listing the guarantees issued by it based on counter guarantee received from overseas branches of ANZ. The assessee also furnished the sample documents enclosing the copy of swift message received from ANZ New York advising the assessee to issue guarantee to Indian beneficiaries like Reliance Infrastructure Ltd., and providing counter guarantee. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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