TMI Blog2023 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet entry, then the addition shall be deleted. Business advances - We agree with the DR and in the interest of justice, we set aside this issue to the file of the learned Assessing Officer/learned TPO for verification whether these trade advances are the result of the regular business transactions of the assessee with its AEs on account of any business expediency. We accordingly direct the learned Assessing Officer/learned TPO to cause such verification and if it is found to be so, then, no adjustment is warranted and the same has to be deleted. For this purpose, the issue under grounds No. 14 to 23 is restored to the file of the learned Assessing Officer/learned TPO. Corporate guarantee - As respectfully following the view taken in the case of Glenmark Pharmaceuticals Ltd. [ 2013 (11) TMI 1583 - ITAT MUMBAI] we deem it just and proper to accept the ALP of corporate guarantee at 0.53%. we accordingly directing the learned Assessing Officer/learned TPO to adopt the same. Grounds answered accordingly. Disallowance of interest on TDS - As brought to our notice that in the decision in Taksheel Solutions Ltd [ 2016 (7) TMI 840 - ITAT HYDERABAD] has taken a vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of corporate issue on disallowance on TDS. We shall now deal with the same hereunder. Assessee also challenged the reference made by the learned Assessing Officer to the learned TPO vide grounds No. 1 to 6, but at the time of arguments, not pressed the same. 5. Coming to the reimbursement of expenditure, covered by grounds No. 7 to 13, according to the learned TPO, the assessee represented before him that the assessee recovered the salary and travel related expenses incurred on certain employees working for Ocimum Biosolutions (Inc) which has been reimbursed on cost to cost basis. Learned TPO, however, opined that no independent party would render such services without any markup. On this assumption, learned TPO proceeded to make the addition of Rs. 27,38,773/- on an estimate of 10%. 6. Before the learned DRP, the assessee s case was same but the learned DRP, without going into the fact whether or not the assessee actually received any markup, followed the view taken by the Co-ordinate Bench of this Tribunal in the case of M/s. Kirbi Building Systems India Ltd., in ITA No. 1759/Hyd/2012 and ITA No. 262/Hyd/2014 for the assessment year 2008-09, upheld the levy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth Price (ALP) could be determined. 12. Learned TPO, however, observed that section 92B is retrospectively amended by insertion of explanation by Finance Act, 2012 and, therefore, lending and borrowing is also an international transaction for which ALP needs to be determined. Learned TPO accordingly proceeded and observed that since the taxpayer obtained loan from the directors, carrying 12% interest rate, ALP has to be determined at 12% by taking the internal CUP of such transaction of lending and borrowing. 13. Before the learned DRP, assessee argued that charging interest on trade advances given by the assessee to its subsidiaries is not justified, the assessee provided trade advances to AEs for administrative convenience and for smooth functioning of business and, therefore, classified the same as such in the financial statements. Inasmuch as there is no income component and the transactions are not covered by section 92B of the Act as on such date no adjustment is warranted. It is further contended that the assessee has been declaring substantial profits from its subsidiary companies in its consolidated profits and, therefore, no separate benchmarking is warranted. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently argued by the learned AR that the transaction relating the issue of corporate guarantee does not involve any costs to the assessee and does not fall within the scope of the term international transaction even after the insertion of explanation to section 92B of the Act by Finance Act, 2012 with effect from 01/04/2002, and, therefore, there is no requirement of such transaction to be reported in form No. 3CEB. 19. Learned DR, however, submitted that this issue is no longer available to be agitated by the assessee and it is descended by the Hon ble Madras High Court in the case of PCIT Vs. Redington (India) Ltd., (2020) 122 taxmann.com 136 (MAD). 20. Learned AR in the alternative, pleaded that corporate guarantee at 1.75% determined by the learned DRP is too high and cannot be sustained. Basing on the view taken by the Co-ordinate Benches of this Tribunal in the cases of Aster Private Limited Vs. DCIT in ITA No. 220/Hyd/2015 and DCIT Vs. Lanco Infratech Limited, 81 taxmann.com 381 (Hyderabad Tribunal) he prayed that the ALP in respect of Corporate Guarantee fee may be determined at 0.25%. On this aspect, the learned DR submitted that the ALP at 0.25% is absurdly low and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
