TMI Blog2023 (2) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... rate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. We therefore partly allowed the grounds raised by the assessee. - SHRI DUVVURU RL REDDY, HON BLE JUDICIAL MEMBER AND SHRI S BALAKRISHNAN, HON BLE ACCOUNTANT MEMBER For the Appellant : Smt. SuvibhaNolkha, CA For the Respondent : Sri MN Murthy Naik, CIT-DR ORDER PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the final assessment order of the Ld. Assessing Officer [AO] passed U/s. 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 [the Act] for the AY 2014-15. 2. Brief facts of the case are that the assessee-company is engaged in the business of manufacture and tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in Form 3CEB as shareholder activity by using other method. Before the Ld. TPO it is the submission of the assessee that the corporate guarantee given by them is different from letter of credit usually given by banks and it more in the nature of personal guarantees given by the promoters of the companies in India for the loan taken by the AE companies from banks outside India. It was also submitted that on account of this corporate guarantee, neither the assessee s AEs gained any direct financial benefit nor any expense was absorbed by the assessee (parent company) on behalf of its AEs and requested to drop the TP adjustment in this regard. After considering the submissions of the assessee as well as on perusal of the information obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout prejudice to the above ground, not making adjustment for the differences in the comparable transactions selected vis- -vis corporate guarantee provided by the company. e. Without prejudice to the above, not considering the bank guarantee commission rate charged by the bank to the appellant as a benchmark. OTHER GROUNDS 2. Levy of interest U/s. 234B of the act of INR 6,71,027/-. 3. Levy of interest U/s. 234C of the Act of INR 1,45,673/. 4. Initiating penalty proceedings U/s. 271(1)(c) of the Act. 4. In the grounds of appeal, though the assessee has raised four grounds, but the main issues involved are: (i) Whether the corporate guarantee given by the assesseecompany to its AEs for the loan taken by the AEs can be considered as an inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench of the Tribunal held that the provision of corporate guarantee on behalf of the AE without incurring any cost would not constitute international transaction within the meaning of section 92B of the Act. The Ld. AR further submitted that the above view was also held in the case of Dr. Reddy s Laboratories Limited vs. Addl. CIT reported in 81 taxmann.com 398. The Ld. AR further submitted that for bank guarantee facility provided by Axis Bank the rate adopted was 0.4% and in case if the Bench decides to treat the corporate guarantee as an international transaction in the alternative the rate of 0.4% shall be considered. The Ld. AR further submitted that as per the OECD guidelines corporate guarantee is not an international transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate guarantee given to the AE is an international transaction and shall be chargeable @ 0.50% on the amount of corporate guarantee given to the AEs. In view of the above discussions and by respectfully following the ratio laid down in various judicial pronouncements as discussed above, we are of the considered view that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. We therefore partly allowed the grounds raised by the assessee. 7. Grounds No. 2, 3 4 raised by the assessee are consequential in nature and therefore need no separate adjudication. 8. In the result, appeal of the assessee is partly allowed. Pronounced in the open Court on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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