DEPUTY COMMISSIONER OF INCOME TAX, GUNTUR V. CCL PRODUCTS (INDIA) LIMITED, DUGGIRALA

ITA 152/VIZ/2025

AI Insights

The case involves multiple appeals by the Deputy Commissioner of Income Tax, Guntur against CCL Products (India) Limited concerning the assessment years 2011-12, 2012-13, and 2016-17. The primary issues revolved around the treatment of corporate guarantees and the arm's length pricing of transactions between the assessee and its 100% subsidiaries. The CIT(A) had earlier deleted the additions made by the AO, which were challenged by the Revenue. The Tribunal, referencing previous decisions and the specific circumstances of the case, upheld the CIT(A)'s decisions, emphasizing that the corporate guarantees did not incur any costs to the assessee and thus did not affect its profits or assets.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633387 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Other Referred Cases: PCIT vs. Redington (India) Ltd [2020] 122 taxmann.com 136
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Transfer pricing; International transaction; Question of law; Rule of consistency; Notional interest; Wholly owned subsidiary
• Section: 143(3); 92B

Judgement Text

"आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM श्री िी. दुर्ाा राि, न्याधयक सदस्य, एिं श्री एस बालाक ृष्णन, लेखा सदस्य क ेसमक्ष BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A. No.97/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2011-12) Deputy Commissioner of Income Tax, Guntur-522004. PAN: AAACC9552G v. CCL Products (India) Limited, Guntur-522330, Andhra Pradesh. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) आयकरअपीलसं./I.T.A. No.98/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2012-13) Deputy Commissioner of Income Tax, Guntur-522004. PAN: AAACC9552G v. CCL Products (India) Limited, Guntur-522330, Andhra Pradesh. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) आयकरअपीलसं./I.T.A. No.152/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2016-17) Deputy Commissioner of Income Tax, Guntur-522004. PAN: AAACC9552G v. CCL Products (India) Limited, Guntur-522330, Andhra Pradesh. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 2 करदाता का प्रतततितित्व/ Assessee Represented by : Sri Ramesh Babu Kilaru, CA राजस्व का प्रतततितित्व/ Department Represented by : Dr. Satyasai Rath, CIT-DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 02/06/2025 घोर्णध की तधरीख/Date of Pronouncement : 10/06/2025 आदेश /O R D E R PER V. DURGA RAO, JM: The captioned appeals are filed by the Revenue against the orders of the Learned Commissioner of Income Tax (Appeals)-10, Hyderabad and the details are as under: Sl no ITA No. CIT(A)-10, Hyderabad appeal No. Date of order of the CIT(A) 1. 97/Viz/2025 CIT(A), Guntur- 1/10330/2019-20 20/12/2024 2. 98/Viz/2025 CIT(A), Guntur- 1/10331/2019-20 20/12/2024 3. 152/Viz/2025 CIT(A), Guntur- 1/10231/2019-20 16/01/2025 Since all these appeals pertaining to one assessee and the issues involved in these appeals are interconnected, these appeals are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given below: आयकरअपीलसं./I.T.A. No.97/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2011-12) 2. This appeal filed by the Revenue against the order of the Ld. CIT(A)-10, Hyderabad arising out of the order passed U/s. 143(3) r.w.s. ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 3 263 r.w.s 92CA of the Income Tax Act, 1961 (in short “the Act”), dated 20/12/2019 for the AY 2011-12. 3. Brief facts of the case are that the assessee is a company deriving income from manufacturing of instant coffee / soluble coffee, filed its return of income for the AY 2011-12 on 29/09/2011, declaring a total income of Rs. 30,45,17,213/-. Assessment was completed U/s. 143(3) r.w.s 92CA(3) of the Act on 17/03/2015 determining the total income of Rs. 31,07,62,680/- and made addition of Rs. 62,45,470/- as proposed by TPO towards difference in Arm’s Length Price in respect of interest charged on loans. Subsequently, the case was subjected to revision U/s. 263 of the Act and the Ld. Pr. CIT, Guntur has passed the order U/s. 263 of the Act, dated 08/11/2016 and directed the AO to examine the Bank Guarantees including corporate guarantees to its 100% subsidiaries and determine the ALP thereon to examine the applicability of provisions U/s. 271AA for failure to report the international transaction in the books of account. Thereafter, a reference was made to the Ld. Transfer Pricing Officer (in short “TPO”) in respect of the revisionary order U/s. 263 of the Act. As per the directions of the Ld. Pr. CIT, Guntur, the Ld. TPO determined the ALP and made an adjustment of Rs. 2,05,39,000/- towards commission @ 2% on corporate guarantee given by the assessee to its 100% subsidiaries and passed the order U/s. 92CA(3) of the Act on ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 4 25/10/2016. Thereafter, the Ld. AO giving effect to the order of the Ld. TPO made an addition of Rs. 2,05,39,000/- and determined the total income of the assessee at Rs. 32,50,56,213/- against the returned income of Rs. 30,45,17,213/- and passed the order U/s. 143(3) r.w.s 263 r.w.s 92CA(3) of the Act, dated 20/12/2019. Aggrieved by the order of the Ld. AO, the assessee carried the matter in appeal before the Ld. CIT(A). 4. On appeal, the Ld. CIT(A) after discussing the issue at length and by relying on various decisions of the ITAT on identical issue, including the assessee’s own case before the ITAT, Hyderabad for the AY 2013- 14, 2014-15 and 2015-16, deleted the addition made by the Ld. AO on account of corporate guarantee of Rs. 2,05,39,000/- vide para 7.9 of his order. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds of appeal: “1. The order of the Ld. CIT(A)-10, Hyderabad is erroneous both in law and on facts of the case. 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that corporate guarantee to Associated Enterprises is not an international transaction without appreciating the fact that with clarificatory amendment made to section 92B of the Act w.e.f 01/04/2022, corporate guarantee is clearly an international transaction as per section 92B of the Act? 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that corporate guarantee to Associated Enterprises is not an international transaction without appreciating the fact that by providing corporate guarantee the assessee is liable to pay to the lender entire loan amount including interest in the event of default by the borrower / AE and thus has a direct bearing on the profits or income or losses or assets of the assessee? ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 5 4. Whether the decision of the CIT(A) holding that corporate guarantee to Associated Enterprises is not an international transaction is violation of ratio laid down by Madras High Court in the c.ase of PCIT vs. Redington (India) Ltd [2020] 122 taxmann.com 136? 5. Any other grounds that may be urged at the time of hearing.” 5. At the outset, the Learned Departmental Representative submitted that the CIT(A) is not justified in holding that corporate guarantee to Associated Enterprises is not an international transaction. He further submitted that the Ld. CIT(A) has erred in appreciating the fact that with clarificatory amendment made to section 92B of the Act w.e.f 01/04/2002, corporate guarantee is clearly an international transaction as per section 92B of the Act. The Ld. DR further submitted that by providing corporate guarantee the assessee is liable to pay to the lender entire loan amount including interest in the event of default by the borrower / AE and thus has a direct bearing on the profits or income or losses or assets of the assessee. In support of his arguments, the Ld. DR relied on the decision of the Hon’ble Madras High Court in the case of PCIT vs. Redington (India) Ltd [2020] 122 taxmann.com 136. 6. Ld. Authorized Representative (in short “Ld. AR”) submitted that the Ld. CIT(A) by relying on various decisions of the ITAT including in the assessee’s own case for the AYs 2013-14, 2014-15 and 2015-16 held that providing corporate guarantee on behalf of its AEs would not constitute an international transaction within the meaning of section 92B of the Act. The Ld. AR further submitted that the decision of the Hon’ble Madras High Court in the case of PCIT vs. Redington (India) Ltd ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 6 [2020] 122 taxmann.com 136 (supra) relied on by the Ld. DR has no application to the present case of the assessee as the facts are entirely different. The Ld. AR further submitted that the Department has already carried the matter in appeal against the order passed by the CIT(A) before the Tribunal in the assessee’s own case and therefore, following the principle of consistency, the order passed by the Tribunal in the assessee’s own case may be followed. The Ld. AR further submitted that the assessee has not provided a bank guarantee on behalf of the 100% overseas subsidiaries whereas the assessee has provided only corporate guarantee. The loans availed by the subsidiary company are fully secured. In the case of PCIT vs. Redington (India) Ltd (supra), the assessee has provided bank guarantee and not corporate guarantee and also not 100% secured. Therefore, the Ld. AR pleaded that the decision of the Ld. CIT(A) may be upheld. 7. We have heard both the sides and perused the orders of the Ld. Revenue Authorities as well as the material available on record and also the judicial pronouncements relied on by both the Counsels. The core issue involved in the present appeal revolves around whether the corporate guarantee provided by the assessee to its AEs would constitute an international transaction or not? On this, we find that the Tribunal while dealing with the similar issue in various cases has held that the corporate guarantee given by the assessee on behalf of its AE ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 7 would not constitute an International Transaction within the meaning of section 92B of the Act. Further, we find that by considering the entire facts and circumstances of the instant case, the issue is covered by the assessee’s own case in ITA No. 191/Viz/2018, AY: 2013-14, dated 28/09/2018. For the sake of immediate reference, the relevant portion from the said order of the Tribunal, dated 28/09/2018 (supra), is extracted herein below: “5. We have heard both the parties and perused the material placed on record. During the appeal hearing, the Ld.AR argued that providing corporate guarantee to its AE would not constitute an international transaction as held by various tribunals and hence no adjustment is required. The ld.AR further submitted that the AE is 100% subsidiary of the assessee company, hence it is the obligation of the assessee to extend it’s support to improve the business and smooth running of the company without any financial impediment. Therefore the Ld.AR submitted that the corporate guarantee is given to it’s AE in the commercial interest and no expenditure was incurred, thus there is no case of any adjustment and no addition is warranted in the assessee’s case. The Ld.AR invited our attention to the decision of ITAT Kolkata, ‘C’ Bench in the case of DCIT, Circle-8(1), Kolkata Vs. M/s EIH Ltd., [2018] 89 taxmann.com 417 (Kolkata – Trib) wherein Hon’ble ITAT held as under : “12.12. Thus, we hold that when a parent company extends an assistance to the subsidiary, being associated enterprise, such as corporate guarantee to a financial institution for lending money to the subsidiary, which does not cost anything to the parent company, and which does not have any bearing on its profits, income, losses or assets, it will be outside the ambit of international transaction under section 92B(1) of the Act. In this regard, we would like to hold that issuance of corporate guarantee by the assessee to its AE would have influence on the profits, incomes, losses or assets of enterprise 'but not necessarily have any impact on the profits, incomes, losses or assets' as admittedly no consideration was received by the assessee in respect of this corporate guarantee from its AE. We find that the Ahmedabad Tribunal in the ease of Micro Ink Ltd. (supra) had observed that if a subsidiary (AE in the instant case) could not borrow money from third party sources on its own standing and the guarantee provided by the parent (assessee in the instant se) enables it to make such borrowing, then the guarantee could be said to be a shareholder function, not warranting a guarantee fee. This ratio ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 8 would squarely be applicable to the facts of the instant case before us.” 5.1. Similarly in the case Dr. Reddy Laboratories Limited Vs Additional Commissioner of Income tax, Circle-1(2), Hyderabad reported in 81 Taxman 398, the Coordinate Bench of ITAT Hyderabad ‘A’ held that where the assessee had not incurred any corporate guarantee charges on behalf of its AE it would not constitute international transaction within the meaning of 292B of the Act. For ready reference, we extract para No.29 of the order of the ITAT which reads as under : “29. We have carefully considered the rival contentions and perused the record. The ITAT, Delhi Bench in the case of Bharati Airtel Ltd., (supra) has considered an identical issue which was re- affirmed in the case of Siro Clinpharma (P.) Ltd. v. Dy. CIT [IT Appeal No. 2618 (Mum.) of 2014, dated 31-3-2016). The Bench observed that transfer pricing is a legislation seeking the tax- payers to organise their affairs in a manner compliant with the norms set-out. In short, it is an anti abuse legislation which tells you as to what is the acceptable behaviour but it does not trigger levy of tax in a retrospective manner because no party can be asked to do an impossibility. Analysing further the Bench observed that though Explanation to Section 92B is stated to be clarificatory, it has to be necessarily treated as effective from the A.Y. 2013- 2014 and in this regard, relied upon the observations of the Hon'ble Delhi High Court in the case of Skies Satellite. We have also analysed the case law relied upon by the Ld. D.R. and also the provisions of the Act. In our considered opinion, the view taken by the Delhi Bench of ITAT in the case of Bharati Airtel Ltd., (supra) is one of the possible views on the matter and so long as there is no binding decision of any other Higher Forum taking a contrary view, the one which is favourable to the assessee has to be adopted even though other Benches have taken a different view. We, therefore, hold that the Explanation to Section 92B cannot be applied retrospectively and for the years under consideration the assessee having not incurred any costs in providing corporate guarantee it would not constitute \"International Transaction\" within the meaning of Section 92B of the Act and consequently, ALP adjustment is not warranted on this aspect.” 5.2. Similar view was taken up by the Coordinate Bench of ITAT, Hyderabad in the case of Batronics India Ltd. (supra). In the instant case, the facts are identical. The assessee had given corporate guarantee to its 100% subsidiary and the AE for the purpose of business. The assessee had not incurred any expenditure towards the corporate guarantee. The revenue could not bring any evidence to establish that the assessee had incurred any expenditure for extending the corporate guarantee. As stated by the Ld.AR it is the obligation on the part of the assessee to ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 9 extend the support and assistance to its subsidiaries for business development. Since the facts are identical, respectfully following the view taken by coordinate benches in the case laws cited, we hold that the corporate guarantee given by the assessee on behalf of its AE would not constitute an international transaction within the meaning of 92B of the Act. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. 6. In the result, appeal of the revenue is dismissed.” 8. Respectfully following the view taken by the Coordinate Bench of the ITAT, Vizag Bench in the assessee’s own case (supra), wherein the Tribunal has relied on various decisions of the Tribunal on similar issue, we hold that the corporate guarantee given by the assessee on behalf of the AE in the absence of any expenditure being incurred by the assessee, would not constitute an international transaction within the meaning of section 92B of the Act. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the grounds raised by the Revenue. 9. In the result, appeal of the Revenue is dismissed. आयकरअपीलसं./I.T.A. No.98/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2012-13) 10. This appeal filed by the Revenue is against the order of the Ld. CIT(A)-10, Hyderabad arising out of the order passed U/s. 143(3) r.w.s 263 r.w.s 92CA(3) of the Act, dated 20/12/2019 for the AY 2012-13. 11. The Revenue has raised the following grounds of appeal: “1. The order of the Ld. CIT(A)-10, Hyderabad is erroneous both in law and on facts of the case. ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 10 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that corporate guarantee to Associated Enterprises is not an international transaction without appreciating the fact that with clarificatory amendment made to section 92B of the Act w.e.f 01/04/2022, corporate guarantee is clearly an international transaction as per section 92B of the Act? 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that corporate guarantee to Associated Enterprises is not an international transaction without appreciating the fact that by providing corporate guarantee the assessee is liable to pay to the lender entire loan amount including interest in the event of default by the borrower / AE and thus has a direct bearing on the profits or income or losses or assets of the assessee? 4. Whether the decision of the CIT(A) holding that corporate guarantee to Associated Enterprises is not an international transaction is violation of ratio laid down by Madras High Court in the case of PCIT vs. Redington (India) Ltd [2020] 122 taxmann.com 136? 5. Any other grounds that may be urged at the time of hearing.” 12. In this appeal, the Revenue has raised the identical grounds with that of the grounds raised in its appeal in ITA No.97/Viz/2025 for the AY 2011-12. In both the appeals, since the similar issue (corporate guarantee) is involved, our decision given while adjudicating the Revenue’s appeal for the AY 2011-12, in the above paragraphs of this order, mutatis mutandis applies to the present appeal for the AY 2012- 13 also. Accordingly, the grounds raised by the Revenue are dismissed. 13. In the result, appeal filed by the Revenue is dismissed. ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 11 आयकर अपीलसं./I.T.A. No.152/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2016-17) 14. This appeal filed by the Revenue is against the order of the Ld. CIT(A)-10, Hyderabad, dated 16/01/2024 arising out of the order passed U/s. 143(3) of the Act, dated 30/12/2019 for the AY 2016-17. 15. The Revenue has raised the following grounds of appeal: 1. The order of the Ld. CIT(A)-10, Hyderabad is erroneous both in law and on facts of the case. A. On the issue of sale of instant coffee to AE: (i) Whether on the facts and in the circumstances of the case and in law, the order of CIT(A) is in violation of Rule 10B(1)(a)(ii) of the IT Rules, 1962 for not providing any adjustment on account of differences between the “international transaction” and the comparable controlled transaction with Non-AE. (ii) Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in observing that the TPO erred in comparing only select number of items only but not considering entire sales made to AE and non-AE, without appreciating that the TPO has selected the appropriate comparables after making necessary adjustments as required under the CUP method? (iii) Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in comparing the entire sales made to EFSDAE with Non-AE without providing necessary adjustment for material differences such as price charged to the AE is inclusive of cost of insurance, transport and freight which is not the case with Non-AE? (iv) Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in comparing the entire sales made to AE with Non-AE without appreciating the fact that the invoices in the AE transactions were raised in USD and thus only the invoices raised in USD for Non-AE transactions are eligible for comparability purpose under CUP analysis? B. On the issue of Corporate Guarantee fees: (i) Whether on the facts and in the circumstances of the case and in law, the order of CIT(A) is justified in holding that corporate guarantee to AE is not an international transaction without appreciating the fact that with clarificatory amendment to section 92B of the Act w.e.f 01/04/2002, ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 12 corporate guarantee is clearly an international transaction as per section 92B of the Act? (ii) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that corporate guarantee to AEs is not an international transaction without appreciating the fact that by providing corporate guarantee the assessee is liable to pay the lender entire loan amount including interest in the event of default by the borrower / AE and thus has a direct bearing on the profits or income or losses or assets of the assessee? (iii) Whether the decision of the CIT(A) holding that corporate guarantee to AE is not an international transaction is violation of ratio laid down by Madras High Court in the case of PCIT vs. Redington (India) Ltd (2020) (122 taxmann.com 136)? (iv) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in observing that the corporate guarantee to AE is not an international transaction as the AE is a 100% subsidiary without appreciating that section 92B of the Acts does not provide this distinction between a 100% subsidiary and other subsidiaries? C. On the issue of interest on delayed receivables: (i) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in rejecting the benchmarking analysis carried out by the TPO? (ii) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that there was no case for making adjustment of interest on receivables without appreciating the fact that the outstanding trade receivables outside the allowed credit period to be received by the assessee from its AE falls under the definition of ‘international Transaction’ within the purview of Section 92B of the Income Tax Act, 1961 and needs separate benchmarking? (iii) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that there was no case for making adjustment of interest on receivables without appreciating the fact that it is now settled legal position that as per Explanation to section 92B by Finance Act, 2012 if there is any delay in realization of a trading debt arising from sale of goods or services rendered in course of carrying on of business, assessee is liable for transfer pricing adjustment on account of interest income short charged / uncharged as held by Hon’ble Delhi High Court in the case of MCkinsey Knowledge Centre India (P.) Ltd vs. Pr. CIT (2018) (96 taxmann.com 237) (Del) on which SLP filed by the assessee was also dismissed by the Hon’ble Supreme Court in 102 taxmann.com 439 (SC) (2019). ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 13 (iv) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in holding that there was no case for making adjustment of interest on receivables without appreciating the fact that the jurisdictional ITAT is consistently upholding that the interest on delayed outstanding is and “international transaction” in many cases such as M/s. TEK Systems Global Services (P) Ltd (ITA No. 487/Hyd/2022), M/s. Microchip Technology (India) Pvt Ltd (ITA No. 509/Hyd/2022), M/s. Aurobindo Pharma Ltd (ITA No. 320 & 351/Hyd/2023) etc. (v) Whether on the facts and in the circumstances of the case and in law, the CIT(A) is justified in observing that receivables were received in a reasonable period and there was no delay when the TPO has already allowed 60 days credit period as per industry standard and computed the delay after allowing this credit period? 2. Any other grounds that may be urged at the time of hearing.” 16. Ground No.1(A) raised by the Revenue relates to ALP adjustment suggested by the TPO in respect of difference in price charged to assessee’s AE when compared sale to non-AE. 17. Facts in brief are that from the assessment order it is observed that, during the FY 2015-16 relevant to the AY 2016-17, the assessee sold its single product viz., instant coffee [146674 kgs] to the tune of Rs. 74.46 Crs to its 100% subsidiary M/s. Grandsaugreen SA, Switzerland in various packing sizes ranging from 45 gms to 500 gms and also in bulk sizes. For this, the assessee adopted CUP method and held the same to beat Arm’s Length and did not suggest any adjustment. The assessee further submitted that the TPO refused to follow the CUP method and adopted TNMM method for determining the ALP and also stated that no adjustment could be made under the method as the assessee’s net profit margin was highest in the industry ie., 23%. The ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 14 assessee further submitted that the TPO is not able to make any adjustment under TNMM, since the AY 2015-16 onwards, Department started following CUP method but while doing so, started cherry-picking the sizes favourable to them with the sole intention of making the TP adjustment which is unfair and unjust. Later on, when the matter reached to the Ld. CIT(A), the assessee relied on various case laws as well as the decision of the Ld. CIT(A) in the assessee’s own case for the AY 2015-16, wherein the Ld. CIT(A) deleted the addition made by the Ld. AO. The Ld. CIT(A), after considering the submissions of the assessee and also following the decision of the ITAT, Vizag Bench in the assessee’s own case vide order dated 07/01/2020, deleted the addition made by the AO amounting to Rs. 4,10,64,562/- by observing as under: “6.6.4. In view of the above, and since the facts for the AY 2016-17 are similar to the facts for the AY 2015-16 and respectfully following the above Hon’ble ITAT’s decision in the appellant’s own case, the addition made by the AO of Rs. 4,10,64,562/- on account of adjustment towards alleged difference in price charged to 100% step-down subsidiary viz., Grandsaugree SA Switzerland, is hereby deleted. Accordingly, the grounds No. 2 to 5 are allowed.” Aggrieved by the order the Ld. CIT(A), the Revenue is in appeal before us. 18. At the outset, the Ld. Departmental Representative (Ld. DR) heavily relied on the orders of the Ld. AO and the Ld. TPO and argued in support of the same. ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 15 19. On the other hand, the Ld. Authorized representative (Ld. AR) vehemently argued in support of the decision taken by the Ld. CIT(A). The Ld. AR further submitted the issue on hand is clearly covered by the decision of the Vizag Bench of the Tribunal in the assessee’s own case in ITA No. 433/Viz/2019, AY 2015-16, dated 07/01/2020. Therefore, the Ld. AR pleaded that since there is no change in the facts and circumstances of the case, the decision taken by the Tribunal in the assessee’s own case for the AY 2015-16 (supra) may be applied to the AY under consideration also. 20. We have heard both the sides and perused the orders of the Ld. Revenue Authorities as well as the material available on record. We have also gone through decision of the Tribunal in the assessee’s own case in ITA No. 433/Viz/2019 (supra) wherein the Tribunal has dealt with the similar issue and held as under: “22. We find that the assessee has supplied instant coffee to the AEs and non-AEs in different sizes i.e. 11 sizes, out of which the TPO has taken only two sizes i.e. 100 grams and 200 grams and suggested adjustment. The case of the assessee is that when the same product is supplied to AE as well as non-AE in out of 11 sizes, 6 sizes the assessee has charged to AE higher rate and 5 sizes lower rate, therefore once the entire supply is the same product the entire sales made to AE and non-AE has to be considered and adjustment has to be made. This was not considered by the TPO. The ld. CIT(A) by considering the same and gave a finding that TPO is not correct in selecting two items out of 11 items suggested adjustment for the purpose of arriving at ALP. He further gave a finding that if the entire sales is considered the irrespective of size of packaging difference is only 1.49% which is permissible limit as per provisions of law. As per proviso to sub-section (2) of section 92C, the difference to the extent of 3% is permissible. We further find that the assessee by submitting all the details explained before the TPO that the assessee has charged for AE as well as non-AE similar prices for the supply of instant ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 16 coffee and no profit has been shifted to AE, however, the TPO not accepted the explanation given by the assessee and suggested TP adjustment without giving any reasons. The TPO has not given what is the reason for choosing only two sizes 100 grams and 200 grams, when the assessee specifically submitted before the TPO that out of 11 sizes, 6 sizes the assessee has charged high price and submitted that average has to be taken. Without considering the same, the TPO simply suggested adjustment by taking only two sizes, in our opinion, the assessee has discharged the burden casted upon him to show that it has not shifted profits to AE, therefore it is the duty of the TPO to establish that the assessee has shifted profits to AE. In this case, without giving any reason simply suggested TP adjustment by the TPO. We find that TPO is not correct. Thus, we find that the ld. CIT(A) has considered the facts and directed the Assessing Officer to delete the addition. We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.” 21. Respectfully following the decision of the coordinate Bench of the ITAT, Vizag in the assessee’s own case in ITA No. 433/Viz/2019 (supra), we have no hesitation to come to a conclusion that the Ld. CIT(A) has rightly adjudicated the issue and therefore, we find no reason to interfere with the order passed by the Ld. CIT(A). Thus, the Ground No. 1(A) raised by the Revenue is dismissed. 22. Ground No. 1(B) relates to corporate guarantee fees. This issue is identical to that of the issue raised by the Revenue in its appeal in ITA No.97/Viz/2025 for the AY 2011-12. In both the appeals, since the similar issue is involved, our decision given while adjudicating the Revenue’s appeal for the AY 2011-12, in the above paragraphs of this order, mutatis mutandis applies to the present appeal for the AY 2016- 17 also. Accordingly, this Ground No.1(B) raised by the Revenue is dismissed. ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 17 23. Ground No. 1(C) relates to interest on receivables. Brief facts of the issue are that as observed by the TPO from the assessee’s annual report that there are trade receivables of Rs. 736.74 lakhs from the AE M/s. Grandsaugreen S.A. Switzerland and accordingly the TPO informed the assessee that in case of trade receipts from AEs beyond credit period, the delayed receipts are proposed to be treated as “unsecured loans” advanced to the AEs for the period of delay and the interest rate is proposed to be charged on the basis of average SBI PLR during the financial year 2015-16. Further, the assessee was asked by the TPO to furnish invoice wise aging details of outstanding receivables, in respect of all invoices raised during the FY 2015-16 as well as the invoices which were raised in the previous FYs but remained unpaid on the opening day of current FY 2015-16 vis-à-vis credit period as per their service agreement with its AEs. The TPO after a detailed discussion computed the Arm’s Length interest amount to be charged Rs. 47,90,497/- and accordingly, the AO made the addition. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). 24. On appeal, the Ld. CIT(A) after considering the submissions of the assessee and by relying on the decision of the ITAT, Vizag Bench in the assessee’s own case for the AY 2015-16 deleted the addition made by the AO vide paras 6.8.2 and 6.8.3 of his order. For the sake of immediate reference, the relevant paras are culled out as under: ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 18 “6.8.2. During the course of appellate proceedings, with regard to the addition, the appellant submitted that they furnished all the details required by the TPO and also strongly objected for adjustment on this account by treating the same as international transaction. Further, the appellant contended that the TPO while computing the interest on extra period allowed to their AE, conveniently ignored the many instances of early realizations ie., less than the standard 60 days credit period which is highly unjustified. The appellant submitted that the TPO wrongly adopted interest rate of 8% whereas their company is a cash rich company with huge share capital and reserves to the tune of 446.70 Crs as on 31/03/2016 and does not have any long term borrowings, even their working capital (PCFC) rate of interest is only between 1.2428% to 1.4195% p.a. and hence the interest rate adopted is very high considering the specific facts of the case. In this regard, appellant relied on various case laws and also submitted that the Hon’ble ITAT, Visakhapatnam decision for the AY 2015-16 in the appellant’s own case wherein the Hon’ble ITAT, Visakhapatnam, relying on the decision of the Coordinate Bench of the Tribunal in the appellant’s own case for the AY 2014-15, has dismissed the revenue appeal on the above ground. 6.8.3. In view of the above and since the facts of the appellant’s case referred above are similar to that of the year under consideration and respectfully following the Hon’ble ITAT, Visakhapatnam, decision the addition made by the AO of Rs. 47,90,497/- on account of interest on outstanding receivables is hereby deleted…..” Aggrieved by the order the Ld. CIT(A), the Revenue is in appeal before us. 25. At the outset, the Ld. Departmental Representative (Ld. DR) heavily relied on the orders of the Ld. AO and the Ld. TPO and argued in support of the same. 26. On the other hand, the Ld. Authorized representative (Ld. AR) vehemently argued in support of the decision taken by the Ld. CIT(A). The Ld. AR further submitted that the issue on hand is clearly covered by the decision of the Vizag Bench of the Tribunal in the assessee’s own case in ITA No. 348/Viz/2018, AY 2014-15, dated 03/04/2019. Therefore, the Ld. AR pleaded that since there is no change in the facts ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 19 and circumstances of the case, the decision taken by the Tribunal in the assessee’s own case for the AY 2014-15 (supra) may be applied to the AY under consideration also. 27. We have heard both the sides and perused the orders of the Ld. Revenue Authorities as well as the material available on record. We have also gone through decision of the Tribunal in the assessee’s own case in ITA No. 348/Viz/2018 (supra) wherein the Tribunal has dealt with the similar issue and held as under: “7. We have considered the arguments of both the parties. The issue is similar to the facts of the case of this Tribunal relied upon by the Ld.AR. in the case of Mahati Software Pvt. Ltd supra., wherein the Coordinate Bench held that no separate benchmark is required on receivables when PLI is comparable. For the sake of clarity and convenience, we extract para No.17 and 17.1 of the said order which reads as under : “17. We have heard both the parties and perused the material placed on record. In this case, there were receivables outstanding for both the assessment years which was not received in time. It was also observed that the receivables were not received during the entire year. The Ld.TPO has not furnished the delay in recovery of receivables and period of outstanding. As per the order of the TPO, the PLI margin in the assessee’s case is 37.26% which is higher than the average margin of comparable case. The interest on receivables is bench marked to equate the PLI of the tax payer company with that of comparable company. The TPO has accepted that there is no arm length adjustment is required in this case on account of margin. The AO has not brought on record to show that the assessee has extended undue credit to the AE for the period beyond the time specified in the master service agreement. The AO has also not made out a case that there was any undue advantage by extending credit on receivables by the assessee. Though there was financial impact on giving loans from the funds of the assessee such impact cannot be imparted in the case of receivables when the PLI is comparable. Hon’ble ITAT Hyderabad in the case of Cura Logistics relied upon by the assessee held that on trade advance, no interest is leviable, relying on the decision of GSS Infotech Ltd. Vs. ACIT (supra).In the case of Bartronics India Ltd., ITAT Hyderabad has held that if the work contract is within the ALP, there is no separate requirement for bench marking the interest on trade advances. The assessee relied on the decision of this tribunal in GVK Power & Infrastructure Ltd. vs ACIT Circle-2(1) dated 18/05/2018 where in ITAT held that no notional interest is chargeable on delayed payments. For ready reference we extract the relevant para ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 20 of the ITAT’s order in GVK Power & Infrastructure Ltd which reads as under: 12. Even otherwise as observed from the order of the TPO on three occasions, there was a delay of receivables and pointed out by the Ld. A.R. the assessee is not indulged in any systematic or organized activity of allowing the undue credit to the AEs. The assessee relied on the decision of Motherson SumiInfotech & Designs Limited Vs. DC1T reported In (2018) 52 CCH 0122 Delhi, and Hon'ble ITAT Delhi held as under: 5. We have considered the rival submissions and perused the material available on record. The assessee has given several reasons to explain that it being a business transaction, commercial consideration should have been considered by the authorities below. It was explained that the long term business relation with the customer and A.E. predicate waiver of this right. The interest is only associated with the loans and not services. It was explained that payments are received only after satisfaction of the customer and therefore, there was delay in receiving the payments. The assessee also explained before T.P. authorities below that average outstanding days for recovering sales dues was 57 days in the case of A.Es, whereas, in the case of non-A.E. it was 66 days. It was also explained that non-charging of interest from A.Es. as well as non- A.E. on interest receivables was that it being pre-dominantly involved in the provision of services to it's A.Es. as well as third parties. The contention of the assessee have not been disputed by the authorities below. It may also be noted here that all international transactions were accepted by the TPO to be at arm's length, except, payment of interest on loan. The authorities below have treated the delayed payment beyond 30 days as loans. In fact, no loan have been extended by the assessee. It was the amount ‘due' against the A.Es. as well as non-A.E. on which interest have been charged by considering the deemed loans. Therefore, the decision of ITAT, Delhi Bench in the case of M/s. Kusum Healthcare Pvt. Ltd., (supra), squarely apply in the case of the assessee, since the assessee earned significantly higher margin than the comparable companies, which have been accepted by the TPO, therefore, there was no justification to charge interest on outstandings. The decision of Hon'ble jurisdictional Delhi High Court in the case of Pr. CIT vs. Kusum Healthcare Pvt. Ltd.,(supra), squarely apply to the facts and circumstances of the case. The assessee also explained that there are similar delays in collection of outstanding receivables from both A.Es and non-A.Es which is due to business and commercial reasons. Therefore, there is uniformity in act of assessee in not charging interest from A.Es and non-A.Es. Therefore, the decision of the Hon'ble Bombay High Court in the case of CIT vs. Indo American Jewellery Ltd., (supra), squarely apply to the facts of the case. 5.1. Considering the nature of business of assessee and the facts explained above, we are of the view that there was no justification for the authorities below to make adjustment to the income declared by assessee. Recently, the ITAT, I-2 Bench in the case of Terradata India Pvt. Ltd., vs. ACIT in ITA.No.7885/Del./2017 vide order dated 21st February, 2018, following the order in the case of same assessee, in which the decision of Hon'ble jurisdictional Delhi High Court in the case ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 21 of Pr. CIT vs. M/s. Kusum Healthcare Pvt. Ltd., (supra), have been relied upon, allowed the appeal of assessee on the similar ground. In view of the above discussion and in the light of various decisions above and facts of the case, we are of the view that the adjustment to the income of the assessee is wholly unjustified on account of interest on receivables. We, accordingly, set aside the orders of the authorities below and delete the entire addition. 6. In the result, appeal of the assessee is allowed. The department has not made out case of systematic planning of allowing the undue credit to the AE. Further Ld.AR relied on the decision of Pr.CIT vs B.C.Management Services (P) Ltd, (2018) 164 DTR (Del)299 where in Hon’ble Delhi High court held that delayed payment made by AE cannot be treated as part of income. For ready reference we extract the relevant part of the order of the Hon'ble DeIhi High court which reads as under: 9. With respect to the treatment of notional interest by the TPO/AO, the Court is of the opinion that no question of law arises. In an identical situation, in Principal Commissioner of Income Tax Vs. Bechtel India Pvt. Ltd. ITA 379/2016, decided on 21.07.2016, the Court had held that such notional income on account of delayed payment made by the AO cannot be treated as part of the income and made the subject matter of the adjustments. While rendering the judgement the Hon'ble High court has considered the decision in the case of Bechtel India (P) ltd. Therefore, placing reliance on the decision of Motherson SumiJnfotech& Designs Limited Vs. DCIT (supra) and the decision in the case of B.C.Managemerit services (P) Ltd we hold that the revenue has not made out case of disallowance of notional interest on delayed payments and accordingly, we set aside the orders of the authorities below and delete the addition. The appeal of the assessee on this ground is allowed. 17.1. In the instant case the PLI is higher than comparable cases and the TPO held that no ALP adjustment is required with regard to profit margin. The assessee contended that having accepted that the PLI is higher than the comparable cases the potential loss of interest is taken care and embedded in the sale price. The department has not given the specific details such as what was the period of recovery, what was the delay, what was the reasonable delay etc., thus the department has not made out a case for charging the interest on delay. The revenue also did not controvert the submission of the assessee that due to higher margins and the long term relations and business considerations the right of interest is waived. In the case of M/s Cura Technologies supra Hon’ble ITAT , Hyderabad bench has held that no interest required to be charged on trade advances. Similar view was taken by the ITAT, Hyderabad in the case of M/s Bartronics supra. Therefore respectfully following the decisions cited supra, we hold that there is no justification for charging the interest on receivables in the case of the assessee, accordingly, we delete the interest levied on receivables and allow the appeals of the assessee for the assessment year 2011-12 and 2012-13.” ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 22 7.1 The Ld.AR also relied on the decision of GVK Power & Infrastructure Ltd. Vs. ACIT, 94 taxmann.com 415 of this bench on similar issue. For ready reference we extract para No.12 of the said order which reads as under: 12. Even otherwise as observed from the order of the TPO on three occasions, there was a delay of receivables and pointed out by the Ld. A.R. the assessee is not indulged in any systematic or organized activity of allowing the undue credit to the AEs. The assessee relied on the decision of Motherson SumiInfotech& Designs Ltd. (supra), and Hon'ble ITAT Delhi held as under: \"We have considered the rival submission and perused the material available on record. The assessee has given several reasons to explain that it being a business transaction, commercial consideration should have been considered by the authorities below. It was explained that the long term business relation with the customer and A.E. predicate waiver of this right. The interest is only associated with the loans and not services. It was explained that payments are received only after satisfaction of the customer and therefore, there was delay in receiving the payments. The assessee also explained before T.P. authorities below that average outstanding days for recovering sales dues was 57 days in the case of A.Es, whereas, in the case of non A.E., it was 66 days. It was also explained that non charging of interest from A.E.s as well as non A.E. on interest receivables was that it being predominantly involved in the provision of services to it's A.Es as we l as third parties. The contention of the assessee have not been disputed by the authorities below. It may also be noted here that all international transactions were accepted by the TPO to be at arm's length, except, payment of interest on loan. The authorities below have treated the delayed payment beyond 30 days as loans. In fact, no loan have been extended by the assessee. It was the amount 'due' against the A.Es as well as non A.E on which interest have been charged by considering the deemed loans. Therefore, the decision of ITAT, Delhi Bench in the case of M/s. Kusum Healthcare Pvt. Ltd., (supra) squarely apply in the case of the assessee, since the assessee earned significantly higher margin than the comparable companies, which have been accepted by the TPO, therefore, there was no justification to charge interest on outstanding. The decision of Hon'ble jurisdictional Delhi High Court in the case of Pr. CIT v. Kusum Healthcare Pvt. Ltd. (supra) squarely apply to the facts and circumstances of the case. The assessee also explained that there are similar delays in collection of outstanding receivables from both A.Es and non AEs which is due to business and commercial reasons. Therefore, there is uniformity in act of assessee in not charging interest from AEs and non AEs. Therefore, the decision of the Hon'ble Bombay High court in the case of CIT v. Indo American Jewellery Ltd. (supra) squarely apply to the facts of the case. 5.1 Considering the nature of business of assessee and the facts explained above, we are of the view that there was non justification for the authorities below to make adjustment to the income declared by assessee. Recently, the ITAT, I-2 Bench in the case of Terradata India Pvt. Ltd. v. ACIT in ITA No.7855/Del/2017 vide order dated 21st ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 23 February, 2018, following the order in the case of same assessee, in which the decision of Hon'ble jurisdictional Delhi High Court in the case of Pr. CIT v. M/s. Kusum Healthcare Pvt. Ltd. (supra) have been relied upon, allowed the appeal of assessee on the similar ground. In view of the above discussion and in the light of various decisions above and facts of the case, we are of the view that the adjustment to the income of the assessee is wholly unjustified on account of interest on receivables. We, accordingly, set aside the orders of the authorities below and delete the entire addition.\" The department has not made out case of systematic planning of allowing the undue credit to the AE. Further Ld.AR relied on the decision of Pr.CIT v. B.C. Management Services (P.) Ltd. [2018] 89 taxmann.com 68/253 Taxman 138/403 ITR 45 (Delhi) where in Hon'ble Delhi High court held that delayed payment made by AE cannot be treated as part of income. For ready reference we extract the relevant part of the order of the Hon'ble Delhi High court which reads as under: \"9. With respect to the treatment of notional interest by the TPO/AO, the Court is of the opinion that no question of law arises. In an identical situation, in Bechtel India (P.)Ltd.(supra), the Court had held that such notional income on account of delayed payment made by the AO cannot be treated as part of the income and made the subject matter of the adjustments. The question no. 2 and 3 therefore does not arise for consideration.\" While rendering the judgment the Hon'ble High court has considered the decision in the case of Bechtel India (P.) Ltd. (supra) Therefore, placing reliance on the decision of Motherson SumiInfotech& Designs Ltd. (supra) and the decision in the case of B.C. Management services (P.) Ltd. (supra) we hold that the revenue has not made out case of disallowance of notional interest on delayed payments and accordingly, we set aside the orders of the authorities below and delete the addition. The appeal of the assessee on this ground is allowed 7.2 The facts of the assessee’s case are similar. In the instant case also it is established that the transactions with the AEs are at arms length price. All the AEs are 100% subsidiary companies and the assessee is debt free company having large amount of reserves. The department has not made out a case of undue advantage of allowing credit. The Ld. CIT(A) has given finding that the receivables were received in reasonable period and there was no delay. The department did not place any evidence to controvert the finding given by the Ld. CIT(A). Therefore, we hold that there is no case for making adjustment of interest on receivables in the assessee’s case. Ld. DR did not place any other decision of the Apex Court to controvert the case laws relied upon by the assessee. Accordingly, we uphold the order of the Ld. CIT(A) and appeal of the revenue on this ground is dismissed.” 28. Respectfully following the decision of the coordinate Bench of the ITAT, Vizag in the assessee’s own case in ITA No. 348/Viz/2018 (supra), ITA NO. 97, 98 & 152/Viz/2025 DCIT VS. CCL PRODUCTS INDIA LIMITED Page No. 24 we have no hesitation to come to a conclusion that the Ld. CIT(A) has rightly adjudicated the issue and therefore, we find no reason to interfere with the order passed by the Ld. CIT(A). Thus, the Ground No. 1(C) raised by the Revenue is dismissed. Ground No.2 is general in nature and needs no adjudication. 29. In the result, appeal filed by the Revenue is dismissed. 30. Ex-consequenti, all the three appeals filed by the Revenue are dismissed. Order pronounced in the open court on 10th June, 2025. Sd/ (एस बालाक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/ (िी. दुर्ाा राि)Sd/- (V. DURGA RAO) न्याधयक सदस्य/JUDICIAL MEMBER Dated : /06/2025 Okk, Sr.PS आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to :- 1. निर्धाररती/ The Assessee : (i) CCL Products (India) Limited, Duggirala (Post & Mandal), Guntur, Andhra Pradesh. 2. रधजस्व/ The Revenue : (i) Deputy Commissioner of Income Tax, 2nd Floor, Standard House, Nagarampalem, Guntur-522004, Andhra Pradesh. 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम/DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल/ Guard file //True Copy// आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "