PERI (INDIA ) P.LTD, MUMBAI V. JT CIT (OSD) CIR -13(1)(2), MUMBAI

ITA 3181/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3499 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSHIL MISHRA
• Keywords: Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Additional evidence; Wholly owned subsidiary; Non-deduction of tax; Corroborative evidences; Set aside
• Section: 143(3); 206AA; 250; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3181& 4608/MUM/2019 ASSESSMENT YEAR: 2012-13 PERI (INDIA) PRIVATE LIMITED, 1406, DLH PARK, S.V. ROAD, GOREGAON WEST, MUMBAI-400062. VS. JT. COMMISSIONER OF INCOME TAX (OSD), CIRCLE-13(1)(2), ROOM NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400020. PAN NO. AAECP 4115 E APPELLANT RESPONDENT ITA NO. 3182 & 4607/MUM/2019 ASSESSMENT YEAR: 2013-14 PERI (INDIA) PRIVATE LIMITED, 1406, DLH PARK, S.V. ROAD, GOREGAON WEST, MUMBAI-400062. VS. DY. COMMISSIONER OF INCOME TAX CIRCLE-13(1)(2), ROOM NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI-400020. PAN NO. AAECP 4115 E APPELLANT RESPONDENT ASSESSEE BY : MR. M.P. LOHIA, AR REVENUE BY : MR. SUSHIL MISHRA, DR DATE OF HEARING : 25/01/2021 DATE OF PRONOUNCEMENT : 05/03/2021 ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 2 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDER OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-57, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COM PLETED U/S 143(3) R.W.S. 144C(3)OF THE INCOME TAX ACT 1961, (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE OFF THESE AP PEALS BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 4608/MUM/2019 ASSESSMENT YEAR: 2012-13 2. FOR AY 2012-13, THE ASSESSEE HAD FILED FORM NO. 36 (ITA NO. 3181/M/2019) ON 13.05.2019. IT HAD ALSO FILED FORM NO. 36 (ITA NO. 4608/M/2019) FOR THE SAME ASSESSMENT YEAR ON 22.05. 2019. THE ASSESSEE RECEIVED A DEFECT NOTICE DATED 11.11.2020 INTIMATIN G THAT THE APPEAL IS TIME BARRED BY 55 DAYS. THE ASSESSEE SUBMITS THAT THE CA PTIONED APPEAL WAS FILED BEFORE THE TRIBUNAL ON 13.05.2019; THIS APPEAL WAS FILED AGAINST THE ORDER OF THE LD. CIT(A) DATED 22.02.2019 PASSED U/S 250 OF T HE ACT; HOWEVER, AT THE TIME OF FILING OF THE APPEAL, THE MANAGING DIRECTOR WAS TRAVELLING AND THE OTHER DIRECTOR BEING A FOREIGN DIRECTOR, WAS NOT AVAILABL E IN INDIA FOR EXECUTION OF THE APPEAL; HENCE, THE APPEAL COULD NOT BE SIGNED B Y THEM; HENCE, THE ASSESSEE, IN ORDER TO AVOID ANY DELAY IN FILING OF THE APPEAL FILED THE APPEAL DOCUMENTS AS EXECUTED BY THE AUTHORIZED SIGNATORY O F THE ASSESSEE. IT IS STATED THAT A COPY OF CERTIFICATE STATING THAT THE MANAGIN G DIRECTOR WAS TRAVELLING WAS FILED ALONG WITH THE APPEAL BEFORE THE TRIBUNAL ON 13.05.2019 AND THEREFORE, THE ASSESSEE TOOK SUO MOTU INITIATIVE AND FILED A REVISED MEMORANDUM OF APPEAL VIDE LETTER DATED 22.05.2019 TO RECTIFY THIS ERROR OF EX ECUTION BY AN ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 3 AUTHORIZED SIGNATORY AND THIS REVISED MEMORANDUM OF APPEAL WAS DULY SIGNED BY THE MANAGING DIRECTOR OF THE ASSESSEE. THUS IT I S EXPLAINED BY THE LD. COUNSEL THAT THE ASSESSEE HAS ALREADY FILED THE APP EAL WITHIN THE TIME LIMIT OF 60 DAYS I.E. ON 13.05.2019 AND FOR THE PURPOSE OF C URING THE DEFECT IN THE APPEAL FILED ON 13.05.2019, THE ASSESSEE HAS FILED THE REVISED MEMORANDUM OF APPEAL DATED 22.05.2019 WHICH IS DULY SIGNED BY THE MANAGING DIRECTOR. SIMILAR IS THE CASE FOR AY 2013-14. CONSIDERING THE ABOVE FACTS, WE HOLD THAT THE ASSESSEE HAS FILED THE APPEAL WITHIN THE TIME L IMIT OF 60 DAYS. ACCORDINGLY, THE APPEAL FILED BEARING ITA NO. 3181/M/2019 FOR AY 2012-13 AND ITA NO. 3182/M/2019 FOR AY 2013-14 BECOMES INFRUCTUOUS. WE ADJUDICATE BELOW ITA NO. 4608/M/2019 FOR AY 2012-13 AND ITA NO. 4607/M/2 019 FOR AY 2013-14. 3. FACTS BEING IDENTICAL, WE BEGIN WITH THE ASSESSM ENT YEAR (AY) 2012-13. THE 1 ST AND 2 ND GROUNDS OF APPEAL ARE GENERAL IN NATURE AND REQUIR E NO SPECIFIC ADJUDICATION. THE 3 RD , 4 TH , 5 TH GROUNDS OF APPEAL RELATE TO ADJUSTMENT ON ACCOUNT OF PAYMENT FOR IT LICENSE MAINTENANCE COST OF RS.5,89,732/- AS REPRODUCED AS UNDER : 3. THE LD. CIT(A) ERRED IN VIOLATING THE PRINCIPLE OF NATURAL JUSTICE BY NOT GRANTING AN OPPORTUNITY OF BEING HEARD TO THE APPEL LANT BY DISALLOWING THE PAYMENT FOR IT LICENSE MAINTENANCE COST ON GROUND OF NON-DE DUCTION OF TAX AT SAME AND TREATING AS PAYMENT OF ROYALTY AS PER EXPLANATION 2 (I) OF SECTION 9(1)(VI) OF THE ACT. 4. THE LD. CIT(A) ERRED IN DISREGARDING THE SUBMISS ION OF THE APPELLANT WHEREIN THE APPELLANT HAS STATED THAT TAX HAS BEEN DEDUCTED BY THE APPELLANT UNDER SECTION 206AA OF THE ACT AT THE RATE OF 21.115 PERCENT AND ACCORDINGLY, DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE IS UNCALL ED FOR; ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 4 5. THE LD. CIT(A) ERRED IN NOT GIVING A CLEAR FINDI NG THAT TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF PAYMENT OF IT LICENSE MAIN TENANCE COST IS NOT REQUIRED EVEN THOUGH SAME IS ACCEPTED ON EARLIER YEARS ALSO. 4. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2012-13 ON 28.09.2012 DECLARING TOTAL INCOME AT RS.36,72,757/-. THE ASSES SEE IS A COMPANY WHICH WAS INCORPORATED ON 28.12.2006 AND IS A 100% SUBSIDIARY OF PERI GMBH, GERMANY AND IT PROVIDES DESIGN AND SUPPLY OF FRAMEWORK AND SCAFFOLDING SYSTEMS TO COMPANIES ENGAGED IN CONSTRUCTION AND INFRASTRUCTUR E. IT ALSO PROVIDES TECHNICAL SUPPORT AND SERVICES TO CUSTOMERS IN INDI A FOR USE OF FRAMEWORK AND SCAFFOLDING SYSTEMS. IN FORM 3CEB, THE ASSESSEE HAS REPORTED INTER ALIA PAYMENT TOWARDS IT LICENSES MAINTENANCE COST OF RS.5,89,732/- AS AN IN TERNATIONAL TRANSACTION. THE ASSESSING OFFICER (AO) FOLLOWING THE ORDER OF THE T RANSFER PRICING OFFICER (TPO) HAS MADE AN ADDITION OF THE ABOVE AMOUNT ON THE GRO UND THAT THE ASSESSEE FAILED TO JUSTIFY THE PRICE AND BENEFIT DERIVED BY IT. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ABOVE DISALLOWANCE OF RS.5,89,732/- M ADE BY THE AO BY OBSERVING THAT : (III) AS REGARDS PAYMENT OF IT LICENSE MAINTENANCE COST, AGAIN NO DISCUSSION APPEARS ON RECORD. THE ASSESSEE CONTENDS THAT NO SUCH ADDIT ION IS MADE IN EARLIER YEAR ALSO. HOWEVER, IN MY VIEW THIS IS IN THE NATURE OF ROYALT Y AS PER EXPLANATION 2(I) TO SECTION 9(1)(VI) OF THE ACT AND AS NO TAX IS DEDUCTED ON TH IS AMOUNT, THE SAME NEEDS TO BE DISALLOWED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITS THAT THE APPELLANT HAS DEDUCTED TAX U/S 206AA OF THE ACT @ 21.115% AND ACC ORDINGLY, DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE IS UNC ALLED FOR. ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 5 ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTA TIVE SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE ONLY POINT OF DISPUTE HERE IS THE FI NDING OF THE LD. CIT(A) THAT NO TAX HAS BEEN DEDUCTED ON PAYMENT OF RS.5,89,732/- B Y THE ASSESSEE FOR IT LICENSE MAINTENANCE COST, WHEREAS IT IS THE CONTENT IONS OF THE LD. COUNSEL THAT THE ASSESSEE HAS DEDUCTED TAX @ 21.115% U/S 206AA O F THE ACT. TO RESOLVE THE ABOVE CONTENTIONS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ABOVE MATTER AND RESTORE THE MATTER TO THE F ILE OF THE TPO/AO TO MAKE AN ORDER AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVA NT DOCUMENTS/EVIDENCE BEFORE THE TPO/AO. IN THE RESULT, THE 3 RD , 4 TH AND 5 TH GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 7. THE 6 TH , 7 TH , 8 TH , 9 TH , 10 TH AND 11 TH GROUNDS OF APPEAL DEAL WITH ADJUSTMENT ON ACCOUNT OF PAYMENT OF INTEREST ON TRADE CREDITS OF RS.29,79,359/- AND THESE ARE REPRODUCED AS UNDER : 6. THE LD. CIT(A) ERRED IN CONFIRMING THE ACT ION OF TPO/AO IN MAKING TRANSFER PRICING ADJUSTMENT ON THE INTERNATIONAL TRANSACTION OF PAYMENT OF INTEREST ON TRADE CREDITS TO ITS AE AND COMPUTING THE ALP AT NIL BY A DOPTING INTERNAL CUP METHOD; 7. THE LD. CIT(A) ERRED IN IGNORING THE CONTRACTUAL TERMS OF THE APPELLANT WITH ITS AE IN RESPECT OF CHARGE OF INTEREST POST AVAILI NG INTEREST PERIOD OF 90 DAYS, 8. THE LD. CIT(A) FAILED TO APPRECIATE THE F ACT THAT THE CREDIT PERIOD ALLOWED BY NON-AE (30 DAYS) IS LESS THAN THE CREDIT PERIOD ALL OWED BY AE (90 DAYS); ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 6 9. THE LD. CIT(A) FAILED TO APPRECIATE THE COMMERCI AL AND BUSINESS REALITIES OF THE INDUSTRY IN WHICH THE APPELLANT OPERATES AND BU SINESS DECISION OF THE APPELLANT OF NOT CHARGING INTEREST FROM CUSTOMERS; 10. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN NOT RELYING ON EXTERNAL COMPARABLE DATA FOR DETERMINING THE ARM'S LENGTH IN TEREST RATE FOR THE SAID TRANSACTION, 11. THE LD. CIT(A) FAILED TO APPRECIATE THAT P AYMENT OF INTEREST ON TRADE CREDITS IS LINKED TO THE TRANSACTION OF IMPORT OF GOODS AND HE NCE SHOULD BE AGGREGATED WITH THE SAID TRANSACTION. 8. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD PAID INTEREST OF RS.29,79,359/- ON OUTSTANDING TRADE CREDITS TO ITS AES. THE TPO MADE AN ADJUSTMENT OF THE ABOVE SUM BY HOLDING THAT : 7.2.4 ON PERUSAL OF THE ABOVE REPLY, IT CAN BE S EEN THAT THE ASSESSEE HAS STATED THAT IT PAID INTEREST TO AE ON OUTSTANDING BALANCES BUT HAS NOT PAID ANY INTEREST TO NON- AES AT ALL. THE ASSESSEE HAS NOT SUBMITTED ANY DOCU MENT IN SUPPORT OF THE CLAIM THAT THE CREDIT PERIOD ALLOWED TO NON-AES WAS LESS THAN CREDIT PERIOD ALLOWED TO AE. ALSO, THE CHART SUBMITTED BY THE ASSESSEE WITH RESP ECT TO INTEREST PAID TO AE SHOWS THE PERIOD OF CREDIT IN NUMBER OF DAYS WHICH IS LES S THAN 30 DAYS IN ALL THE TRANSACTIONS. THUS ALSO IT IS NOT JUSTIFIED TO PAY INTEREST WHEN CREDIT PERIOD IS AS LOW AS LESS THAN 30 DAYS. IN ADDITION TO ABOVE, IT IS A LSO A FACT WHICH THE ASSESSEE HAS STATED THAT THE ASSESSEE GIVES CREDIT PERIOD TO ITS CUSTOMERS (NON-AES) RANGING BETWEEN 90 TO 180 DAYS BUT IT DOES NOT CHARGE ANY A MOUNT FROM THEM AS INTEREST AT ALL. ALSO, IT IS A FACT THAT THE ASSESSEE WAS HAVIN G TRANSACTION WITH AE IN THE PREVIOUS YEARS ALSO AND HAD SIMILAR TERMS OF PAYMENT WITH AE IN THOSE YEARS ALSO FOR WHICH THE AE HAD CHARGED NIL INTEREST IN ALL THEPREVIOUS YEARS. FOLLOWING THE ORDER OF THE TPO, THE AO HAS MADE AN ADJUSTMENT OF RS.29,79,359/-. ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 7 9. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ABOVE AD JUSTMENT MADE BY THE AO BY OBSERVING THAT : THE FACTS ARE THAT THE ASSESSEE HAS PAID INTEREST O F RS.29,79,359/- TO THE A.E ON OUTSTANDING CREDIT BALANCE. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE TPO THAT INTEREST IS PAID TO THE A.E AFTER 90 DAYS FROM THE DATE OF INVOICE, IT WAS ALSO SUBMITTED THAT 30 DAYS CREDIT PERIOD IS ALLOWED TO NON AE THOUGH NO INTEREST WAS PAID TO THE NON AE. HOWEVER THE TPO NOTED THAT NO D OCUMENTARY EVIDENCE IS PROVIDED SHOWING THAT CREDIT PERIOD OF NON AE IS LE SSER THAN THAT OF AE. FURTHER IN THE CHART SUBMITTED BEFORE THE TPO, IT WAS SEEN THA T INTEREST PAID TO AE IN CASES EVEN LESS THAN 30 DAYS. NO SUCH INTEREST WAS PAID T O AE IN EARLIER YEAR EVEN THOUGH THE TERMS OF PAYMENTS WERE SIMILAR. THE ASSESSEE HO WEVER DISPUTES THIS ARGUMENT CONTENDING THAT INTEREST WAS PAID IN EARLIER YEARS ALSO. HOWEVER, THE ASSESSEE FAILED TO REBUT THE COMMENT OF THE TPO THAT INTEREST IS PA ID TO THE AE EVEN FOR PERIOD OF LESS THAN 30 DAYS. NO INTEREST WAS ALSO CHARGED FRO M DEBTORS/NON AES THOUGH ALLOWABLE CREDIT PERIOD 90 TO 180 DAYS TO MAINTAIN CORDIAL RELATION. THE ASSESSEE HAS NOT BENCHMARKED THIS TRANSACTION INDEPENDENTLY. THE TPO APPARENTLY USED INTERNAL CUP COMPARING THE INTEREST PAYMENTS TO AE VS. NON A E. LOOKING INTO THE ENTIRETY OF THE FACTS, IN MY OPINION, THERE IS AN INTERNAL CUP AVAILABLE IN RESPECT OF INTEREST PAYMENT TO AE VS. NON AE AND THE ASSESSEE HAS FAILE D TO GIVE ANY FAR ANALYSIS IN RESPECT OF THIS TRANSACTION THEREFORE THIS ADDITION IS UPHELD. 10. BEFORE US, THE COUNSEL SUBMITS THAT FOR THE YEA R UNDER CONSIDERATION THE ASSESSEE HAD PAID INTEREST AMOUNTING TO RS.29,79,35 9/- ON OUTSTANDING TRADE CREDIT TO ITS AES ; THE INTEREST WAS PAID TO AE AFT ER 90 DAYS FROM THE DATE OF INVOICE @ 5.5% PER ANNUM. IT IS SUBMITTED BY HIM TH AT THE ASSESSEE WISHES TO FILE SUPPORTING EVIDENCE IN THE FORM OF CIRCULAR IS SUED BY THE PERI GMBH (PARENT COMPANY OF THE APPELLANT) TO ALL ITS SUBSID IARIES, COMMUNICATING THAT INTEREST AT RATE OF 5.5% P.A. WOULD BE CHARGED TO A LL THE SUBSIDIARIES (INCLUDING ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 8 THE APPELLANT), ON OUTSTANDING TRADE PAYABLE TO PER I GMBH. IT IS THUS STATED THAT THE SUPPORTING EVIDENCE BE ADMITTED FOR ADJUDI CATION. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER P ASSED BY THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE SUPPORTING EVIDENCE AS FILED BY THE LD. COUNSEL IS NOTHING BUT ADDITIONAL EVIDENCE. WE ARE OF THE CONSIDERED VIEW THAT ADMISSION OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THE AB OVE GROUND OF APPEAL BY US WOULD FACILITATE TO RENDER SUBSTANTIAL JUSTICE BETW EEN THE PARTIES. WE ARE AWARE OF THE POSITION OF LAW THAT WHERE AN ADDITION AL EVIDENCE HAS BEEN ALLOWED TO BE ADDUCED, THE INTERESTS OF JUSTICE DEM AND THAT THE OTHER SIDE MUST BE GIVEN AN OPPORTUNITY TO EXPLAIN OR REBUT SU CH ADDITIONAL EVIDENCE AS HELD IN THE CASE OF SMT. URMIAL RATILAL V. CIT, (1982) 136 ITR 797, 799 (GUJ); HIRALAL DEVDUTT JAGADHRI V. ADDL. CIT, (1980) 18 CIT (PUNJ) 96, 98. HAVING CONSIDERED THE FACTS OF THE CASE AND HAVING REGARD TO THE ABOVE POSITION OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS OF APPEAL AND RESTORE THE MATTER TO THE FILE OF THE TPO/AO TO MAKE AN ORDER AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/ EVIDENCE BEFORE THE TPO/AO. IN THE RESULT, THE 6 TH , 7 TH , 8 TH , 9 TH , 10 TH AND 11 TH GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 9 12. THE 12 TH AND 13 TH GROUND OF APPEAL BEING LEVY OF INTEREST ARE CONSEQUENTIAL. AS THE PENALTY HAS BEEN INITIATED ON LY, THE 14 TH GROUND OF APPEAL RELATING TO PENALTY PROCEEDINGS IS PREMATURE AND THEREFORE DISMISSED. 13. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO. 4607/MUM/2019 ASSESSMENT YEAR: 2013-14 14. THE 1 ST GROUND OF APPEAL IS GENERAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. THE 2 ND , 3 RD , 4 TH , 5 TH AND 6 TH GROUNDS OF APPEAL RELATE TO ADJUSTMENT ON ACCOUNT OF FEES ON CORPORATE GUARANTE E OF RS.7,23,100/- AND THESE ARE REPRODUCED AS UNDER : 2. THE LD. CIT(A) ERRED IN DETERMINING THE ARM'S LE NGTH PRICE OF THE INTERNATIONAL TRANSACTION OF PAYMENT OF CORPORATE G UARANTEE FEES AS NIL BY CONSIDERING IT AS SHAREHOLDER ACTIVITY AND MAKING T RANSFER PRICING ADJUSTMENTS OF RS.7,23,100/-; 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT GUARANT EE HAS BEEN SPECIFICALLY INCLUDED IN THE DEFINITION OF INTERNATIONAL TRANSAC TION WHILE HOLDING THAT IT IS A SHAREHOLDER ACTIVITY; 4. THE LD. CIT(A) ERRED M NOT CONSIDERING THE FACT THAT CORPORATE GUARANTEE FEE HAS BEEN DETERMINED CONSIDERING AVERAGE COST OF INT EREST THAT AE HAS PAID ON ITS NON-LIQUID FINANCING INSTRUMENTS OBTAINED FROM INDE PENDENT THIRD PARTIES. 5. THE LD. CIT(A) FAILED TO APPRECIATE THAT GUARANT EE WAS PROVIDED TO APPELLANT FOR THE ENTIRE AMOUNT OF CREDIT/OD FACILITY IRRESPE CTIVE OF THE SAME BEING PARTLY UTILIZED BY THE APPELLANT ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 10 6. THE LD. CIT(A) FAILED TO APPRECIATE THAT PAYMENT OF CORPORATE GUARANTEE IS LINKED TO TRANSACTION OF IMPORT OF GOODS AND HENCE SHOULD BE AGGREGATED WITH THE SAID TRANSACTION. 15. FOR THE AY 2013-14, THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME ON 29.11.2013 DECLARING TOTAL INCOME OF RS.2,72,98,000 /-. THE TPO HAS MADE ADJUSTMENT ON ACCOUNT OF FEES ON CORPORATE GUARANTE E OF RS.7,23,100/- BY DETERMINING ALP OF GUARANTEE FEES PAID AT NIL AS AG AINST 2% BY THE ASSESSEE TO ITS PARENT COMPANY (PERI GMBH). THE AO HAS FOLLOWED THE ORDER OF THE TPO. 16. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER O F THE AO BY OBSERVING THAT : I HAVE GONE THROUGH THE TPO'S ORDER AND ALSO APPEL LANT'S SUBMISSION. THE TPO IN HIS ORDER PG17 TO 19 HAS EXPLAINED IN DETAILS WHY T HE ASSESSEE'S CONTENTION IS NOT ACCEPTED. THE TPO IS OF A VIEW THAT THE GUARANTEE I S NOT IN THE NATURE OF ANY SERVICE BEING RENDERED BY THE AE BUT IT IS ONLY A SHAREHOLD ER'S OBLIGATION TO PROVIDE THE CORPORATE GUARANTEE TO ITS WHOLLY OWNED SUBSIDIARIE S. I FIND THAT THE CONTENTION OF THE TPO IS CORRECT. HENCE THE ADJUSTMENT MADE BY TH E AO IS CONFIRMED. 17. BEFORE US, THE LD. COUNSEL SUBMITS THAT THE ASS ESSEE HAD AVAILED OVERDRAFT FACILITY FROM DEUTSCHE BANK, MUMBAI BRANC H FOR EURO 5,00,000 AND AE HAD PROVIDED CORPORATE GUARANTEE FOR THE SAME; T HE AE CHARGED 2% GUARANTEE COMMISSION FROM THE ASSESSEE AND THEREBY ASSESSEE HAS PAID CORPORATE GUARANTEE FEES OF RS.7,23,100/- TO ITS AE ; THAT CORPORATE GUARANTEE GIVEN BY AE WAS FOR PROVIDING FINANCE FROM BANK ON BETTER TERMS TO GO A LONG WAY IN EFFICIENT CONDUCT OF BUSINESS, THEREBY RESUL TING IN DIRECT AND INDIRECT BENEFIT TO THE ASSESSEE. IT IS ARGUED BY HIM THAT T HE TPO, INSTEAD OF EXAMINING WHETHER GUARANTEE FEES PAID BY THE ASSESSEE IS AT A RMS LENGTH, HAS CONSIDERED ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 11 THAT THIS IS A SHAREHOLDER FUNCTION OF THE AE. FURT HER, IT IS ARGUED THAT THE TPO HAS OBSERVED THAT OVERDRAFT FACILITY WAS TAKEN ON 1 8.08.2008, BUT THE ASSESSEE HAS NOT PAID THE CORPORATE GUARANTEE FEES TILL FINA NCIAL YEAR 2011-12, AS THOSE WERE NOT CHARGED BY THE AE SINCE AE TREATED IT AS S HAREHOLDER FUNCTION. ARGUING THAT IT IS AES POLICY TO CHARGE 2% GUARAN TEE FEE TO ALL ITS AE AND THE ASSESSEE WISHES TO FILE SUPPORTING EVIDENCE IN SUPPORT OF THE ABOVE CORPORATE GUARANTEE FEES, THE LD. COUNSEL PLEADS TH AT THE ADDITIONAL EVIDENCE BE ADMITTED FOR ADJUDICATION. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER P ASSED BY THE LD. CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE SUPPORTING EVIDENCE AS FILED BY THE LD. COUNSEL IS NOTHING BUT ADDITIONAL EVIDENCE. WE ARE OF THE CONSIDERED VIEW THAT ADMISSION OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THE AB OVE GROUNDS OF APPEAL BY US WOULD FACILITATE TO RENDER SUBSTANTIAL JUSTICE BETW EEN THE PARTIES. WE ARE AWARE OF THE POSITION OF LAW THAT WHERE AN ADDITION AL EVIDENCE HAS BEEN ALLOWED TO BE ADDUCED, THE INTERESTS OF JUSTICE DEM AND THAT THE OTHER SIDE MUST BE GIVEN AN OPPORTUNITY TO EXPLAIN OR REBUT SU CH ADDITIONAL EVIDENCE AS NARRATED AT PARA 11 HEREINABOVE. HAVING CONSIDERED THE FACTS OF THE CASE AND HAVING REGARD TO THE ABOVE POSITION OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS OF APPEAL AND RESTORE THE MATTER TO THE FILE OF THE TPO/AO TO MAKE AN ORDER AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 12 DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/ EVIDENCE BEFORE THE TPO/AO. IN THE RESULT, THE 2 ND , 3 RD , 4 TH , 5 TH AND 6 TH GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 19. THE 7 TH AND 8 TH GROUNDS OF APPEAL BEING LEVY OF INTEREST ARE CONSEQUENTIAL. AS THE PENALTY HAS BEEN INITIATED ON LY, THE 9 TH GROUND OF APPEAL RELATING TO PENALTY PROCEEDINGS IS PREMATURE AND TH EREFORE DISMISSED. 20. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 21. TO SUM UP, ITA NO. 3181/M/2019 FOR AY 2012-13 A ND ITA NO. 3182/M/2019 FOR AY 2013-14 BECOMES INFRUCTUOUS. THE APPEAL BEARING NO. 4608/M/2019 FOR AY 2012-13 AND 4607/M/2019 FOR AY 2 013-14 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/03/2021. SD/- SD/- (VIKAS AW ASTHY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 05/03/2021 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI ITA NO. 3181 & ORS/M/2019 PERI (INDIA) PVT. LTD. 13 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI