Sri Rajarajeswari Rice Industries , Nellore V. Deputy Commissioner of Income Tax ,Circle-1, Nellore

ITA 476/Hyd/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9935 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Appeal Filed On: 17-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing
• Section: 143(3); 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘B’ BENCH, HYDERABAD. BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER AND (Through Virtual Hearing) ITA No.476/Hyd/2021 (Assessment Year : 2017-18) M/s. Axis Clinicals Limited, Hyderabad. PAN AAHCA9013B .....Appellant. Vs. Asst. Commissioner of Income Tax, Circle 1(2), Hyderabad. .....Respondent. Appellant By : Shri Amarendar Kaparti (A.R.) Respondent By : Shri Rajendra Kumar. (D.R.) Date of Hearing : 09.12.2021. Date of Pronouncement : 20.12.2021. O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2017-18 arises from the Assessment Order dt.13.09.2021 DIN & Order No. ITBA / AST / S / 143(3) / 2021-22 / 1035511747(1) in proceedings under Section 143(3) r.w.s. 144C(13) of Income Tax Act, 1961 (‘the Act’). 2 ITA No.436/Hyd/2021 Heard both the parties. Case file perused. 2. The assessee has raised the following grounds of appeal : 3 ITA No.436/Hyd/2021 3. We have given our thoughtful consideration to rival pleadings against and in support of the impugned corporate guarantee adjustment of Rs.1,42,50,000. Suffice to say, hon’ble Madras high court in Pr.CIT Vs. M/s.Redignton (India) Limited, dt.10-12-2020 Tax Case Appeal Nos.590 & 591 of 2019 holds that Explanation to Section 92B inserted vide the Finance Act, 2012 with retrospective effect from 01-04-2002 has settled the law that a corporate guarantee indeed forms an international transaction u/s. 92B Expln.(1)(c) of the Act. We thus uphold the learned lower authorities’ action to this effect in principle. 4. Next comes the equally important later aspect of quantification of the impugned corporate guarantee adjustment taken @ 1.9% per annum in the lower proceedings. We note herein that this tribunal’s co-ordinate bench decision in ITA No.1950/Hyd/2017 in Rain Industries 4 ITA No.436/Hyd/2021 Limited Vs. DCIT decided on 24.08.2021 has upheld such a guarantee commission @ 0.53% on estimation basis. There is hardly any dispute that the learned lower authorities have also gone by similar orders only whilst estimating the impugned guarantee commission @ 1.9%. We therefore hold in these factual circumstances that the impugned guarantee commission deserves to be adopted at an estimated rate of 0.6% with a rider that it shall not be treated as an precedent in any other case. The assessee's instant first and foremost substantive ground is treated as partly allowed in very terms. 5. Next comes the later issue of interest on receivables involving arm’s length price (ALP) adjustment of Rs.20,20,420. Learned department representative fails to dispute that although the TPO has rightly quoted the foregoing statutory provision for treating interest on trading receivables as an international transaction (supra), the fact remains that he had adopted assessee's inter company agreement with the Associated Enterprise (AE) concerned only as comparable(s). Case law Technimont Private Limited in ITA No.487/MUM/2017 (TS-880-HC- 2018-Bom-TP) (Mum) and holds that an AE itself could not be taken as a comparable since lacking uncontrolled transactions. Coupled with 5 ITA No.436/Hyd/2021 these facts that the impugned adjustment has been made as per SBI short-term deposit rates only which are not applicable in international transactions. We accordingly direct the TPO to delete the impugned assessment. No other ground has been pressed before us. 6. This assessee's appeal is partly allowed in above terms. Order pronounced in the open court on 20th Dec., 2021. Sd/- Sd/- (A.MOHAN ALANKAMONY) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt.20.12.2021. * Reddy gp Copy to : 1. M/s. Axis Clinicals Limited, 1-121/1, Miyapur, Miyapur P.O., Serilingampally Mandal, Hyderabad-500 049 2. ACIT, Circle 1(2), Hyderabad. 3. DRP-1, Bangalore. 4. Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File. By Order Sr. Pvt. Secretary, ITAT, Hyderabad.