MANUGRAPH INDIA LTD, MUMBAI V. DCIT 3(2)1, MUMBAI

ITA 491/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101059 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 21-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Initiation of penalty proceedings; Wholly owned subsidiary; Revenue expenditure
• Section: 14A; 133(6)

Judgement Text

1 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K , MUMBAI , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JU DICIAL MEMBERITA ITA NO. : 491 /MUM/20 1 5 (ASSESSMENT YEAR: 20 1 0 - 11 ) MANUGRAPH INDIA LTD., SIDHVAHOUSE, N A SAWANT MARG, COLABA, MUMBAI 400 005 .: PAN: AAA C M 7246 H VS D C IT 3 (2) , R NO. 608, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, CHURCHGATE, MUMBAI - 400 02 0 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R AJAN R VORA SHRI HEMEN CHANDARIYA SHRI PRANAY GANDHI RESPONDENT BY : SHRI NARENDRA KUMAR CHAND ITA NO. : 1072 /MUM/20 15 (ASSE SSMENT YEAR: 20 1 0 - 11 ) DCIT 3(2), R NO. 608, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, CHURCHGATE, MUMBAI - 400 020 VS MANUGRAPH INDIA LTD., SIDHVAHOUSE, N A SAWANT MARG, COLABA, MUMBAI 400 005 .: PAN: AAACM 7246 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NARENDRA KUMAR CHAND RESPONDENT BY : SHRI RAJAN R VORA SHRI HEMEN CHANDARIYA SHRI PRANAY GANDHI /DATE OF HEARING : 01 - 0 7 - 2015 / DATE OF P RONOUNCEMENT : 16 - 09 - 201 5 ORDER , : PER AMIT SHUKLA , JM: THE AFORESAID CROSS APPEAL HAS BEEN FILED AGAINST FINAL ASSESSMENT ORDER DATED 31. 1 2 .201 4 PASSED BY DY. COMMISSIONER OF INCOME - TAX , CIRCLE - 3 (2), MUMBAI IN PURSUANCE OF DIRECTIONS DATED 28 . 1 0.201 4 GIVEN BY DISPUTE RESOLUTION PANEL I (DRP) U/S 144C(5). 2 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 2. WE SHALL FIRST TAKE - UP ASSESSEES APPEAL BEING ITA 491/MUM/2015 VIDE WHICH FOLLOWING ISSUES HAVE BEEN RAISED IN THE VARIOUS GROUNDS OF APPEAL : - ( I ) TRANSFER PRICING ADJUSTMENT OF RS. 1,23,03,722/ - ON ACCOUNT OF INTEREST ON LOANS ADVANCED TO ASSOCIATE ENTERPRISE; ( II ) TRANSFER PRICING ADJUSTMENT OF RS. 64,74,975/ - ON ACCOUNT OF CORPORATE GUARANTEE GIVEN BY THE ASSESSEE TO THE OVERSEAS BANK IN FAVOUR OF ITS AE; ( III ) DIS ALLOWANCE OF RS. 28,51,891/ - U/S 14A; ( IV ) LEGAL CLAIM WITH REGARD TO DRUPA EXHIBITION EXPENSES OF RS. 3.99 CRORES IN VIEW OF THE FINDING GIVEN IN THE ASSESSMENT ORDER FOR AY 2009 - 10 ; AND , LASTLY ( V ) INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C). 2. THE BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PRINTING AND ALLIED MACHINERIES. THE ASSESSEE HAS ACQUIRED A SUBSIDIARY IN USA , NAMED AS MDGM ON 11 TH NOVEMBER, 2006, WHICH HAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SERVICING OF WEB OFFSET PRINTING MACHINERIES. THE ASSESSEE DURING THE YEAR HAS ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS AE : - S NO. DEPRECIATION NAME OF AE AMOUNT (IN RS.) I SALE OF OFFSET PRINTING MACHINES MANUGR APH KENYA LTD 1,48,62,750 II ADVANCE GIVEN TO AE MANUGRAPH DGM, INC. 10,15,10,000 III INTEREST ON ADVANCE GIVEN TO AE MANUGRAPH DGM, INC. 48,31,400 IV SALE OF SPARES TO AE MANUGRAPH DGM, INC. 1,27,09,078 V PURCHASE FROM AE MANUGRAPH DG M, INC. 56,52,421 3. DURING THE COURSE OF TRANSFER PRICING PROCEEDINGS, THE TPO NOTED THAT THE ASSESSEE HAS GIVEN LOAN TO I T S AE AMOUNTING TO RS. USD 3.75 MILLION ( IN TERMS OF INR WAS RS. 14.78 CRORES ) . OUT OF THE SAID LOAN AN AMOUNT OF USD 1.75 M ILLION WAS TRANSFERRED TO THE INVESTMENT ACCOUNT ON 30.04.2008 AND BALANCE USD 2 MILLION 3 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 CONTINUED TO REMAIN AS ADVANCE , AS ON 31 ST MARCH, 2009. FURTHER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ADVANCED LOAN AMOUNTING TO RS. USD 4.55 MILLION AS PER THE DETAILS GIVEN HEREUNDER : - DT. OF PAYMENT OUTSTANDING LOAN AMOUNT USD PERIOD FROM PERIOD TO NO. OF DAYS OPENING BALANCE 2,000,000.00 01.04.2009 31.03.2010 365 28.05.2009 1,000,000.00 29.05.2009 31.03.2010 307 23.06.2009 600,000.00 24.06.2009 31.03.2010 281 29.07.2009 600,000.00 30.07.2009 31.03.2010 245 25.09.2009 500,000.00 26.09.2009 31.03.2010 187 17.11.2009 1,000,000.00 18.11.2009 31.03.2010 134 28.12.2009 300,000.00 29.12 .2009 31.03.2010 93 15.01.2010 300,000.00 16.01.2009 31.03.2010 75 12.03.2010 250,000.00 13.03.2009 31.03.2010 19 TOTAL USD 6,550,000 RS.29,24,90,250 THE ASSESSEE SUBMITTED THAT IT HAS CHARGED INTEREST ON THE ABOVE LOAN AT USD , 6 MONTHS LIBOR + 200 BASIS POINTS THAT IS LIBOR + 200 BASIS POINTS , WHICH WORKED OUT 3.75%. 4. IN THE TRANSFER PRICING DOCUMENTATION, THE ASSESSEE HAS BENCHMARKED THE AFORESAID TRANSACTION BY USING INTERNAL CU P LIBOR + 2%. THE INTERNAL CUP CONSIDERED BY THE ASSESSEE W AS AT THE RATE OF INTEREST PAID ON LOANS AVAILED BY THE ASSESSEE FROM THE STATE BANK OF INDIA IN 2006. THE TPO HOWEVER BASED ON THE FINDING GIVEN IN THE EARLIER ASSESSMENT YEAR, ARRIVED AT ALP OF INTEREST RATE OF 14.736% BY CONSIDERING THE AVERAGE YIELD RATE BASED ON DDB RATED POINTS BASED ON THE DATA COLLECTED U/S 133(6) FROM C RISIL AND THEREBY , MAKING THE ADJUSTMENT OF RS. 2,19,78,648/ - ON ACCOUNT OF DIFFERENCE BETWEEN RATE OF 14.736% AS AGAINST THE RATE OF 3.75% CHARGED B Y THE ASSESSEE. THE DRP DIRECTED THE TPO TO CONSIDER THE DOMESTIC COST OF BORROWING OF THE ASSESSEE PLUS MARKUP OF 3% AS AL P FOR BENCHMARKING THE INTEREST ON LOAN ADVANCED TO THE AE. THE DOMESTIC COST OF BORROWING + MARK - UP OF 3% WORKED OUT TO 9.90% BASE D ON WHICH THE ADJUSTMENT WAS RESTRICTED TO R S. 1,23,03,722/ - IN THE FINAL ASSESSMENT ORDER. 4 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 5. BEFORE US, THE LD. COUNSEL SUBMITTED THAT EXACTLY SIMILAR ISSUE HAD COME - UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEA R 2008 - 09 , WHEREIN THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER/TPO TO ADOPT LIBOR + 2% AS ARMS LENGTH INTEREST IN RESPECT OF LOAN PROVIDED TO THE ASSESSEE TO ITS AE. THE SAID DECISION IS BASED ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF EVEREST KENTO CYLINDER LTD., IN ITA 7073/MUM/2012 VIDE ORDER DATED 23.11.2012, WHICH DECISION HAS NOW BEEN CONFIRMED BY THE HONBLE HIGH COURT VIDE ORDER DATED 8 TH MAY, 2015. NOT ONLY THAT, NOW THE DELHI HIGH COURT IN THE CASE OF COTTON INDUS TRIAL (I) PVT. LTD. INCOME TAX APPEAL NO. 233 OF 2014 ORDER DATED 27 TH MARCH, 2015 HAS HELD THAT LIBOR RATES FOR BENCHMARKING THE TRANSACTION OF PROVIDING OF LOAN TO FOREIGN AE SHOULD BE ACCEPTED. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORD ER OF THE DRP. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE IMPUGNED ORDER AND THE MATERIAL PLACED ON RECORD. ON THE LOAN GIVEN TO ITS AE , THE ASSESSEE HAS CHARGED INTEREST RATE WORKED OUT ON THE BASIS OF SIX MONTHS AT LIBOR + 2%, WHICH WORKED OUT AT 3.75%. THIS ARMS LENGTH INTEREST WAS BENCHMARKED BY USING INTERNAL CUP ON THE BASIS OF RATE OF INTEREST PAID ON LOANS BY THE ASSESSEE AVAILED FR O M STATE BANK OF INDIA. HOWEVER, THE TPO HAS ARRIVED AT ALP 14.736% BY TAKING THE INTEREST RATE BASED ON AVERAGE YIELD RATE OF DB RATED POINTS BASED ON DATA COLLECTED FROM CRISIL . THE DRP HAS REDUCED THE SAID INTEREST RATE BY HOLDING THAT DOMESTIC COST OF BORROWING + MARK - UP OF 3% SHOULD BE APPLIED WHICH WORKS OUT 9.90%. THE APPLICABILITY OF INTEREST RATE BA SED ON LIBOR HAD COME - UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN AY 2008 - 09 WHEREIN, THE TRIBUNAL RELYING UPON THE DECISION OF THE CO - CO - ORDINATE BENCH IN THE CASE OF EVEREST KENTO CYLINDER LTD. ( SUPRA ) HAD DIRECTED THE ASSESS ING 5 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 OFFICER /TPO TO ADOPT LIBOR +2% AS ARMS LENGTHS INTEREST. AS POINTED OUT BY THE LD. COUNSEL, THE DECISION OF THE TRIBUNAL IN THE CASE OF EVEREST KENTO CYLINDER LTD. HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT IN THE INCOME TAX APPEAL NO. 1165 OF 2013. THUS, FOLLOWING THE EARLIER YEARS PRECEDENCE, WE ALSO HOLD THAT INTEREST RATE CHARGED BY THE ASSESSEE ON THE LOAN GIVEN SHOULD BE BENCHMARKED WITH LIBOR +2% A S ARMS LENGTH AND, THEREFORE, NO ADJUSTMENT IS CALLED FOR. THUS, GROUND NO. 1 AS RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. 8 . IN GROUND NO. 2 READ WITH VARIOUS SUB - GROUNDS RELATES TO ADDITION OF RS. 69,74,975/ - ON ACCOUNT OF CORPORATE GUARANTEE GIVEN BY THE ASSESSEE TO ITS AE. 9 . THE ASSESSEE HAD GIVEN CORPORATE GUARANTEE/LETTER OF COMFOR T OF RS. 38. 26 CRORES I.E. USD 7.25 MILLION TO PMC BANK NATIONAL ASSOCIATION FOR THE WORKING CAPITAL FACILITIES TO BE AVAILED BY I TS WHOLLY OWNED SUBSIDIARY BY ENTERING INTO TRIPARTITE SUPPORT AGREEMENT DATED 30.04.2007 BETWEEN PMC BANK, ASSESSEE AND M OGM . SINCE NO COST WAS INCURRED BY THE ASSESSEE FOR PROVIDING SUCH GUARANTEE , THEREFORE, ASSESSEE ALSO IN TURN HAS NOT CHARGED ANY GUARANTEE COMMISSION FROM ITS AE. EVEN THOUGH IN THE TRANSFER PRICING STUDY AND FORM 3CEB, THE ASSESSEE HAS NOT CLASSIFIED THE TR ANSACTION OF PROVIDING CORPORATE GUARANTEE AS AN INTERNATIONAL TRANSACTION , HOWEVER I N THE TRANSFER PRICING PROCEEDINGS, TPO BENCHMARKED THE TRANSACTION OF CORPORATE GUARANTEE BY CONSIDERING THE DIFFERENCE BETWEEN PLR RATE AND BANK RATE AND SUCH A DIFFEREN CE WAS COMPUTED AT 6%. FURTHER THE TPO ADOPTED ANOTHER METHOD BY ADOPTING RISK BEARING RATE BY CONSIDERING THE DIFFERENCE BETWEEN YIELD OF A+ AND BB RATED POINTS ON WHICH HE WORKED OUT APPROXIMATELY RATE OF 6%. ACCORDINGLY, THE TPO HELD THAT THE ASSESSEE C OMPANY SHOULD HAVE CHARGED ON COST OF GUARANTEE COMMISSION FEES OF 6% FOR ARMS LENGTH SITUATION AND THEREBY PROPOSED ADDITION OF RS. 1,96,00,012/ - . THE DRP 6 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 DETERMINED THE ALP OF COST OF GUARANTEE OF 2% BASED ON SAFE HARBOUR RULES. BASED ON SUCH DIRECTIONS THE ADJUSTMENT ON ACCOUNT OF COST OF GUARANTEE WAS RESTRICTED TO RS. 64,75,975/ - . 10 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT IN THE EARLIER YEARS, THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 09 HAD HELD THAT CORPORATE GUARANTEE FEE SHOULD BE B ENCHMARKED @ 0.5%. THIS DECISION AGAIN IS BASED ON THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF EVEREST KENTO CYLINDER LTD. THUS, HE SUBMITTED THAT FOLLOWING THE EARLIER YEARS PRECEDENCE, THE CORPORATE GUARANTEE SHOULD BE TAKEN AT @ OF 0.5%. ON TH E OTHER HAND, LD. DR HAD STRONGLY RELIED UPON THE ORDER OF THE DRP. 11 . AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AND ALSO THE ORDER OF THE TRIBUNAL FOR THE EARLIER YEARS. WE FIND THAT THE TRIBUNAL IN AY 2008 - 09 HA S HELD THAT AR MS LENGTH GUARANTEE COMMISSION SHOULD BE BENCHMARKED BY TAKING THE RATE OF 0.5%. THE DECISION OF ITAT IS BASED ON THE DECISION OF EVEREST KENTO CYLINDER LTD. WHICH HAS BEEN APPROVED BY THE HONBLE HIGH COURT. THUS, RATE OF 0.5% IS WHOLLY JUSTIFIED ON THE PRESENT CASE ALSO. WE ORDER ACCORDINGLY. 1 2 . GROUND NO. 2 AS RAISED BY THE ASSESSEE IS THUS ALLOWED. 1 3 . IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE U/S 14A FOR RS. 28,51,891/ - . THE ASSESSEE COMPANY HAS EARNED DIVIDEND INCOME OF RS. 1.3 6 CRORES FROM INVESTMENT IN SHARES AND MUTUAL FUNDS AND SAME HAS BEEN CLAIMED EXEMPT FROM TAX. AT THE TIME OF FILING OF RETURN OF INCOME, THE ASSESSEE HAS WORKED OUT THE DISALLOWANCE U/S 14A AT RS. 30,00,370/ - IN ACCORDANCE WITH THE RULE 8D WHICH COMPRISED OF INTEREST OF RS. 11.07 LAKHS UNDER RULES 8D(2)(II) AND RS. 18.93 LAKHS UNDER RULE 8D(2)(III) AFTER EXCLUDING INTEREST PAID ON SPECIFIC LOANS AND 7 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 INVESTMENT IN FOREIGN SUBSIDIARY, DIVIDEND FROM WHICH IS NOT EXEMPT. HOWEVER, THE ASSESSING OFFICER IN THE D RAFT ASSESSMENT ORDER CALCULATED THE DISALLOWANCE U/S 14A BY APPLYING RULE 8D AND WORKED OUT THE DISALLOWANCE AT RS. 1,13,00,469/ - AND PROPOSED AN ADDITION OF RS. 83,00,099/ - , C ONSIDERING ALL THE INVESTMENTS MADE BY THE ASSESSEE AND ENTIRE INTEREST EXPENDI TURE INCURRED. THE DRP DIRECTED THE ASSESSING OFFICER TO EXCLUDE THE S HARES AND SECURITIES THE INCOME FROM WHICH IS TAXABLE FOR THE COMPUTATION OF THE DISALLOWANCE UNDER RULE 8D. ACCORDINGLY, THE ASSESSING OFFICER IN THE FINAL ASSESSMENT ORDER HAS COMPUTED THE DISALLOWANCE AT RS. 28,51,891/ - . 1 4 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD FILED REVISED WORKING OF DISALLOWANCE U/S 14A R.W. RULE 8D AT RS. 28,67,984/ - AFTER EXCLUDING THE INVESTMENT IN FOREIGN SUBSIDIARY AND ALSO CONSIDER INTE REST PAID ON CASH CREDIT OF RS. 1,44,36,388/ - . BUT ASSESSING OFFICER HAS INADVERTENTLY CONSIDERED THE INTEREST ON LOAN TAKEN FOR INVESTMENT IN FOREIGN SUBSIDIARY AND INTEREST ON CASH CREDIT WHILE COMPUTING THE DISALLOWANCE U/S 14A. HE SUBMITTED THAT INTERE ST ON LOAN TAKEN FOR INVESTMENT IN FOREIGN SUBSIDIARY CANNOT BE CONSIDERED FOR COMPUTATION OF DISALLOWANCE U/S 14A, BECAUSE THESE INVESTMENTS ARE CAPABLE OF EARNING TAXABLE INCOME. EVEN THE DISALLOWANCE OF COMPUTATION OF DISALLOWANCE IS ACCORDINGLY WORKED OUT BY THE ASSESSING OFFICER THEN THE DISALLOWANCE U/S 14A WOULD BE REDUCED TO RS. 26,63,594/ - . SUCH 8 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 A CALCULATION HAS BEEN GIVEN BY THE COUNSEL BEFORE US WHICH IS AS UNDER : - 1 5 . LASTLY, HE POINTED OUT THAT THE ASSESSEES ACTION OF EXCLUDING INTER EST PAID ON LOANS TAKEN FOR INVESTMENT FOR FOREIGN SUBSIDIARY WHILE COMPUTING THE DISALLOWANCE HAS BEEN ACCEPTED BY THE DEPARTMENT IN AY 2008 - 09 & 2009 - 10. 1 6 . IN VIEW OF THE SUBMISSIONS MADE ABOVE, NOW THE ISSUE OF DISALLOWANCE U/S 14A IS RESTRICTED TO THE CALCULATION PART WHEREIN THE INTEREST PAID O N LOAN TAKEN FOR INVESTMENT IN FOREIGN SUBSIDIARY HAS TO BE EXCLUDED. BASED ON THAT, THE AGGREGATE WORKING OF 9 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 DISALLOWANCE NEEDS TO BE WORKED OUT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CALCULATION GIVEN BY THE ASSESSEE AS INCORPORATED ABOVE AND G I VE CONSEQUENTIAL RELIEF. ACCORDINGLY, GROUND NO. 3 IS TREATED AS PARTLY ALLOWED. 1 7 . REGARDING LAST GROUND, LD. COUNSEL SUBMITTED THAT IN THE ASSESSMENT ORDER FOR AY 2009 - 10, THE LEARNED ASSESS ING OFFICER HAD DISALLOWED RS. 2,99,79,357/ - BEING THREE FORTH OF EXHIBITION EXPENSES OF RS. 3,99,72,476/ - IN RESPECT OF DRUPA - 2008, GERMANY BY TREATING THE SAME AS ENDURING IN NATURE AND ALLOWED RS. 99,93,110/ - . THE DISALLOWANCE HAS BEEN CONFIRMED BY THE LEARNED CIT(A) FOR AY 2009 - 10. HOWEVER, THE LEARNED AO WHILE PASSING THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION HAS NOT ALLOWED THE SAME BASED ON THE ORDER FOR AY 2009 - 10. HE SUBMITTED THAT THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED 1/4 TH OF T HE EXHIBITION EXPENSES BEING RS. 99,93,110/ - IN THE CURRENT YEAR CONSISTENT WITH THE TREATMENT GIVEN BY HIM FOR AY 2009 - 10. OTHERWISE, THESE EXPENSES ARE FULLY ALLOWABLE AS REVENUE EXPENDITURE. 1 8 . IN VIEW OF THE FACTS NARRATED BY THE LD. COUNSEL, WE DIRE CT THE ASSESSING OFFICER TO ALLOW 1/4 TH OF THE EXHIBITION EXPENSES IN THIS YEAR ALSO CONSISTENT WITH THE TREATMENT GIVEN BY THE ASSESSING OFFICER IN AY 2009 - 10. ACCORDINGLY, GROUND NO. 4 IS TREATED AS ALLOWED. 19 . GROUND NO. 5 IS PREMATURE AT THIS STAGE AND HENCE THE SAME IS DISMISSED. 20 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21 . NOW, WE WILL TAKE - UP REVENUES APPEAL IN ITA NO. 1072/MUM/2015 VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED : - 10 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 1. WHETHER ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE HONBLE DRP WAS JUSTIFIED TO RE - COMPUTE THE ADJUSTMENT ON ACCOUNT OF INTEREST AT A MARK - UP OF 3% OVER AND ABOVE THE DOMESTIC COST OF ASSESSEE WITHOUT GIVING ANY COGENT REASONS INSTEAD OF 14.736% WORKED OUT BY THE TPO. 2. WHE THER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP WAS JUSTIFIED IN ARRIVING AT ALP RATE OF CORPORATE GUARANTEE AT 2% INSTEAD OF 6% AS SUGGESTED BY THE TPO WITHOUT GIVING ANY COGENT REASONS. 3. THE APPELLANT PRAYS THAT THE ORDER O F THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 22 . AS ADMITTED BY BOTH THE PARTIES, GROUND NO. 1 & 2 ARE SIMILAR TO GROUND RAISED BY THE ASSESSEE IN ITS APPEAL, THEREFORE, IN VIEW OF THE FINDING GIVEN THEREIN , THE GROUNDS RAISED BY THE DEPARTMENT ARE TREATED AS DISMISSED. BECAUSE I N SO FAR AS THE ADJUSTMENT ON ACCOUNT OF INTEREST IS CONCERNED, WE HAVE ALREADY HELD THAT LIBOR + 2% IS THE APPROPRIATE RATE T O BENCHMARK THE INTEREST RATE IN THE CASE OF THE ASSESSE E FOLLOWING THE JUDICIAL PRECEDENCE OF THE EARLIER TRIBUNAL ORDER. SIMILARLY, WITH REGARD TO CHARGING OF RATE OF CORPORATE GUARANTEE FEES, WE HAVE HELD THAT 0.5% RATE OF GUARANTEE FEES/COMMISSION IS A REASONABLE RATE FOLLOWING THE EARLIER ORDER OF THE TRIB UNAL. THUS, GROUND RAISED BY THE REVENUE ARE DISMISSED. 2 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS REVENUES APPEAL STANDS DISMISSED. TO SUM - UP : - ASSESSEES APPEAL IS PARTLY ALLOWED REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER , 2015. SD/ - SD/ - ( ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 16 TH SEPTEMBER , 2015 11 MANUGRAPH INDIA LTD. ITA 491 /MUM/201 5 ITA NO. 1072/MUM/2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 2 , MUMBAI. 4 ) THE CIT 1/ CONCERNED ______ , M UMBAI. 5 ) , , / THE D.R. K BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A. T., MUMBAI * . . *CHAVAN, SR.PS