M/s IFGL Refractories Ltd., Kolkata V. A.C.I.T.,(OSD)-Ward-6(2), Kolkata

ITA 684/KOL/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3404 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-11-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 05-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY PAUL
• Keywords: Transfer pricing; Double taxation relief; International transaction; Retrospective amendment; Wholly owned subsidiary
• Section: 92B; 250; 92CA; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA VIRTUAL COURT HEARING (BEFORE SRI J. SUDHAKAR REDDY, HONBLE ACCOUNTANT MEMBER & SRI S.S. GODARA, HONBLE JUDICIAL MEMBER) ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD.......................................APPELLANT MCLEOD HOUSE 3, NETAJI SUBHAS ROAD KOLKATA 700 001 [PAN : AABCI 7391 C] VS. ASSTT. COMMISSIONER OF INCOME TAX (OSD), WARD-6(2) KOLKATA..................RESPONDENT APPEARANCES BY: SHRI RAVI TULSIYAN, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI SANJAY PAUL, ADDL. CIT, D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 19 TH , 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 17 TH , 2021 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 22, KOLKATA, (HEREINAFTER THE LD. PR. CIT), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 28/02/2019, FOR THE ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF MANUFACTURING REFRACTORY ITEMS. IT HAS A WHOLLY OWNED SUBSIDIARY IN THE UNITED KINGDOM, M/S. MONOCON INTERNATIONAL REFRACTORIES LTD. (MIRL). THE ASSESSEE COMPANY HAS GIVEN A CORPORATE GUARANTEE AGAINST A FOREIGN CURRENCY LOAN TAKEN BY MIRL. THE TOTAL LOAN OUTSTANDING AS ON 31/03/2012 IS RS.5.697 GBP. THE ASSESSEE DID NOT CHARGE ANY CORPORATE GUARANTEE FEE IN RESPECT OF THE ABOVE GUARANTEE PROVIDED FOR ITS AE. 2.1. THE TRANSFER PRICING OFFICER, HELD THAT THAT THE CORPORATE GUARANTEE BY THE ASSESSEE TO ITS ASSOCIATE ENTERPRISE (AE) CONSTITUTED AN INTERNATIONAL TRANSACTION AS PER EXPLANATION TO SECTION 92B OF THE ACT AND DETERMINED THE ARMS LENGTH PRICE AS PER PROVISIONS OF SECTION 92CA OF THE ACT AND DETERMINED AN ADJUSTMENT OF RS.28,53,625/- AS ALP. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE ARGUED THAT THE TRANSACTION OF PROVIDING CORPORATE GUARANTEE IS NOT AN INTERNATIONAL TRANSACTION. THE LD. CIT(A) REJECTED THE CONTENTION BY FOLLOWING THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CAS ENGINEERING INDUSTRIES LTD. (ITA NO. 986 & 987/KOL/2017) LD. CIT(A) ALSO UPHELD THE ACTION OF THE TPO IN BENCHMARKING THE CORPORATE FEE @ 0.5% AND CONSEQUENTLY THE T.P. ADJUSTMENT DERTERMINED 4. AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS: 1. THAT, THE LD. C.I.T.(A) ERRED IN UPHOLDING THE ACTION OF THE LD. TPOIAO IN BENCHMARKING THE CORPORATE GUARANTEE FEE AT 0.5%, RESULTING IN UPWARD TP ADJUSTMENT OF RS.28,53,625/ COMFORT/CORPORATE GUARANTEE ISSUED BY THE APPELLANT FOR THE LOAN OBTAINED FROM HSBC BANK PLC, UK HOLDING THE SAME AN INTERNATIONAL TRANSACTION IN SPITE OF THE FACT THAT SUCH GUARANTEE TO AE CAPACITY OF ULTIMATE SHAREHOLDER. 2. THAT, THE LD. C.I.T.(A) FURTHER ERRED IN NOT PROPERLY CONSIDERING THAT AS THE LETTER OF COMFORT/CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AE INVOLVED NO COSTS TO THE APPELLANT HOLDING PROFIT OR LOSS IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION AND HENCE THE UPWARD TP ADJUSTMENT OF RS.28,53,625/ EXPLANATION AT CLAUSE (I)(C) OF SEC.92B OF THE ACT. 3. TH AT, THE LD. C.I.T.(A), ERRED IN NOT PROPERLY CONSIDERING THAT AS THE APPELLANT HOLDING COMPANY HAS NOT INCURRED ANY COST AGAINST PROVIDING LETTER OF COMFORT/CORPORATE GUARANTEE OR HAVING ANY BEARING ON PROFIT OR LOSS OR ASSETS OF ITS AE, THE ADDITION OF RS AGAINST THE SETTLED LAW. 4. THAT, THE LD. C.I.T.(A) UPHELD THE ACTION OF THE TPO/AO RELYING ON A DECISION OF ITAT, KOLKATA HOLDING ANOTHER DECISION OF THE SAME BENCH TO BE PER INCURIAM WHEN THERE ARE CLAIM AND IN THAT VIEW OF THE MATTER, HE ERRED IN NOT HAVING DECIDED THE ISSUE FAVOURING THE APPELLANT AS PER SETTLED POSITION IN LAW. 4.1. THE ASSESSEE FILED THE FOLLOWING ADDITIONAL GROUND OF APP 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED TO REFUND OF DIVIDEND DISTRIBUTION TAX (DDT) PAID @ 16.22% U/S.115 ITS JAPANESE SHAREHOLDERS DURING A.Y. 2012 APPLICABLE AT 10% SPECIFIED IN DTAA BETWEEN INDIA AND JAPAN.' 4.2. THE ASSESSEE FILED A S THAT, ON THE FACTS AND IN TH DEDUCTION OF EDUCATION CESS PAID @ 3% OF INCOME TAX AND SURCHARGE THEREON AMOUNTING TO RS.26,53,314/ DURING A.Y. 2012-13. 2 DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CAS E OF DY. CIT VS. NATIONAL ENGINEERING INDUSTRIES LTD. (ITA NO. 986 & 987/KOL/2017) , ORDER DT. 12/09/2018. LD. CIT(A) ALSO UPHELD THE ACTION OF THE TPO IN BENCHMARKING THE CORPORATE AND CONSEQUENTLY THE T.P. ADJUSTMENT DERTERMINED . AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS: - THAT, THE LD. C.I.T.(A) ERRED IN UPHOLDING THE ACTION OF THE LD. TPOIAO IN BENCHMARKING THE CORPORATE GUARANTEE FEE AT 0.5%, RESULTING IN UPWARD TP ADJUSTMENT OF RS.28,53,625/ - U/S.92CA(3) OF THE ACT, AGAINST LETTER OF COMFORT/CORPORATE GUARANTEE ISSUED BY THE APPELLANT - COMPANY TO ITS AE (MIRL) FOR THE LOAN OBTAINED FROM HSBC BANK PLC, UK HOLDING THE SAME AN INTERNATIONAL TRANSACTION IN SPITE OF THE FACT THAT SUCH GUARANTEE TO AE WAS ONLY PROVIDED IN THE CAPACITY OF ULTIMATE SHAREHOLDER. THAT, THE LD. C.I.T.(A) FURTHER ERRED IN NOT PROPERLY CONSIDERING THAT AS THE LETTER OF COMFORT/CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AE INVOLVED NO COSTS TO THE APPELLANT HOLDING COMPANY AND CONSEQUENTLY HAD NO BEARING ON ITS PROFIT OR LOSS IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION AND HENCE THE UPWARD TP ADJUSTMENT OF RS.28,53,625/ - U/S.92CA(3) WAS IN VIOLATION OF EXPLANATION AT CLAUSE (I)(C) OF SEC.92B OF THE ACT. AT, THE LD. C.I.T.(A), ERRED IN NOT PROPERLY CONSIDERING THAT AS THE APPELLANT HOLDING COMPANY HAS NOT INCURRED ANY COST AGAINST PROVIDING LETTER OF COMFORT/CORPORATE GUARANTEE OR HAVING ANY BEARING ON PROFIT OR LOSS OR ASSETS OF ITS AE, THE ADDITION OF RS .28,53,625/- IN THE GUISE OF GUARANTEE FEES AT 0.5% IS THAT, THE LD. C.I.T.(A) UPHELD THE ACTION OF THE TPO/AO RELYING ON A DECISION OF ITAT, KOLKATA HOLDING ANOTHER DECISION OF THE SAME BENCH TO BE PER INCURIAM WHEN THERE ARE SERIES OF DECISIONS ON THE LEGITIMACY OF THE APPELLANT'S CLAIM AND IN THAT VIEW OF THE MATTER, HE ERRED IN NOT HAVING DECIDED THE ISSUE FAVOURING THE APPELLANT AS PER SETTLED POSITION IN LAW. THE ASSESSEE FILED THE FOLLOWING ADDITIONAL GROUND OF APP EAL:- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED TO REFUND OF DIVIDEND DISTRIBUTION TAX (DDT) PAID @ 16.22% U/S.115 - O ITS JAPANESE SHAREHOLDERS DURING A.Y. 2012 - 13, WHICH WAS IN EXCESS OF RATE APPLICABLE AT 10% SPECIFIED IN DTAA BETWEEN INDIA AND JAPAN.' FILED A S ECOND ADDITIONAL GROUND, WHICH IS AS FOLLOWS: THAT, ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED TO DEDUCTION OF EDUCATION CESS PAID @ 3% OF INCOME TAX AND SURCHARGE THEREON AMOUNTING TO RS.26,53,314/ - U/S 37 OF THE ACT WHILE ARRIVING AT ITS TOTAL TAXABLE INCOME ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD DY. CIT VS. NATIONAL , ORDER DT. 12/09/2018. THE LD. CIT(A) ALSO UPHELD THE ACTION OF THE TPO IN BENCHMARKING THE CORPORATE GUARANTEE THAT, THE LD. C.I.T.(A) ERRED IN UPHOLDING THE ACTION OF THE LD. TPOIAO IN BENCHMARKING THE CORPORATE GUARANTEE FEE AT 0.5%, RESULTING IN UPWARD TP U/S.92CA(3) OF THE ACT, AGAINST LETTER OF COMPANY TO ITS AE (MIRL) FOR THE LOAN OBTAINED FROM HSBC BANK PLC, UK HOLDING THE SAME AN INTERNATIONAL WAS ONLY PROVIDED IN THE THAT, THE LD. C.I.T.(A) FURTHER ERRED IN NOT PROPERLY CONSIDERING THAT AS THE LETTER OF COMFORT/CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AE INVOLVED NO COMPANY AND CONSEQUENTLY HAD NO BEARING ON ITS PROFIT OR LOSS IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION AND HENCE THE U/S.92CA(3) WAS IN VIOLATION OF AT, THE LD. C.I.T.(A), ERRED IN NOT PROPERLY CONSIDERING THAT AS THE APPELLANT HOLDING COMPANY HAS NOT INCURRED ANY COST AGAINST PROVIDING LETTER OF COMFORT/CORPORATE GUARANTEE OR HAVING ANY BEARING ON PROFIT OR LOSS OR ASSETS OF IN THE GUISE OF GUARANTEE FEES AT 0.5% IS THAT, THE LD. C.I.T.(A) UPHELD THE ACTION OF THE TPO/AO RELYING ON A DECISION OF ITAT, KOLKATA HOLDING ANOTHER DECISION OF THE SAME BENCH TO BE PER SERIES OF DECISIONS ON THE LEGITIMACY OF THE APPELLANT'S CLAIM AND IN THAT VIEW OF THE MATTER, HE ERRED IN NOT HAVING DECIDED THE ISSUE 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED O OF THE ACT TO 13, WHICH WAS IN EXCESS OF RATE AS FOLLOWS: - E CIRCUMSTANCES OF THE CASE, THE APPELLANT IS ENTITLED TO DEDUCTION OF EDUCATION CESS PAID @ 3% OF INCOME TAX AND SURCHARGE THEREON U/S 37 OF THE ACT WHILE ARRIVING AT ITS TOTAL TAXABLE INCOME 5. THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSACTION IN QUESTION IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON A NUMBER OF CASE CASE OF DCIT, CIRCLE-8 (1) VS. EIH LIMITED IN ITA NOS. 153/KOL/2016 AND 110/KOL/2016; ORDER DT. 12/01/2018 AND THE DECISION IN THE CASE OF ITA NOS. 262 AND 263/KOL/2018, DT. 12/10/2018 THAT THE LD. CIT(A) HAS WRON DCIT VS. M/S. NATIONAL ENGINEERING INDUSTRIES LTD. (SUPRA) INCURIUM. 6. THE LD. D/R, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE DECISION OF HAS BEEN FOLLOWED BY THE LD. CIT(A) AND HENCE THERE IS NO INFIRMITY IN THE ORDER. 7. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: 8. THIS BENCH OF THE TRIBUNAL IN THE CASE OF SINCE THE AE WAS A START UP COMPANY, THE ASSESSEE EXTENDED CORPORATE GUARANTEE TO THE THIRD PARTY BORROWERS AS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT THE INTEREST BY FULFILLING THE SHAREHOLDERS OBLIGATION. ACCORDING TO THE LD AR, THE CORPORATE GUARANT ASSESSEE WAS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT BY FULFILLING THE SHAREHOLDER OBLIGATION AS ANY FINANCIAL INCAPACITATION OF THE SUBSIDIARY WOULD JEOPARDIZE THE INVESTMENT OF THE ASSESSEE. HE RELIED ON THE ORDER OF THE COORDINA VS DCIT (ITA NO.1912/KOL/2012) WHEREIN IT WAS HELD THAT THE PROVISION OF CORPORATE GUARANTEE IS IN THE NATURE OF SHAREHOLDER ACTIVITY AND HENCE, NO TP ADJUSTMENT ON ACCOUNT OF CORPORATE GUARANTEE IS REQUIRED. IN THE SAID CASE, THIS TRIBUNAL HAD HELD THAT 'THE ASSESSEE'S EXPECTATION FROM PROVISION OF GUARANTEE WAS NOT THAT OF A GUARANTOR I.E. TO EARN A GUARANTEE FEE, RATHER, THE EXPECTATION WAS OF A SHAREHOLDER TO PROTECT ITS INVESTMENT INTEREST, ASSESSEE'S BUSINESS OBJECTIVE'. THUS, WE AGREE WITH THE OBJECTIVE OF THE ASSESSEE FOR PROVIDING GUARANTEE WAS NOT TO RETURNS IN THE FORM OF APPRECIATION IN INVESTMENT RECEIVE DIVIDENDS AND, THEREFORE, NO TP ADJUSTMENT OUGHT TO HAVE BEEN MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. COMING TO THE ALTERNATE PLEA OF THE ASSESSEE THAT, IN THE FACTS AND CIRCUMSTANCES THE CORPORATE GUARANTEE IS NOT AN INTERNATIONAL TRANSACTION U WAS INSERTED IN THE DEFINITION OF 'INTERNATIONAL TRANSACTION' IN SECTION 92B BY INSERTING AN EXPLANATION IN THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01 EXPLANATION STATES THAT- 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT (I) THE EXPRESSION 'INTERNATIONAL TRANSACTION' SHALL INCLUDE .... 3 OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSACTION IN QUESTION IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON A NUMBER OF CASE - LAW INCLUDING THE ORDER OF THE ITAT IN THE (1) VS. EIH LIMITED IN ITA NOS. 153/KOL/2016 AND 110/KOL/2016; AND THE DECISION IN THE CASE OF CIT VS. ROHIT FERRO TECH LTD. IN ITA NOS. 262 AND 263/KOL/2018, DT. 12/10/2018 AND OTHER CASE- LAW. THAT THE LD. CIT(A) HAS WRON GLY RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S. NATIONAL ENGINEERING INDUSTRIES LTD. (SUPRA) AS THIS ORDER WAS THE LD. D/R, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE DECISION OF THE M/S. NATIONAL ENGINEERING INDUSTRIES LTD. (SUPRA) HAS BEEN FOLLOWED BY THE LD. CIT(A) AND HENCE THERE IS NO INFIRMITY IN THE ORDER. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: - THIS BENCH OF THE TRIBUNAL IN THE CASE OF EIH LIMITED (SUPRA), HELD AS FOLLOWS: SINCE THE AE WAS A START UP COMPANY, THE ASSESSEE EXTENDED CORPORATE GUARANTEE TO THE THIRD PARTY BORROWERS AS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT THE INTEREST BY FULFILLING THE SHAREHOLDERS OBLIGATION. ACCORDING TO THE LD AR, THE CORPORATE GUARANT EE AS PROVIDED BY THE ASSESSEE WAS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT BY FULFILLING THE SHAREHOLDER OBLIGATION AS ANY FINANCIAL INCAPACITATION OF THE SUBSIDIARY WOULD JEOPARDIZE THE INVESTMENT OF THE ASSESSEE. HE RELIED ON THE ORDER OF THE COORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF TEGA INDUSTRIES LTD. VS DCIT (ITA NO.1912/KOL/2012) WHEREIN IT WAS HELD THAT THE PROVISION OF CORPORATE GUARANTEE IS IN THE NATURE OF SHAREHOLDER ACTIVITY AND HENCE, NO TP ADJUSTMENT ON ACCOUNT OF CORPORATE IN THE SAID CASE, THIS TRIBUNAL HAD HELD THAT 'THE ASSESSEE'S EXPECTATION FROM PROVISION OF GUARANTEE WAS NOT THAT OF A GUARANTOR I.E. TO EARN A GUARANTEE FEE, RATHER, THE EXPECTATION WAS OF A SHAREHOLDER TO PROTECT ITS INVESTMENT INTEREST, TO HELP IT ACHIEVE THE ASSESSEE'S BUSINESS OBJECTIVE'. THUS, WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE OBJECTIVE OF THE ASSESSEE FOR PROVIDING GUARANTEE WAS NOT TO EARN GUARANTEE FEE BUT TO EARN RETURNS IN THE FORM OF APPRECIATION IN INVESTMENT VALUE AND RECEIVE DIVIDENDS AND, THEREFORE, NO TP ADJUSTMENT OUGHT TO HAVE BEEN MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. COMING TO THE ALTERNATE PLEA OF THE ASSESSEE THAT, IN THE FACTS AND CIRCUMSTANCES THE CORPORATE INTERNATIONAL TRANSACTION U /S . 92B OF THE ACT, WE NOTE THAT TERM 'GUARANTEE' WAS INSERTED IN THE DEFINITION OF 'INTERNATIONAL TRANSACTION' IN SECTION 92B BY INSERTING AN EXPLANATION IN THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT (I) THE EXPRESSION 'INTERNATIONAL TRANSACTION' SHALL INCLUDE .... ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSACTION IN QUESTION IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. FOR THIS LAW INCLUDING THE ORDER OF THE ITAT IN THE (1) VS. EIH LIMITED IN ITA NOS. 153/KOL/2016 AND 110/KOL/2016; CIT VS. ROHIT FERRO TECH LTD. IN LAW. HE SUBMITTED GLY RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF AS THIS ORDER WAS PER THE LD. D/R, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A) AND M/S. NATIONAL ENGINEERING INDUSTRIES LTD. (SUPRA) HAS BEEN FOLLOWED BY THE LD. CIT(A) AND HENCE THERE IS NO INFIRMITY IN THE ORDER. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND PAPERS ON RECORD, ORDERS OF THE AUTHORITIES HELD AS FOLLOWS: - SINCE THE AE WAS A START UP COMPANY, THE ASSESSEE EXTENDED CORPORATE GUARANTEE TO THE THIRD PARTY BORROWERS AS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT THE INTEREST BY FULFILLING THE EE AS PROVIDED BY THE ASSESSEE WAS A MATTER OF COMMERCIAL PRUDENCE TO PROTECT BY FULFILLING THE SHAREHOLDER OBLIGATION AS ANY FINANCIAL INCAPACITATION OF THE SUBSIDIARY WOULD JEOPARDIZE THE INVESTMENT OF THE ASSESSEE. TE BENCH OF THIS TRIBUNAL IN THE CASE OF TEGA INDUSTRIES LTD. VS DCIT (ITA NO.1912/KOL/2012) WHEREIN IT WAS HELD THAT THE PROVISION OF CORPORATE GUARANTEE IS IN THE NATURE OF SHAREHOLDER ACTIVITY AND HENCE, NO TP ADJUSTMENT ON ACCOUNT OF CORPORATE IN THE SAID CASE, THIS TRIBUNAL HAD HELD THAT 'THE ASSESSEE'S EXPECTATION FROM PROVISION OF GUARANTEE WAS NOT THAT OF A GUARANTOR I.E. TO EARN A GUARANTEE FEE, RATHER, THE TO HELP IT ACHIEVE THE CONTENTION OF THE ASSESSEE THAT THE EARN GUARANTEE FEE BUT TO EARN RECEIVE DIVIDENDS AND, THEREFORE, NO TP ADJUSTMENT OUGHT TO HAVE BEEN MADE IN THE FACTS AND COMING TO THE ALTERNATE PLEA OF THE ASSESSEE THAT, IN THE FACTS AND CIRCUMSTANCES THE CORPORATE . 92B OF THE ACT, WE NOTE THAT TERM 'GUARANTEE' WAS INSERTED IN THE DEFINITION OF 'INTERNATIONAL TRANSACTION' IN SECTION 92B BY INSERTING AN EXPLANATION IN THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01 /04/2002. THE 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT (I) THE EXPRESSION 'INTERNATIONAL (C) CAPITAL FINANCING, INCLUDING ANY TYPE OF LONG GUARANTEE, PURCH ASE OR SALE OF MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFERRED PAYMENT OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS. ' THE EXPLANATION STATES THAT IT IS CLARIFICATORY IN NATURE AND IS 'FOR THE REMOVAL OF DOUBTS DOES NOT ALTER THE BASIC CHARACTER OF DEFINITION OF 'INTERNATIONAL TRANSACTION' UNDER THE MAIN SECTION 92B. UNDER THIS EXPLANATION, FIVE CATEGORIES OF TRANSACTIONS HAVE BEEN CLARIFIED TO HAVE BEEN INCLUDED IN THE DEFINITION OF 'INTERNATIONAL GUARANTEE, LENDING OR LOANS. OTHER TWO, (C) AND (E) DEAL WITH (I) CAPITAL FINANCING, AND (U) BUSINESS RESTRUCTURING OR REORGANIZATION. CLAUSE (C) REFERS TO LENDING OR GUARANTEE. BUT THE EXPLANATION WHICH I S FOR REMOVAL OF DOUBTS OR IS CLARIFICATORY, CANNOT BE READ INDEPENDENT OF SECTION 92B(1). SECTION 92B(1), PROVIDES THOSE TRANSACTIONS AS INTERNATIONAL TRANSACTIONS WHICH ARE IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY (EXPL CLAUSES (A) AND (B) OF THE EXPLANATION), OR PROVISION OF SERVICES, (EXPLAINED BY CLAUSE (D) OF THE EXPLANATION), OR LENDING OR BORROWING MONEY (EXPLAINED BY CLAUSE (C) OF EXPLANATION). THE PLAIN READING OF PROVISIONS OF SEC. 92B(1) OF THE ACT INDI IN SECTION 9 2B (1) OF THE ACT, (I. E. PURCHASES, SALES, PROVISION FOR SERVICES, LENDING OR BORROWING OR ANY OTHER TRANSACTION) SHOULD HAVE BEARING ON THE PROFITS, INCOMES, LOSSES OR ASSETS OF SUCH ENTERPRISES. I N OUR OPINION, THE CONDITION PRECEDENT OF A TRANSACTION HAVING A BEARING ON PROFITS, INCOMES, LOSSES, OR ASSETS WOULD APPLY TO EACH OF THE AFORESAID TRANSACTIONS NAMELY PURCHASE, SALE, OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY OR PROVISION OF SERVICES, O MONEY OR ANY SUCH TRANSACTION. THIS UNDERSTANDING OF OURS GETS FURTHER CLARIFIED BY WAY OF INSERTION OF EXPLANATION IN SECTION 92B(1) BY THE FINANCE ACT 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.2002 VIDE CLAUSE (A) TO (D). WE FIND T CARVED OUT AS AN EXCEPTION WHEREIN, THE TRANSACTION THEREON HAS BEEN SPECIFICALLY MANDATED TO BE AN INTERNATIONAL TRANSACTION WHERE A TRANSACTION OF BUSINESS RESTRUCTURING OR REORGANIZATION, ENTERED I THAT IT HAS BEARING ON THE PROFITS, INCOMES, LOSSES, OR ASSETS OF SUCH ENTERPRISES AT THE TIME OF TRANSACTION OR AT ANY FUTURE DATE. ' 8.1. THIS BENCH OF THE TRIBUNAL IN THE CASE OF & 263/KOL/2018 (SUPRA), HELD AS FOLLOWS: '4. NEXT COMES CORPORATE GUARANTEES ISSUE IN BOTH THESE ASSESSMENT YEARS. LEARNED CIT( A) HAS REFERRED TO THIS TRIBUNAL VARIOUS DECISIONS (SUPRA) IN CONCLUDING THAT A CORPORATE GUARANTEE DOES NOT AMOUNT TO AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT. THE REVENUE FAILS TO QUOTE ANY JUDICIAL PRECEDENT TO THE CONTR ARY. WE AFFIRM THE CIT(A) FINDINGS ON THE INSTANT LEGAL ISSUE AS WELL. THE REVENUE'S IDENTICAL FIRST SUBSTANTIVE GROUND SEEKING TO REVIVE ALP ADJUSTMENT ON INTEREST AS LOANS AND CORPORATE GUARANTEE FAILS THEREFORE. 8.2. FURTHER, THE DELHI BENCH OF THE IT ITA NO. 5816/DEL/2012, ORDER DT. 11/03/2014, IN ANY EVENT, THE ONUS IS ON THE REVENUE AUTHORITIES TO DEMONSTRATE THAT THE TRANSACTION IS OF SUCH A NATURE AS TO HAVE 'BEARING ON PROFITS, IN THE ENTERPRISE, AND THERE WAS NOT EVEN AN EFFORT TO DISCHARGE THIS ONUS. SUCH AN IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS HAS TO BE ON REAL BASIS, EVEN IF IN PRESENT OR IN FUTURE, AND NOT ON CONTINGENT OR HYPOTHETICAL BASIS, A RECORD TO INDICATE, EVEN IF NOT TO ESTABLISH IT TO HILT, THAT AN INTRA TRANSACTION HAS SOME IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS. CLEARLY, THESE CONDITIONS ARE NOT SATISFIED ON THE FACTS OF THIS C 4 (C) CAPITAL FINANCING, INCLUDING ANY TYPE OF LONG -TERM OR SHORT- TERM BORROWING, LENDING OR ASE OR SALE OF MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFERRED PAYMENT OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS. ' THE EXPLANATION STATES THAT IT IS CLARIFICATORY IN NATURE AND IS 'FOR THE REMOVAL OF DOUBTS DOES NOT ALTER THE BASIC CHARACTER OF DEFINITION OF 'INTERNATIONAL TRANSACTION' UNDER THE MAIN SECTION 92B. UNDER THIS EXPLANATION, FIVE CATEGORIES OF TRANSACTIONS HAVE BEEN CLARIFIED TO HAVE BEEN INCLUDED IN THE DEFINITION OF 'INTERNATIONAL TRANSACTIONS'. CLAUSES (A)(B) AND (D) DO NOT COVER GUARANTEE, LENDING OR LOANS. OTHER TWO, (C) AND (E) DEAL WITH (I) CAPITAL FINANCING, AND (U) BUSINESS RESTRUCTURING OR REORGANIZATION. CLAUSE (C) REFERS TO LENDING OR GUARANTEE. BUT THE S FOR REMOVAL OF DOUBTS OR IS CLARIFICATORY, CANNOT BE READ INDEPENDENT OF SECTION 92B(1). SECTION 92B(1), PROVIDES THOSE TRANSACTIONS AS INTERNATIONAL TRANSACTIONS WHICH ARE IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY (EXPL CLAUSES (A) AND (B) OF THE EXPLANATION), OR PROVISION OF SERVICES, (EXPLAINED BY CLAUSE (D) OF THE EXPLANATION), OR LENDING OR BORROWING MONEY (EXPLAINED BY CLAUSE (C) OF EXPLANATION). THE PLAIN READING OF PROVISIONS OF SEC. 92B(1) OF THE ACT INDI CATE THAT THE VARIOUS TRANSACTIONS 2B (1) OF THE ACT, (I. E. PURCHASES, SALES, PROVISION FOR SERVICES, LENDING OR BORROWING OR ANY OTHER TRANSACTION) SHOULD HAVE BEARING ON THE PROFITS, INCOMES, LOSSES OR ASSETS OF SUCH N OUR OPINION, THE CONDITION PRECEDENT OF A TRANSACTION HAVING A BEARING ON PROFITS, INCOMES, LOSSES, OR ASSETS WOULD APPLY TO EACH OF THE AFORESAID TRANSACTIONS NAMELY PURCHASE, SALE, OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY OR PROVISION OF SERVICES, O R LENDING OR BORROWING MONEY OR ANY SUCH TRANSACTION. THIS UNDERSTANDING OF OURS GETS FURTHER CLARIFIED BY WAY OF INSERTION OF EXPLANATION IN SECTION 92B(1) BY THE FINANCE ACT 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.2002 VIDE CLAUSE (A) TO (D). WE FIND T HAT IN THE SAID EXPLANATION, CLAUSE (E) ALONE HAS BEEN CARVED OUT AS AN EXCEPTION WHEREIN, THE TRANSACTION THEREON HAS BEEN SPECIFICALLY MANDATED TO BE AN INTERNATIONAL TRANSACTION WHERE A TRANSACTION OF BUSINESS RESTRUCTURING OR REORGANIZATION, ENTERED I NTO BY AN ENTERPRISE WITH AN AE IRRESPECTIVE OF THE FACT THAT IT HAS BEARING ON THE PROFITS, INCOMES, LOSSES, OR ASSETS OF SUCH ENTERPRISES AT THE TIME OF TRANSACTION OR AT ANY FUTURE DATE. ' THIS BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS. FERRO TECH LTD. IN ITA NOS. 262 HELD AS FOLLOWS: - '4. NEXT COMES CORPORATE GUARANTEES ISSUE IN BOTH THESE ASSESSMENT YEARS. LEARNED A) HAS REFERRED TO THIS TRIBUNAL VARIOUS DECISIONS (SUPRA) IN CONCLUDING THAT A CORPORATE GUARANTEE DOES NOT AMOUNT TO AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT. THE REVENUE FAILS TO QUOTE ANY JUDICIAL PRECEDENT TO ARY. WE AFFIRM THE CIT(A) FINDINGS ON THE INSTANT LEGAL ISSUE AS WELL. THE REVENUE'S IDENTICAL FIRST SUBSTANTIVE GROUND SEEKING TO REVIVE ALP ADJUSTMENT ON INTEREST AS LOANS AND CORPORATE GUARANTEE FAILS THEREFORE. FURTHER, THE DELHI BENCH OF THE IT AT IN THE CASE OF BHARTI AIRTEL VS. ADDL. CIT IN ITA NO. 5816/DEL/2012, ORDER DT. 11/03/2014, HELD AS FOLLOWS:- IN ANY EVENT, THE ONUS IS ON THE REVENUE AUTHORITIES TO DEMONSTRATE THAT THE TRANSACTION IS OF SUCH A NATURE AS TO HAVE 'BEARING ON PROFITS, IN COME, LOSSES OR ASSETS' OF THE ENTERPRISE, AND THERE WAS NOT EVEN AN EFFORT TO DISCHARGE THIS ONUS. SUCH AN IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS HAS TO BE ON REAL BASIS, EVEN IF IN PRESENT OR IN FUTURE, AND NOT ON CONTINGENT OR HYPOTHETICAL BASIS, A ND THERE HAS TO BE SOME MATERIAL ON RECORD TO INDICATE, EVEN IF NOT TO ESTABLISH IT TO HILT, THAT AN INTRA - TRANSACTION HAS SOME IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS. CLEARLY, THESE CONDITIONS ARE NOT SATISFIED ON THE FACTS OF THIS C ASE. ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD TERM BORROWING, LENDING OR ASE OR SALE OF MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFERRED PAYMENT OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINESS. ' THE EXPLANATION STATES THAT IT IS CLARIFICATORY IN NATURE AND IS 'FOR THE REMOVAL OF DOUBTS '. THUS, IT DOES NOT ALTER THE BASIC CHARACTER OF DEFINITION OF 'INTERNATIONAL TRANSACTION' UNDER THE MAIN SECTION 92B. UNDER THIS EXPLANATION, FIVE CATEGORIES OF TRANSACTIONS HAVE BEEN CLARIFIED TO HAVE TRANSACTIONS'. CLAUSES (A)(B) AND (D) DO NOT COVER GUARANTEE, LENDING OR LOANS. OTHER TWO, (C) AND (E) DEAL WITH (I) CAPITAL FINANCING, AND (U) BUSINESS RESTRUCTURING OR REORGANIZATION. CLAUSE (C) REFERS TO LENDING OR GUARANTEE. BUT THE S FOR REMOVAL OF DOUBTS OR IS CLARIFICATORY, CANNOT BE READ INDEPENDENT OF SECTION 92B(1). SECTION 92B(1), PROVIDES THOSE TRANSACTIONS AS INTERNATIONAL TRANSACTIONS WHICH ARE IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY (EXPL AINED BY CLAUSES (A) AND (B) OF THE EXPLANATION), OR PROVISION OF SERVICES, (EXPLAINED BY CLAUSE (D) OF THE EXPLANATION), OR LENDING OR BORROWING MONEY (EXPLAINED BY CLAUSE (C) OF EXPLANATION). THE PLAIN CATE THAT THE VARIOUS TRANSACTIONS MENTIONED 2B (1) OF THE ACT, (I. E. PURCHASES, SALES, PROVISION FOR SERVICES, LENDING OR BORROWING OR ANY OTHER TRANSACTION) SHOULD HAVE BEARING ON THE PROFITS, INCOMES, LOSSES OR ASSETS OF SUCH N OUR OPINION, THE CONDITION PRECEDENT OF A TRANSACTION HAVING A BEARING ON PROFITS, INCOMES, LOSSES, OR ASSETS WOULD APPLY TO EACH OF THE AFORESAID TRANSACTIONS NAMELY PURCHASE, R LENDING OR BORROWING MONEY OR ANY SUCH TRANSACTION. THIS UNDERSTANDING OF OURS GETS FURTHER CLARIFIED BY WAY OF INSERTION OF EXPLANATION IN SECTION 92B(1) BY THE FINANCE ACT 2012 WITH RETROSPECTIVE EFFECT FROM HAT IN THE SAID EXPLANATION, CLAUSE (E) ALONE HAS BEEN CARVED OUT AS AN EXCEPTION WHEREIN, THE TRANSACTION THEREON HAS BEEN SPECIFICALLY MANDATED TO NTO BY AN ENTERPRISE WITH AN AE IRRESPECTIVE OF THE FACT THAT IT HAS BEARING ON THE PROFITS, INCOMES, LOSSES, OR ASSETS OF SUCH ENTERPRISES AT THE TIME OF TECH LTD. IN ITA NOS. 262 '4. NEXT COMES CORPORATE GUARANTEES ISSUE IN BOTH THESE ASSESSMENT YEARS. LEARNED A) HAS REFERRED TO THIS TRIBUNAL VARIOUS DECISIONS (SUPRA) IN CONCLUDING THAT A CORPORATE GUARANTEE DOES NOT AMOUNT TO AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT. THE REVENUE FAILS TO QUOTE ANY JUDICIAL PRECEDENT TO ARY. WE AFFIRM THE CIT(A) FINDINGS ON THE INSTANT LEGAL ISSUE AS WELL. THE REVENUE'S IDENTICAL FIRST SUBSTANTIVE GROUND SEEKING TO REVIVE ALP ADJUSTMENT ON BHARTI AIRTEL VS. ADDL. CIT IN IN ANY EVENT, THE ONUS IS ON THE REVENUE AUTHORITIES TO DEMONSTRATE THAT THE COME, LOSSES OR ASSETS' OF THE ENTERPRISE, AND THERE WAS NOT EVEN AN EFFORT TO DISCHARGE THIS ONUS. SUCH AN IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS HAS TO BE ON REAL BASIS, EVEN IF IN PRESENT OR IN FUTURE, ND THERE HAS TO BE SOME MATERIAL ON - AE INTERNATIONAL TRANSACTION HAS SOME IMPACT ON PROFITS, INCOME, LOSSES OR ASSETS. CLEARLY, THESE WE HAVE HELD THAT EVEN AFTER THE AMENDMENT IN SECTION 92B, BY AMENDING EXPLANATION TO SECTION 92B, A CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AES, WHICH DOES NOT INVOLVE ANY COSTS TO THE ASSESSEE, DOES NOT HAVE ANY BEARING ON PROFITS, INCOM OF THE ENTERPRISE AND, THEREFORE, IT IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION TO WHICH ALP ADJUSTMENT CAN BE MADE. AS WE HAVE DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE ON THIS SHORT ISSUE, WE SEE NO NEED TO ADDRESS OURSELVES RAISED BY THE ASSESSEE AND THE JUDICIAL PRECEDENTS CITED BEFORE US. 8.4. THE CHENNAI BENCH OF THE ITAT IN THE CASE OF VS. DCIT, IN ITA NO. 2756/CHNY/2017 AND S.P. 90/CHNY/2018, ORDER DT. HELD AS FOLLOWS:- 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF REDINGTON INDIA LTD. VS. JCIT IN ITA NO.513/MDS./2014 DATED 07.07.2014 FOR ASSESS HELD THAT:- '47. REGARDING THE ABOVE ISSUE, THE LEARNED SENIOR COUNSEL CONTENDED THAT CORPORATE GUARANTEE GRANTED BY THE ASSESSEE COMPANY IS NOT AN 'INTERNATIONAL TRANSACTION'. THE ASSESSEE HAS NOT GRANTED ANY NEW GUARANTEE IN THE PREVIOUS YEAR. THEREFORE, THE RELIANC 'INTERNATIONAL TRANSACTION' AS RETROSPECTIVELY AMENDED BY THE 2012, IS ERRONEOUS AND BAD IN LAW. THE CORPORATE GUARANTEES PROVIDED BY THE ASSE SSEE COMPANY TO ITS AES ENABLE THEM TO SECURE CREDIT IN THEIR RESPECTIVE OVERSEAS JURISDICTIONS AND TO COMPLY WITH THE LAWS, IN THOSE JURISDICTIONS. SUCH CORPORATE GUARANTEES GRANTED BY THE ASSESSEE TO THE AES ENABLED THEM TO SECURE FUNDS FOR THEIR WORKING ABSENCE OF SUCH LOCALLY SOURCED FUNDING, THE ASSESSEE WOULD HAVE TO SUPPORT ITS AES BUSINESS OPERATIONS BY PROVIDING FUNDS THROUGH EQUITY OR OTHERWISE. ACCORDINGLY, THE TRANSACTION CAN BE SAID TO ACTIVITY. THE WELL WHERE THE BUSINESS OF THE SUBSIDIARY GENERATES SYNERGIES FOR THE ASSESSEE. IT IS IN THE BEST INTEREST OF THE GROUP THAT THE ASSESSEE GUARANTEES TO ITS AES. THE LEARNED SENIOR COUNSEL RELIED ON THE DECISION OF THE ITAT, DELHI BENCH, RENDERED IN THE : CASE OF BHARTI AIRTEL LTD. V. ACIT (43 TAXMAN.COM 150), WHEREIN IT HAS HELD PROVIDING CORPORATE GUARANTEE DOES NOT INVOLVE ANY COST TO THE ASSESSEE AND IT IS NOT AN 'INTERNATIONAL TRANSACTION', EVEN UNDER THE DEFINITION OF THE SAID TERM AS AMENDED BY THE INCOME, LOSSES OR ASSETS OF THE ASSESSEE COMPANY. 48. AS AN ALTERNATIVE CONTENTION, THE LEARNED SENIOR COUNSEL ARGUED THAT GUARANTEES ARE PROVIDED TO THE ASSESSEE ON BEHALF OF AES AS AN INTEGRAL BUSINESS ACTIVITY OF THE ASSESSEE RELATING TO SUPPLY OF GENERAL MANAGEMENT AND DISTRIBUTION OF LOGISTIC BUSINESS, WORLDWIDE. THEREFORE, THE TRANSACTION MUST BE TESTED UNDER THE COMBINED TRANSACTION TNMM APPROACH RATHER THAN ON A STAND ALONE BASIS. THE ITAT, PUNE BENCH IN TH (INDIA) (P.) LTD. V. DCIT MCCANN ERIKSON INDIA PVT. LTD. V 5 WE HAVE HELD THAT EVEN AFTER THE AMENDMENT IN SECTION 92B, BY AMENDING EXPLANATION TO SECTION 92B, A CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AES, WHICH DOES NOT ANY COSTS TO THE ASSESSEE, DOES NOT HAVE ANY BEARING ON PROFITS, INCOM OF THE ENTERPRISE AND, THEREFORE, IT IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION TO WHICH ALP ADJUSTMENT CAN BE MADE. AS WE HAVE DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE ON THIS SHORT ISSUE, WE SEE NO NEED TO ADDRESS OURSELVES TO OTHER LEGAL ISSUES RAISED BY THE ASSESSEE AND THE JUDICIAL PRECEDENTS CITED BEFORE US. THE CHENNAI BENCH OF THE ITAT IN THE CASE OF SIVA INDUSTRIES AND HOLDINGS LTD. VS. DCIT, IN ITA NO. 2756/CHNY/2017 AND S.P. 90/CHNY/2018, ORDER DT. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF REDINGTON INDIA LTD. VS. JCIT IN ITA NO.513/MDS./2014 DATED 07.07.2014 FOR ASSESS MENT YEAR 2009 '47. REGARDING THE ABOVE ISSUE, THE LEARNED SENIOR COUNSEL CONTENDED THAT CORPORATE GUARANTEE GRANTED BY THE ASSESSEE COMPANY IS NOT AN 'INTERNATIONAL TRANSACTION'. THE ASSESSEE HAS NOT GRANTED ANY NEW GUARANTEE IN THE PREVIOUS YEAR. THEREFORE, THE RELIANC E PLACED BY THE TPO ON THE DEFINITION OF THE TERM 'INTERNATIONAL TRANSACTION' AS RETROSPECTIVELY AMENDED BY THE 2012, IS ERRONEOUS AND BAD IN LAW. THE CORPORATE GUARANTEES PROVIDED BY THE SSEE COMPANY TO ITS AES ENABLE THEM TO SECURE CREDIT IN THEIR RESPECTIVE OVERSEAS JURISDICTIONS AND TO COMPLY WITH THE LAWS, IN THOSE JURISDICTIONS. SUCH CORPORATE GUARANTEES GRANTED BY THE ASSESSEE TO THE AES ENABLED THEM TO SECURE FUNDS FOR THEIR WORKING ON COMPETITIVE RATES IN THE RELEVANT JURISDICTIONS. IN THE ABSENCE OF SUCH LOCALLY SOURCED FUNDING, THE ASSESSEE WOULD HAVE TO SUPPORT ITS AES BUSINESS OPERATIONS BY PROVIDING FUNDS THROUGH EQUITY OR OTHERWISE. ACCORDINGLY, THE TRANSACTION CAN BE SAID TO BE ONE OF QUASI- EQUITY OR SHAREHOLDER ACTIVITY. THE WELL - BEING OF THE AES IS OF DEEP INTEREST TO THE ASSESSEE; ESPECIALLY, WHERE THE BUSINESS OF THE SUBSIDIARY GENERATES SYNERGIES FOR THE ASSESSEE. IT IS IN THE BEST INTEREST OF THE GROUP THAT THE ASSESSEE HAS PROVIDED CORPORATE GUARANTEES TO ITS AES. THE LEARNED SENIOR COUNSEL RELIED ON THE DECISION OF THE ITAT, DELHI BENCH, RENDERED IN THE : - 6 - : ITA NO. 2756/2017 & SP NO.90/2018 CASE OF BHARTI AIRTEL LTD. V. ACIT (43 TAXMAN.COM 150), WHEREIN IT HAS HELD PROVIDING CORPORATE GUARANTEE DOES NOT INVOLVE ANY COST TO THE ASSESSEE AND IT IS NOT AN 'INTERNATIONAL TRANSACTION', EVEN UNDER THE DEFINITION OF THE SAID TERM AS AMENDED BY THE FINANCE ACT , 2012, AS IT DOES NOT HAVE ANY BEARING ON PROFITS, INCOME, LOSSES OR ASSETS OF THE ASSESSEE COMPANY. 48. AS AN ALTERNATIVE CONTENTION, THE LEARNED SENIOR COUNSEL ARGUED THAT GUARANTEES ARE PROVIDED TO THE ASSESSEE ON BEHALF OF AES AS AN INTEGRAL BUSINESS OF THE ASSESSEE RELATING TO SUPPLY OF GENERAL MANAGEMENT AND DISTRIBUTION OF LOGISTIC BUSINESS, WORLDWIDE. THEREFORE, THE TRANSACTION MUST BE TESTED UNDER THE COMBINED TRANSACTION TNMM APPROACH RATHER THAN ON A STAND ALONE BASIS. THE ITAT, PUNE BENCH IN TH E CASE OF DEMAG CRANES & COMPONENTS LTD. V. DCIT , 56 SOT 187(PUNE) AND ITAT, DELHI BENCH IN THE CASE OF MCCANN ERIKSON INDIA PVT. LTD. V . ADDL.CIT (24 TAXMANN.COM 21) HAVE HELD THAT ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD WE HAVE HELD THAT EVEN AFTER THE AMENDMENT IN SECTION 92B, BY AMENDING EXPLANATION TO SECTION 92B, A CORPORATE GUARANTEE ISSUED FOR THE BENEFIT OF THE AES, WHICH DOES NOT ANY COSTS TO THE ASSESSEE, DOES NOT HAVE ANY BEARING ON PROFITS, INCOM E, LOSSES OR ASSETS OF THE ENTERPRISE AND, THEREFORE, IT IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION TO WHICH ALP ADJUSTMENT CAN BE MADE. AS WE HAVE DECIDED THE MATTER IN FAVOUR OF THE TO OTHER LEGAL ISSUES SIVA INDUSTRIES AND HOLDINGS LTD. VS. DCIT, IN ITA NO. 2756/CHNY/2017 AND S.P. 90/CHNY/2018, ORDER DT. 20/03/2018, 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF REDINGTON INDIA LTD. VS. MENT YEAR 2009 -10 WHEREIN '47. REGARDING THE ABOVE ISSUE, THE LEARNED SENIOR COUNSEL CONTENDED THAT CORPORATE GUARANTEE GRANTED BY THE ASSESSEE COMPANY IS NOT AN 'INTERNATIONAL TRANSACTION'. THE ASSESSEE HAS NOT GRANTED ANY NEW GUARANTEE IN THE PREVIOUS E PLACED BY THE TPO ON THE DEFINITION OF THE TERM 'INTERNATIONAL TRANSACTION' AS RETROSPECTIVELY AMENDED BY THE FINANCE ACT , 2012, IS ERRONEOUS AND BAD IN LAW. THE CORPORATE GUARANTEES PROVIDED BY THE SSEE COMPANY TO ITS AES ENABLE THEM TO SECURE CREDIT IN THEIR RESPECTIVE OVERSEAS JURISDICTIONS AND TO COMPLY WITH THE LAWS, IN THOSE JURISDICTIONS. SUCH CORPORATE GUARANTEES GRANTED BY THE ASSESSEE TO THE AES ENABLED THEM TO SECURE ON COMPETITIVE RATES IN THE RELEVANT JURISDICTIONS. IN THE ABSENCE OF SUCH LOCALLY SOURCED FUNDING, THE ASSESSEE WOULD HAVE TO SUPPORT ITS AES BUSINESS OPERATIONS BY PROVIDING FUNDS THROUGH EQUITY OR OTHERWISE. EQUITY OR SHAREHOLDER BEING OF THE AES IS OF DEEP INTEREST TO THE ASSESSEE; ESPECIALLY, WHERE THE BUSINESS OF THE SUBSIDIARY GENERATES SYNERGIES FOR THE ASSESSEE. IT IS IN HAS PROVIDED CORPORATE GUARANTEES TO ITS AES. THE LEARNED SENIOR COUNSEL RELIED ON THE DECISION OF THE : ITA NO. 2756/2017 & SP NO.90/2018 CASE OF BHARTI AIRTEL LTD. V. ACIT (43 TAXMAN.COM 150), WHEREIN IT HAS HELD THAT PROVIDING CORPORATE GUARANTEE DOES NOT INVOLVE ANY COST TO THE ASSESSEE AND IT IS NOT AN 'INTERNATIONAL TRANSACTION', EVEN UNDER THE DEFINITION OF THE SAID TERM AS IT DOES NOT HAVE ANY BEARING ON PROFITS, 48. AS AN ALTERNATIVE CONTENTION, THE LEARNED SENIOR COUNSEL ARGUED THAT GUARANTEES ARE PROVIDED TO THE ASSESSEE ON BEHALF OF AES AS AN INTEGRAL BUSINESS OF THE ASSESSEE RELATING TO SUPPLY OF GENERAL MANAGEMENT AND DISTRIBUTION OF LOGISTIC BUSINESS, WORLDWIDE. THEREFORE, THE TRANSACTION MUST BE TESTED UNDER THE COMBINED TRANSACTION TNMM APPROACH RATHER THAN ON A STAND - E CASE OF DEMAG CRANES & COMPONENTS , 56 SOT 187(PUNE) AND ITAT, DELHI BENCH IN THE CASE OF (24 TAXMANN.COM 21) HAVE HELD THAT TNMM APPLIED ON AN ENTITY BENCHMARKING TRANSACTIONS THAT ARE NOT INDEPENDENT OF THE BUSINESS CARRIED ON BY AN ASSESSEE. THE LEARNED SENIOR COUNSEL SUBMITTED THAT TH AGAINST THE CORPORATE GUARANTEE MAY BE DELETED.' ACCORDINGLY THIS GROUND IS DECIDED IN FAVOUR OF THE AS 9. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE CASE THE CASE, WE HOLD THAT PROVISION OF BANK GUARANTEE WITHIN THE MEANING OF SECTION 92B OF THE ACT. 10. NOW WE TAKE UP THE DECISION OF THE TRIBUNAL IN THE CASE OF ENGINEERING INDUSTRIES LTD. (SUPRA). DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF CORPORATION VS DDIT, ITA NO. 1548 & 1549/KOL/2009, FOR ASSESSMENT YEAR 2003 2004- 05, ORDER DT. 15/07/2016 FOR THE ASSESSMENT YEAR 2011 DOING SO, THE ITAT ERRONEOUSLY HELD THAT M/S TEGA INDUSTRIES LIMITED VS. DCIT, ITA NO. 19 THIS ORDER WAS PASSED WITHOUT CONSIDERING THE JUDGMENT OF THE COORDINATE BENCH IN THE CASE OF M/S ELECTROSTEEL CASTING LTD, IT (SS) NO.47 TO 53 /KOL/2014, FOR A.Y. 2003 04 TO 2011- 12, ORDER DATED 25.11.2016 CASTING LTD. (SUPRA) COULD HAVE BEEN CONSIDERED IN THE CASE OF LIMITED (SUPRA) AS THAT ORDER WAS PASSED MUCH LATTER IN THE CASE OF INSTRUMENTARIUM CORPORATION VS DDIT (SUPRA) OF CORPORATE GUARANTEE. IT WAS A CASE RELAT FREE LOAN GIVEN BY A COMPANY TO ITS FULLY OWNED INDIAN SUBSIDIARY. COUNTS THE ORDER OF THE BENCH IN THE CASE OF (SUPRA) IS BASED ON WRONG FACTS AND PRECEDENTS. 11. THUS, WE ARE NOT ABLE TO FOLLOW THE RATIO OF DECISION LAID DOWN IN ENGINEERING INDUSTRIES LTD. (SUPRA). THE CASE OF EIH LTD. (SUPRA) AND CORPORATE GUARANTEE ISSUED BY THE ASSESSEE COMPANY TO ITS FULLY OWNED SUBSIDIARY, IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. CONSEQUE 6 TNMM APPLIED ON AN ENTITY - WIDE BASIS IS THE MOST APPROPRIATE METHOD FOR BENCHMARKING TRANSACTIONS THAT ARE NOT INDEPENDENT OF THE BUSINESS CARRIED ON BY AN ASSESSEE. THE LEARNED SENIOR COUNSEL SUBMITTED THAT TH E ADJUSTMENT MADE AGAINST THE CORPORATE GUARANTEE MAY BE DELETED.' ACCORDINGLY THIS GROUND IS DECIDED IN FAVOUR OF THE AS SESSEE AND AGAINST THE REVENUE. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE CASE - LAW TO THE FACTS OF THAT PROVISION OF BANK GUARANTEE , IS N OT AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT. NOW WE TAKE UP THE DECISION OF THE TRIBUNAL IN THE CASE OF ENGINEERING INDUSTRIES LTD. (SUPRA). IN THIS DECISION, THE TRIBUNAL RELIED UPON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF INSTRUMENTARIUM CORPORATION VS DDIT, ITA NO. 1548 & 1549/KOL/2009, FOR ASSESSMENT YEAR 2003 05, ORDER DT. 15/07/2016 , FOR COMING TO THE CONCLUSION THAT CORPORATE GUARANTEE FOR THE ASSESSMENT YEAR 2011 -12 AND 2012- 13, IS AN INTERNATIONAL TRANSACTION. WHILE THE ITAT ERRONEOUSLY HELD THAT THE ORDER OF THE TRIBUNAL, AS IT WAS HELD THAT M/S TEGA INDUSTRIES LIMITED VS. DCIT, ITA NO. 19 12/KOL/2012 , WAS PER INCURIAM, PASSED WITHOUT CONSIDERING THE JUDGMENT OF THE COORDINATE BENCH IN M/S ELECTROSTEEL CASTING LTD, IT (SS) NO.47 TO 53 /KOL/2014, FOR A.Y. 2003 12, ORDER DATED 25.11.2016 . THE ORDER IN THE CASE OF M/S. ELECTROSTEEL COULD HAVE BEEN CONSIDERED IN THE CASE OF M/S TEGA INDUSTRIES AS THAT ORDER WAS PASSED MUCH LATTER . THE SPECIAL BENCH OF THE INSTRUMENTARIUM CORPORATION VS DDIT (SUPRA) , DOES NOT DEAL ON THE ISSUE OF CORPORATE GUARANTEE. IT WAS A CASE RELAT ING TO DETERMINATION OF ALP ON AN INTEREST FREE LOAN GIVEN BY A COMPANY TO ITS FULLY OWNED INDIAN SUBSIDIARY. COUNTS THE ORDER OF THE BENCH IN THE CASE OF M/S. NATIONAL ENGINEERING INDUSTRIES LTD. IS BASED ON WRONG FACTS AND PRECEDENTS. THUS, WE ARE NOT ABLE TO FOLLOW THE RATIO OF DECISION LAID DOWN IN ENGINEERING INDUSTRIES LTD. (SUPRA). THUS, RESPECTFULLY FOLLOWING OUR OWN DECISIO AND CIT VS. ROHIT FERRO TECH LTD. (SUPRA) , WE HOLD THAT THE CORPORATE GUARANTEE ISSUED BY THE ASSESSEE COMPANY TO ITS FULLY OWNED SUBSIDIARY, IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. CONSEQUE ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD WIDE BASIS IS THE MOST APPROPRIATE METHOD FOR BENCHMARKING TRANSACTIONS THAT ARE NOT INDEPENDENT OF THE BUSINESS CARRIED ON E ADJUSTMENT MADE SESSEE AND AGAINST THE REVENUE. LAW TO THE FACTS OF OT AN INTERNATIONAL TRANSACTION NOW WE TAKE UP THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. NATIONAL IN THIS DECISION, THE TRIBUNAL RELIED UPON THE INSTRUMENTARIUM CORPORATION VS DDIT, ITA NO. 1548 & 1549/KOL/2009, FOR ASSESSMENT YEAR 2003 -04 AND CONCLUSION THAT CORPORATE GUARANTEE 13, IS AN INTERNATIONAL TRANSACTION. WHILE AS IT WAS HELD THAT PER INCURIAM, AS PASSED WITHOUT CONSIDERING THE JUDGMENT OF THE COORDINATE BENCH IN M/S ELECTROSTEEL CASTING LTD, IT (SS) NO.47 TO 53 /KOL/2014, FOR A.Y. 2003 - M/S. ELECTROSTEEL M/S TEGA INDUSTRIES THE SPECIAL BENCH OF THE ITAT DOES NOT DEAL ON THE ISSUE TO DETERMINATION OF ALP ON AN INTEREST FREE LOAN GIVEN BY A COMPANY TO ITS FULLY OWNED INDIAN SUBSIDIARY. THUS, ON BOTH M/S. NATIONAL ENGINEERING INDUSTRIES LTD. THUS, WE ARE NOT ABLE TO FOLLOW THE RATIO OF DECISION LAID DOWN IN M/S. NATIONAL THUS, RESPECTFULLY FOLLOWING OUR OWN DECISIO N IN , WE HOLD THAT THE CORPORATE GUARANTEE ISSUED BY THE ASSESSEE COMPANY TO ITS FULLY OWNED SUBSIDIARY, IS NOT AN INTERNATIONAL TRANSACTION IN TERMS OF SECTION 92B OF THE ACT. CONSEQUE NTLY, THE ADJUSTMENT MADE U/S 92CA OF THE ACT IS ASSESSEE IS ALLOWED. 12. THE ASSESSEE HAS RAISED TWO ADDITIONAL GROUNDS. BOTH THE ADDITIONAL GROUND ARE LEGAL GROUNDS AND DO NOT REQUIRE ENQUIRY INTO FACTS. UNDER THE CIRCUMSTANCES, WE ADMIT BOTH THESE ADDITIONAL GROUNDS BY APPLYING THE JUDGMENT OF THE HONBLE SUPREME COURT IN VS COMMISSIONER OF INCOME 1998 13. AFTER HEARING RIVAL CON EDUCATION CESS IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF INCOME TAX APPEAL NO. 52/2018] GOA LTD. VS. JCIT REPORTED IN [2020] 117 TAXMANN.COM 96 (BOMBAY) CESS CANNOT BE DISALLOWED BY INVOKING SECTION 40(A)(II) OF THE ACT. BOTH THE HONBLE HIGH COURTS HAVE ELABORATE LY THE TRIBUNAL HAS FOLLOWED THIS DECISION IN THE CASE OF 685 AND 1267/KOL/2014, ORDER DT. 27/11/2018. ALLOW THIS GROUND OF THE ASSESSEE. 14. THE SECOND ADDITIONAL GROUND IS ON THE ISSUE WHETHER THE ASSESSEE IS ENTITLED TO REFUND ON DIVIDEND DISTRIBUTION TAX (DDT) PAID @ 16.22% U/S. 115 THE ASSESSEE SUBMITS THAT DURING THE YEAR IT HAS PAID DIVIDEND TO JAPANESE COMPANIES I.E., M/S K ROSAKI HARIMA CORPORATION AND M/S. SOJITZ CORPORATION. DDT @ 16.22% WAS PAID BY THE ASSESSEE ON THESE PAYMENTS. THE ASSESSEE CLAIMS THAT THE DDT ON DIVIDEND PAID TO THE FOREIGN COMPANIES SHOULD BE RESTRICTED TO 10% AS PER DTAA. THE LD. COUNSEL SUBMITTED TH PROVIDES THAT TAX ON DIVIDEND SHALL BE PAID @ 10%. DDT IN INDIA IS PAID AS PER THE PROVISIONS OF THE SECTION 115O OF THE ACT. ON THE ISSUE WHERE DDT ON DIVIDEND SHALL BE PAID AS PER THE PROVISION OF SECTION BETWEEN INDIA AND JAPAN , THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT IN ITA NO. 7075/DEL/2017, ORDER DT. 7 ADJUSTMENT MADE U/S 92CA OF THE ACT IS HEREBY DELETED AND THIS GROUND OF THE THE ASSESSEE HAS RAISED TWO ADDITIONAL GROUNDS. BOTH THE ADDITIONAL GROUND ARE LEGAL GROUNDS AND DO NOT REQUIRE ENQUIRY INTO FACTS. ALL THE FACT S ARE ON RECORD. UNDER THE CIRCUMSTANCES, WE ADMIT BOTH THESE ADDITIONAL GROUNDS BY APPLYING THE OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. 1998 229 ITR 383 SC. AFTER HEARING RIVAL CON TENTIONS, WE FIND THAT THE ISSUE OF DEDUCTION OF EDUCATION CESS IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LTD. VS. CIT [D.B. INCOME TAX APPEAL NO. 52/2018] . T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF [2020] 117 TAXMANN.COM 96 (BOMBAY) HELD THAT EDUCATION CESS CANNOT BE DISALLOWED BY INVOKING SECTION 40(A)(II) OF THE ACT. BOTH THE HONBLE LY DISCUSSED THIS ISSUE, IN THEIR JUDGMENTS. THIS BENCH OF THE TRIBUNAL HAS FOLLOWED THIS DECISION IN THE CASE OF ITC LIMITED VS. ACIT IN ITA NOS. 685 AND 1267/KOL/2014, ORDER DT. 27/11/2018. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS GROUND OF THE ASSESSEE. THE SECOND ADDITIONAL GROUND IS ON THE ISSUE WHETHER THE ASSESSEE IS ENTITLED TO REFUND ON DIVIDEND DISTRIBUTION TAX (DDT) PAID @ 16.22% U/S. 115 THE ASSESSEE SUBMITS THAT DURING THE YEAR IT HAS PAID DIVIDEND TO JAPANESE ROSAKI HARIMA CORPORATION AND M/S. SOJITZ CORPORATION. DDT @ 16.22% WAS PAID BY THE ASSESSEE ON THESE PAYMENTS. THE ASSESSEE CLAIMS THAT THE DDT ON DIVIDEND PAID TO THE FOREIGN COMPANIES SHOULD BE RESTRICTED TO 10% AS PER DTAA. THE LD. COUNSEL SUBMITTED TH AT ARTICLE 10 OF THE DTAA BETWEEN INDIA AND JAPAN PROVIDES THAT TAX ON DIVIDEND SHALL BE PAID @ 10%. DDT IN INDIA IS PAID AS PER THE PROVISIONS OF THE SECTION 115O OF THE ACT. ON THE ISSUE WHERE DDT ON DIVIDEND SHALL BE PAID AS PER THE PROVISION OF SECTION 115- O OF THE ACT OR ARTICLE , THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GIESECKE AND DEVRIENT [INDIA] PVT. LTD. VS. ACIT IN ITA NO. 7075/DEL/2017, ORDER DT. 13/10/2020. ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD DELETED AND THIS GROUND OF THE THE ASSESSEE HAS RAISED TWO ADDITIONAL GROUNDS. BOTH THE ADDITIONAL GROUND S ARE ON RECORD. UNDER THE CIRCUMSTANCES, WE ADMIT BOTH THESE ADDITIONAL GROUNDS BY APPLYING THE NATIONAL THERMAL POWER CO. LTD. TENTIONS, WE FIND THAT THE ISSUE OF DEDUCTION OF EDUCATION CESS IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE CHAMBAL FERTILIZERS AND CHEMICALS LTD. VS. CIT [D.B. HE HONBLE BOMBAY HIGH COURT IN THE CASE OF SESA HELD THAT EDUCATION CESS CANNOT BE DISALLOWED BY INVOKING SECTION 40(A)(II) OF THE ACT. BOTH THE HONBLE IN THEIR JUDGMENTS. THIS BENCH OF ITC LIMITED VS. ACIT IN ITA NOS. RESPECTFULLY FOLLOWING THE SAME, WE THE SECOND ADDITIONAL GROUND IS ON THE ISSUE WHETHER THE ASSESSEE IS ENTITLED TO REFUND ON DIVIDEND DISTRIBUTION TAX (DDT) PAID @ 16.22% U/S. 115 -O OF THE ACT. THE ASSESSEE SUBMITS THAT DURING THE YEAR IT HAS PAID DIVIDEND TO JAPANESE ROSAKI HARIMA CORPORATION AND M/S. SOJITZ CORPORATION. DDT @ 16.22% WAS PAID BY THE ASSESSEE ON THESE PAYMENTS. THE ASSESSEE CLAIMS THAT THE DDT ON DIVIDEND PAID TO THE FOREIGN COMPANIES SHOULD BE RESTRICTED TO 10% AS PER AT ARTICLE 10 OF THE DTAA BETWEEN INDIA AND JAPAN PROVIDES THAT TAX ON DIVIDEND SHALL BE PAID @ 10%. DDT IN INDIA IS PAID AS PER THE PROVISIONS OF THE SECTION 115O OF THE ACT. ON THE ISSUE WHERE DDT ON DIVIDEND SHALL O OF THE ACT OR ARTICLE 10 OF DTAA , THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE GIESECKE AND DEVRIENT [INDIA] PVT. LTD. VS. 14.1. THE LD. D/R OPPOSED THE CONTENTIONS AND SUBMITTED THAT ALL THE FACTS ARE NOT ON RECORD AND THAT DIVIDEND DISTRIBUTION TAX (DDT) IS A TAX ON DOMESTIC COMPANY. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE GODREJ AND BOYCE VS. DCIT ( 328 ITR 81 15. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT IN THE CASE OF DEVRIENT [INDIA] PVT. LTD. (SUPRA) THE ASSESSING OFFICER BY OBSERVING AS 72. ARTICLE 10.4 ABOVE SPECIFIES THAT CLAUSE 1 AND 2 WILL NOT BE APPLICABLE IF BENEFICIAL OWNER OF DIVIDEND CARRIES ON BUSINESS IN OTHER CONTRACTING STATE OF WHICH THE COMPANY PAYING DIVIDEND IS A RESIDENT THROUGH PE SITUATED THEREIN. THOUGH SUP PORTING DOCUMENTS HAVE BEEN FILED BEFORE US, BUT THESE DOCUMENTS NEED VERIFICATION FROM PRIMARY OFFICER, THAT IS, THE ASSESSING OFFICER. WE, THEREFORE, DEEM IT FIT TO RESTORE THIS ISSUE FOR LIMITED PURPOSE OF VERIFICATION IN THE LIGHT OF THE AFORESAID ARTI CLES OF DTAA. 73. CONSIDERING THE ABOVE IN TOTALITY, IN OUR CONSIDERED OPINION, THE DDT LEVIED BY THE APPELLANT SHOULD NOT EXCEED THE RATE SPECIFIED IN ARTICLE 10 IN INDIA GERMANY DTAA. 16. IN THE CASE ON HAND ALSO, WE RESTORE THE ENTIRE ISSUE TO THE FIL OFFICER WITH A DIRECTION THAT THE CLAIM OF THE ASSESSEE MAY BE EXAMINED ASSESSEE IS DIRECTED TO FURNISH ALL THE NECESSARY DETAILS IN SUPPORT OF ITS CLAIM. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. BEFORE US. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. KOLKATA, THE SD/- [ S. S. GODARA ] JUDICIAL MEMBER DATED : 17.02.2021 {SC SPS} 8 THE LD. D/R OPPOSED THE CONTENTIONS AND SUBMITTED THAT ALL THE FACTS ARE NOT ON RECORD AND THAT DIVIDEND DISTRIBUTION TAX (DDT) IS A TAX ON DOMESTIC COMPANY. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE 328 ITR 81 ). AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT IN THE CASE OF DEVRIENT [INDIA] PVT. LTD. (SUPRA) , THE TRIBUNAL HAD RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 72. ARTICLE 10.4 ABOVE SPECIFIES THAT CLAUSE 1 AND 2 WILL NOT BE APPLICABLE IF BENEFICIAL OWNER OF DIVIDEND CARRIES ON BUSINESS IN OTHER CONTRACTING STATE OF WHICH THE COMPANY PAYING DIVIDEND IS A RESIDENT THROUGH PE SITUATED THEREIN. THOUGH PORTING DOCUMENTS HAVE BEEN FILED BEFORE US, BUT THESE DOCUMENTS NEED VERIFICATION FROM PRIMARY OFFICER, THAT IS, THE ASSESSING OFFICER. WE, THEREFORE, DEEM IT FIT TO RESTORE THIS ISSUE FOR LIMITED PURPOSE OF VERIFICATION IN THE LIGHT OF THE CLES OF DTAA. 73. CONSIDERING THE ABOVE IN TOTALITY, IN OUR CONSIDERED OPINION, THE DDT LEVIED BY THE APPELLANT SHOULD NOT EXCEED THE RATE SPECIFIED IN ARTICLE 10 IN INDIA GERMANY IN THE CASE ON HAND ALSO, WE RESTORE THE ENTIRE ISSUE TO THE FIL E OF THE ASSESSING OFFICER WITH A DIRECTION THAT THE CLAIM OF THE ASSESSEE MAY BE EXAMINED ASSESSEE IS DIRECTED TO FURNISH ALL THE NECESSARY DETAILS IN SUPPORT OF ITS CLAIM. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. NO O THER GROUND IS ARGUED IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. KOLKATA, THE 17 TH DAY OF FEBRUARY, 2021. [ J. SUDHAKAR REDDY JUDICIAL MEMBER ACCOUNTANT ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD THE LD. D/R OPPOSED THE CONTENTIONS AND SUBMITTED THAT ALL THE FACTS ARE NOT ON RECORD AND THAT DIVIDEND DISTRIBUTION TAX (DDT) IS A TAX ON DOMESTIC COMPANY. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT IN THE CASE OF GIESECKE AND , THE TRIBUNAL HAD RESTORED THE MATTER TO THE FILE OF 72. ARTICLE 10.4 ABOVE SPECIFIES THAT CLAUSE 1 AND 2 WILL NOT BE APPLICABLE IF BENEFICIAL OWNER OF DIVIDEND CARRIES ON BUSINESS IN OTHER CONTRACTING STATE OF WHICH THE COMPANY PAYING DIVIDEND IS A RESIDENT THROUGH PE SITUATED THEREIN. THOUGH PORTING DOCUMENTS HAVE BEEN FILED BEFORE US, BUT THESE DOCUMENTS NEED VERIFICATION FROM PRIMARY OFFICER, THAT IS, THE ASSESSING OFFICER. WE, THEREFORE, DEEM IT FIT TO RESTORE THIS ISSUE FOR LIMITED PURPOSE OF VERIFICATION IN THE LIGHT OF THE 73. CONSIDERING THE ABOVE IN TOTALITY, IN OUR CONSIDERED OPINION, THE DDT LEVIED BY THE APPELLANT SHOULD NOT EXCEED THE RATE SPECIFIED IN ARTICLE 10 IN INDIA GERMANY E OF THE ASSESSING OFFICER WITH A DIRECTION THAT THE CLAIM OF THE ASSESSEE MAY BE EXAMINED DE NOVO. THE ASSESSEE IS DIRECTED TO FURNISH ALL THE NECESSARY DETAILS IN SUPPORT OF ITS CLAIM. THIS THER GROUND IS ARGUED SD/- J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO: 1. M/S. IFGL REFRACTORIES LTD MCLEOD HOUSE 3, NETAJI SUBHAS ROAD KOLKATA 700 001 2. ASSTT. COMMISSIONER OF INCOME TAX (OSD), WARD 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 9 ASSTT. COMMISSIONER OF INCOME TAX (OSD), WARD -6(2) KOLKATA CIT(DR), KOLKATA BENCHES, KOLKATA. ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES ITA NO. 684/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. IFGL REFRACTORIES LTD TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES