GODREJ SARA LEE LTD.(NOW AMALGAMATED INTO GODREJ CONSUMER PRODUCTS LTD.), MUMBAI V. ADDL.C.I.T.RG.10(2), MUMBAI

ITA 7522/MUM/2011

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3575 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 92B; 80IB; 80IC; 80IC

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI , !'#,$%!' ! BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER !. 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) GODREJ SARA LEE LTD. (NOW AMALGAMATED INTO GODREJ CONSUMER PRODUCTS LTD.) KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 148, MAHATMA GANDHI ROAD, FORT, MUMBAI 400 001 PAN:AAACT1921C ...... #+ / APPELLANT ) VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 10(2), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... %,/ RESPONDENT ASSESSEE BY : SHRI FARROKH IRANI REVENUE BY : SHRI SUSHIL KUMAR MISHRA ! )-%, #/ DATE OF HEARING : 16/02/2021 ./ -%, #/ DATE OF PRONOUNCEMENT : 23/02/2021 / ORDER PER VIKAS AWASTHY,JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-15, MUMBAI ( IN SHORT THE CIT(A)) DATED 09/09/2011 FOR THE ASSESSMENT YEAR 2007-08. 2 !. 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) 2. THE ASSESSEE IN APPEAL HAS RAISED FOLLOWING GROUNDS ASSAILING THE FINDING OF CIT(A): 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) ERRED IN HOLDING THAT THE ASSESSEE HAS CLAIMED EXCESS DEDUCTION U/S.80IB / 80IC OF THE ACT. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN DISREGARDING THE METHOD OF ALLOCATION CONSISTENTLY ADOPTED BY THE APPELLANT AN D IN RE-ALLOCATING 50% OF THE FOLLOWING OVERHEADS OF THE NON-ELIGIBLE UNDERTAKINGS TO THE E LIGIBLE UNDERTAKINGS OF THE APPELLANT, WHILE COMPUTING THE DEDUCTION U/S.80IB / 80IC OF TH E ACT:- > MISCELLANEOUS EXPENSES > CONVEYANCE AND TRAVELLING EXPENSES > RENT, RATES AND TAXES > ADVERTISEMENT AND PUBLICITY > SCHEMES AND PROMOTIONS HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO RE-COMPUTE THE DED UCTION U/S.80IB / 80IC OF THE ACT ON THE BASIS OF ALLOCATION OF OVERHEADS ADOPTED BY THE APP ELLANT IN ITS RETURN OF INCOME. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE GUARANTEE TO A BA NKER AS AN 'INTERNATIONAL TRANSACTION' WITHIN THE MEANING OF SECTION 92B OF THE ACT. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE AGGREGATE GUARANTEE RATE CH ARGED BY ICICI BANK AT 2.25%, BEING 1.45% AS FINANCIAL GUARANTEE AND 0.8% AS PERFORMANC E GUARANTEE, INSTEAD OF CONSIDERING ONLY THE FINANCIAL GUARANTEE OF 1.45%. 5.WITHOUT PREJUDICE TO GROUND NOS.3 AND 4 ABOVE, TH E APPELLANT SUBMITS THAT THE ADJUSTMENT IS ARBITRARY AND EXCESSIVE AND OUGHT TO BE DELETED OR REDUCED SUBSTANTIALLY. 6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN DISMISSING THE GROUND ON THE LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. 3. SHRI FARROKH IRANI APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED AT THE OUTSET THAT ON IDENTICAL SET OF FACTS ADDITIONS/D ISALLOWANCES WERE MADE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005-06 AND 2006-07. THE ISSUE TRAVELLED TO THE TRIBUNAL IN APPEALS FILED BY THE ASSESSEE F OR RESPECTIVE ASSESSMENT YEARS. THE APPEAL OF THE ASSESSEE IN ITA NO.7369/MUM/2010 FOR ASSESSMENT YEAR 2006- 07 WAS DECIDED BY THE TRIBUNAL ON 22/11/2013 AND I N ITA NO.7227/MUM/2011 3 . 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) FOR ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 19/02/ 2014. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE G ROUNDS RAISED IN APPEAL FOR ASSESSMENT YEAR 2005-06 AND 2006-07 AND IN THE IM PUGNED ASSESSMENT YEAR ARE IDENTICAL. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED THAT REVENUE HAD FILED APPEAL AGAINST THE AFORESAID ORDERS OF TH E TRIBUNAL BEFORE THE HON'BLE BOMBAY HIGH COURT BOTH APPEALS OF THE REVENUE WER E DISMISSED. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURNISHE D COPY OF TRIBUNAL ORDERS FOR ASSESSMENT YEAR 2005-06 AND ASSESSMENT YEAR 2006-07 AND CASE STATUS REPORT FROM THE OFFICIAL WEBSITE OF HONBLE BOMBAY HIGH COURT TO SHOW THE FATE OF APPEALS BY THE REVENUE BEFORE THE HONBLE HIGH COUR T. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON T HE AFORESAID DECISIONS OF THE TRIBUNAL AND SUBMITTED THAT FACTS, NATURE OF TRANS ACTIONS AND MANNER OF DISALLOWANCE BEING IDENTICAL, THE PRESENT APPEAL O F THE ASSESSEE BE DECIDED ON THE SAME TERMS. 4. SHRI SUSHIL KUMAR MISHRA, REPRESENTING THE DEPA RTMENT DEFENDED THE IMPUGNED ORDER. HOWEVER, HE FAIRLY ADMITTED THAT THE ISSUES RAISED IN THE PRESENT APPEAL ARE IDENTICAL TO THE ISSUES RAISED B EFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 AND 2006-07. 5, BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE ASSESSEE/APPELLANT IS ENGAGED IN MANUFACTURING AND TRADING OF HOUSEHOLD INSECTICIDES, ELECTRONIC MOSQUITO DESTROYERS, MOSQU ITO REPLANTS, ETC. SOME OF THE UNITS WHERE MANUFACTURING ACTIVITY IS CARRIED OUT B Y THE ASSESSEE ARE ELIGIBLE FOR DEDUCTION U/S 80 IB/80 IC OF THE ACT. THE ASSESSING OFFICER RECOMPUTED ASSESSEES CLAIM OF DEDUCTION U/S 80 IB/80 IC OF THE ACT AFTER REALLOCATING OVERHEAD AND MISCELLANEOUS EXPENDITURE. WE FIND THAT THE TRIB UNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 HAS DECIDED IDENTICAL ISSU ES. ON THE ISSUE OF 4 . 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) RECOMPUTATION OF DEDUCTION CLAIMED UNDER SECTION 80IB/ 80 IC OF THE ACT AFTER REALLOCATION OF 50% OF THE OVERHEADS OF THE NON- ELIGIBLE UNDERTAKINGS TO THE ELIGIBLE UNDERTAKING BY THE ASSESSING OFFICER, THE TRIBUNAL HELD AS UNDER:- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT OUT OF THE TOTAL OVERHEADS OF RS.154.63 CRORES INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION, OVERHEADS TO THE EXTENT OF RS. 141.91 CRORES WERE DIRECTLY ALLOCATED BY THE ASSESS EE TO THE ELIGIBLE UNITS BEING DIRECTLY ATTRIBUTABLE TO THE SAID SEGMENT. THE BALANCE AMOUN T OF OVERHEADS TO THE EXTENT OF RS. 12.72 CRORES REPRESENTING THE INDIRECT EXPENSES WERE ALLO CATED BY THE ASSESSEE BETWEEN THE ELIGIBLE BUSINESS AND NON-ELIGIBLE BUSINESS IN THE RATIO OF TURNOVER AND THIS BASIS ADOPTED BY THE ASSESSEE WAS ACCEPTED BY THE A.O. EXCEPT IN THE CAS E OF ADVERTISEMENT & PUBLICITY EXPENSES AMOUNTING TO RS. 4.23 CRORES, SCHEMES AND PROMOTION S EXPENSES AMOUNTING TO RS. 0.83 CRORES, MISCELLANEOUS EXPENSES AMOUNTING TO RS. 0.7 2 CRORES, CONVEYANCE AND TRAVELING EXPENSES AMOUNTING TO RS. 0.47 CRORES AND RENT, RAT E & TAXES AMOUNTING TO RS. 0.48 CRORES. AS EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE BE FORE US, THE EXPENDITURE ON ADVERTISEMENT & PUBLICITY AND SCHEMES AND PROMOTIONS WAS INCURRED MAINLY TO CREATE AND PROMOTE THE BRAND IMAGE FOR THE COMPANYS PRODUCT AND THIS POSI TION WAS ACCEPTED EVEN BY THE A.O. IN HIS ORDER. THE, A.O., HOWEVER, HELD THAT THE TRADER NORMALLY WOULD NEVER INCUR EXPENDITURE ON ADVERTISEMENT AND BRANDS OF THE MANUFACTURER OUT OF THE TRADING PROFIT. HE, HOWEVER, APPEARS TO HAVE OVERLOOKED THE FACT THAT GOODS PROC URED FROM THE THIRD PARTY WERE SOLD BY THE ASSESSEE COMPANY AS A PART OF TRADING ACTIVITY UNDER THE SAME BRAND NAME AND THE BENEFIT OF THE SAID EXPENDITURE THUS WAS AVAILABLE EQUALLY TO THE TRADING SEGMENT. INCIDENTALLY, THE A.O. ALSO IMPLIEDLY ACCEPTED THIS POSITION WHILE OBSERVING IN HIS ORDER THAT SUCH EXPENSES ON ADVERTISEMENT & PUBLICITY AND SCHE MES HAVE TO BE ALLOCATED TO SOME EXTENT TO THE NON-ELIGIBLE SEGMENT. HE, HOWEVER, HE LD THAT SUCH ALLOCATION COULD NOT BE VERY LARGE AMOUNT AND ACCORDINGLY RE-ALLOCATED 50% OF TH E SAID EXPENSES TO ELIGIBLE UNIT ON ADHOC BASIS. IN OUR OPINION, SUCH REALLOCATION MADE BY TH E A.O. ON ADHOC BASIS CANNOT BE SUSTAINED HAVING REGARD TO ALL THE FACTS OF THE CASE INCLUDIN G ESPECIALLY THE FACT THAT THE EXPENDITURE ON ADVERTISEMENT & PUBLICITY AND SCHEMES WAS IN THE NA TURE OF SELLING EXPENSES AND THE ALLOCATION MADE BY THE ASSESSEE OF THE SAID EXPENSE S ON THE BASIS OF TURNOVER WAS QUITE REASONABLE. THE ALLOCATION SO MADE BY THE ASSESSEE ALSO CANNOT BE SAID TO HAVE RESULTED IN ALLOCATION OF LARGE AMOUNT OF EXPENSES TO THE NON-E LIGIBLE BUSINESS AS ALLEGED BY THE A.O. SINCE THE GROSS PROFIT RATIO AS SHOWN BY THE ASSESS EE IN THE TRADING SEGMENT WAS 12.92% AND EVEN AFTER ALLOCATING ADVERTISEMENT, SCHEMES AND PR OMOTIONS EXPENSES ON THE BASIS OF TURNOVER, THE PROFIT OF TRADING SEGMENT WAS 6.59%. 9. SIMILARLY, THE OTHER INDIRECT EXPENSES ON CONVE YANCE AND TRAVELING, RATE AND TAXES AND MISCELLANEOUS WERE INCURRED BY THE ASSESSEE DURING THE NORMAL COURSE OF ITS BUSINESS OF SELLING THE FINISHED GOODS, WHETHER MANUFACTURED OR PROCURED FROM THIRD PARTY AND SINCE THE SAID EXPENSES WERE INCURRED EQUALLY FOR THE BENEFIT OF ELIGIBLE BUSINESS AS WELL AS NON-ELIGIBLE BUSINESS OF TRADING, WE ARE OF THE VIEW THAT THE BASIS OF TURNOVER ADOPT ED BY THE ASSESSEE TO ALLOCATE THE SAID EXPENSES WAS MORE SCIENTIFIC A ND REASONABLE. ON THE OTHER HAND, THE REALLOCATION OF THE SAID EXPENSES MADE BY THE A.O. ON ADHOC BASIS WAS NOT SUPPORTED OR SUBSTANTIATED BY HIM AND THE SAME, IN OUR OPINION, CANNOT BE ACCEPTED AS A REASONABLE BASIS. IN THE CASE OF CONSOLIDATED COFFEE LTD. V. STATE OF KARNATAKA (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY THE HONBL E SUPREME COURT THAT WHEN A BIFURCATION OF 5 . 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) EXPENSES IS NOT POSSIBLE, SOME REASONABLE TEST WILL HAVE TO BE ADOPTED AND THAT ADOPTION OF THE METHOD OF APPORTIONING ON THE BASIS OF GROSS RE CEIPTS COULD NOT BE SAID TO BE A PERVERSE METHOD TO APPLY. KEEPING IN VIEW THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF CONSOLIDATED COFFEE LTD. V. STATE OF KARNATAKA (SUP RA) AND HAVING REGARD TO THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ALLOCATION OF EXP ENSES MADE BY THE ASSESSEE BETWEEN ELIGIBLE BUSINESS AND NON-ELIGIBLE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB/80IC OF THE ACT WAS REASONABLE AND THERE WAS N O JUSTIFIABLE REASON FOR THE A.O. TO DISTURB THE SAME AND MAKE RE-ALLOCATION ON ADHOC BA SIS. WE, THEREFORE, DELETE THE ADDITION MADE BY THE A.O. BY RESTRICTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB/80IC OF THE ACT BY REALLOCATING THE COMMON IND IRECT EXPENSES AND ALLOW GROUND NO. 1 & 2 OF THE ASSESSEES APPEAL. [EMPHASIZED BY US] THE TRIBUNAL WHILE ADJUDICATING THE APPEAL OF ASSES SEE FOR ASSESSMENT YEAR 2005- 06 IN ITA NO.7227/MUM/2011 FOLLOWED THE DECISION RE NDERED BY CO-ORDINATE BENCH IN ITA NO.7369/MUM/2010 FOR ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER WHILE RECOMPUTING DEDUCTION UNDER SECTION 8 0IB/80IC OF THE ACT HAS TAKEN CUE FROM ASSESSMENT ORDER FOR ASSESSMENT YEAR 200 6-07 AND IN SIMILAR MANNER HAS REALLOCATED THE EXPENDITURE FROM NON 80IB SEGME NT TO 80IB SEGMENT. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) IN A SUMMARY MANN ER HAS REJECTED ASSESSEES CONTENTIONS AND FOLLOWED HIS OWN ORDER FOR ASSESSME NT YEAR 2005-06. SINCE, FACTS ARE IDENTICAL IN THE IMPUGNED ASSESSMENT YE AR, WE HAVE NO HESITATION IN FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH AND DECIDE THE ISSUE IN SAME TERMS. CONSEQUENTLY, GROUND NO.1 AND 2 OF THE APPE AL ARE ALLOWED FOR PARITY OF REASONS. 6. THE GROUNDS NO.3 TO 5 OF APPEAL ARE IN RESPECT OF PAYMENT OF GUARANTEE COMMISSION TO THE BANK. THESE GROUNDS BEING INTE R CONNECTED/ ALTERNATE PLEAS, HENCE, ARE TAKEN UP TOGETHER FOR ADJUDICATION. TH E TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 HAS DECIDED THIS I SSUE BY OBSERVING AS UNDER:- 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A LSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SIMILAR ISSUE RELATING TO DETERMINATION OF ARMS LENGTH RATE OF GUARANTEE COMMISSION WAS INVOLVED IN THE CASE OF NIMBUS COMMUNICATIONS LTD. (SUPRA) AND THE SAME WAS DECIDED BY THE TRIBUN AL VIDE PARA NO. 10 OF ITS ORDER AS UNDER:- 10. AS REGARDS THE RATE OF GUARANTEE COMMISSION, I T IS NOTED THAT THE ARMS LENGTH PRICE OF GUARANTEE COMMISSION WAS DETERMINED BY THE TPO BY APPLYING CUP METHOD 6 . 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) AND THE ARITHMETIC MEAN OF 1.5% OF THE GUARANTEE CO MMISSION CHARGED BY THE HSBC BANK IN THE RANGE OF 0.15 TO 3% WAS TAKEN AS ARMS LENGTH PRICE. THE LD. CIT(A) UPHELD THE CUP METHOD APPLIED BY THE TPO BUT ADOPTE D THE RATE OF 0.25% OF GUARANTEE FEE AS ARMS LENGTH PRICE RELYING ON THE DECISION OF FRENCH COURT IN THE CASE OF SOCIETE CARREFOUR. THE LD. D.R., AT THE TIM E OF HEARING BEFORE US HAS RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF M/S EVEREST KANTO CYLINDER LTD. (SUPRA) WHEREIN WHILE ACCEPTING THE CUP METHOD AS THE MOST APPROPRIATE METHOD FOR BENCHMARKING THE GUARANTEE F EE, THE TRIBUNAL ACCEPTED 0.5% GUARANTEE FEE/COMMISSION TO BE AT ARMS LENGTH AFTER TAKING INTO CONSIDERATION THE RATES OF GUARANTEE COMMISSION CHARGED BY VARIOU S BANKS INCLUDING THE GUARANTEE COMMISSION CHARGED BY THE HSBC BANK IN THE RANGE OF 0.15% TO 3%. SINCE THE FACTS INVOLVED IN THE PRESENT CASE ARE MATERIALLY SIMILAR TO THE FACTS INVOLVED IN THE CASE OF EVEREST KANTO CYLINDER LTD. (SUPRA), WE PREFER TO F OLLOW THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE SAID CASE OVER THE DECISION OF FRENCH COURT IN THE CASE OF SOCIETE CARREFOUR (SUPRA). WE, ACCOR DINGLY MODIFY THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE A.O. TO RECOMPUTE THE COMMISSION FOR GUARANTEE GIVEN BY THE ASSESSEE TO ITS ASSOCIATED E NTERPRISES @ 0.5% BEING THE ARMS LENGTH PRICE. GROUND NO. 1 OF REVENUES APPEA L IS THUS PARTLY ALLOWED WHEREAS GROUND NO. 2 OF ASSESSEES APPEAL IS DISMISSED. 16. A PERUSAL OF THE RELEVANT PORTION OF THE TRIBU NALS ORDER REPRODUCED ABOVE SHOWS THAT THE ALP OF GUARANTEE COMMISSION WAS DETERMINED BY T HE TPO IN THE CASE OF NIMBUS COMMUNICATIONS LTD. (SUPRA) BY APPLYING CUP METHOD AND THE ARITHMETIC MEAN OF 1.5% OF THE GUARANTEE COMMISSION CHARGED BY THE HSBC BANK I N THE RANGE OF 0.15 TO 3% WAS TAKEN AS ALP. THE LD. CIT(A) UPHELD THE CUP METHOD APPLIE D BY THE TPO BUT ADOPTED THE RATE OF 0.25% OF GUARANTEE FEE AS ARMS LENGTH PRICE RELYIN G ON THE DECISION OF FRENCH COURT IN THE CASE OF SOCIETE CARREFOUR. THE TRIBUNAL, HOWEVER, A DOPTED THE RATE OF GUARANTEE COMMISSION AT 0.5% AS THE ALP AFTER TAKING INTO CONSIDERATION THE RATES OF GUARANTEE COMMISSION CHARGED BY THE VARIOUS BANKS INCLUDING THE GUARANTE E COMMISSION CHARGED BY HSBC LTD. IN THE RANGE OF 0.15% TO 3%. IN THE PRESENT CASE, THE FACTS INVOLVED ARE SIMILAR TO THE CASE OF NIMBUS COMMUNICATIONS LTD. (SUPRA) INASMUCH AS THE RATES OF GUARANTEE COMMISSION CHARGED BY THE VARIOUS BANKS ARE FOUND TO BE IN THE RANGE OF 0.15% TO 3.0% AND THIS BEING SO, WE TAKE THE RATE OF GUARANTEE COMMISSION AT 0.5% AS ALP BY RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN TH E CASE OF NIMBUS COMMUNICATIONS LTD. (SUPRA). THE A.O. IS ACCORDINGLY DIRECTED TO RECOMPUTE THE A DDITION TO BE MADE ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT IN RESPECT OF GUARAN TEE COMMISSION BY TAKING THE ARMS LENGTH RATE OF GUARANTEE COMMISSION AT 0.5%. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE THUS ARE PARTLY ALLOWED. WE FIND THAT IN ASSESSMENT YEAR 2005-06 THE CO-ORDI NATE BENCH HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2006-07. SINCE, BOTH THE SIDES ARE UNANIMOUS IN ADMITTING THAT THE FACTS IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THE ONE RAISED IN ASSESSMENT YEAR 2006-07, WE SEE NO REASON TO DEVIATE FROM THE EARLIER VIEW TAKE N BY THE CO-ORDINATE BENCH ON 7 . 7522/ / 2011 (%). . 2007-08 ) ITA NO.7522/MUM/2011(A.Y.2007-08) THIS ISSUE. CONSEQUENTLY, GROUNDS OF APPEAL NO.3 AND 4 ARE REJECTED AND GROUND NO.5 IS PARTLY ALLOWED. 7. THE GROUND NO.6 OF THE APPEAL IS IN RESPECT OF C HARGING OF INTEREST UNDER SECTION 234C OF THE ACT . THE CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT IS MANDATORY AND CONSEQUENTIAL, THEREFORE, GROUND NO.6 OF THE APPEAL IS DISMISSED. 7. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY , THE 23 RD DAY OF FEBRUARY, 2021. SD/- SD/- (PRAMOD KUMAR) (VIKAS AWAS THY) / VICE PRESIDENT $% ' / JUDICIAL MEMBER / MUMBAI, 1)/ DATED 23/02/2021 VM , SR. PS (O/S) %,2 3 /, COPY OF THE ORDER FORWARDED TO : 1. #+ / THE APPELLANT , 2. %, / THE RESPONDENT. 3. 4, ( )/ THE CIT(A)- 4. 4, CIT 5. 56%,%) , . . . , / DR, ITAT, MUMBAI 6. 6789: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI