AT & S Austria Technologie & Systemtechnik Aktiongesellschaft, Austria V. DCIT, Circle - 11(1), Kolkata , Kolkata

ITA 95/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7298 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-11-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 16-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: RITUPARNA SINHA
• Keywords: Transfer pricing; Residential status; Double taxation relief; International transaction; Retrospective amendment; Wholly owned subsidiary; Set aside
• Section: 92C; 143(3); 92B; 92A; 10B; 195; 144C; 192; 13; 22; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH KO LKATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM ITA NO.95/KOL/2018 (ASSESSMENT YEAR: 2013-14) AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGESELLSCHAFT ANUP SINHA & ASSOCIATES, EC-210, BLOCK EC, SECTOR-1, SALT LAKE, KOLKATA 700064 VS. DCIT, CIRCLE-11(1), KOLKATA ./ ./PAN/GIR NO. : AAICA5300Q ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SMT. RITUPARNA SINHA, FCA RESPONDENT BY : DR. P.K. SRIHARI, CIT(DR) / DATE OF HEARING : 04/11/2019 /DATE OF PRONOUNCEMENT : 31/01/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAIN ING TO ASSESSMENT YEAR 2013-14 IS DIRECTED AGAINST THE FAIR ASSESSMENT ORD ER PASSED BY ASSESSING OFFICER U/S 143(3) R.W.S 144C(13) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), WHICH INCORPORATES THE D IRECTIONS OF THE DISPUTE RESOLUTION PANEL U/S 144(5) OF THE INCOME TAX ACT, DATED 19.09.2017. 2. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIENGESELLSCH AFT (HEREINAFTER REFERRED TO AS AT&S AUSTRIA / ASSESSEE) IS INCORPORATED IN AUST RIA AND IS A TAX RESIDENT OF AUSTRIA. THE AT&S AUSTRIA DOES NOT HAVE A PERMANEN T ESTABLISHMENT IN INDIA. THE AT&S AUSTRIA HAS SET UP A WHOLLY-OWNED SUBSIDIA RY IN INDIA NAMELY AT & S INDIA PVT. LTD. (HEREINAFTER REFERRED TO AS AT&S INDIA) WHICH IS A TAX RESIDENT OF INDIA. THE AT&S AUSTRIA AND AT&S INDIA ARE ASSOC IATED ENTERPRISES WITHIN THE MEANING OF SECTION 92A OF THE INCOME-TAX ACT, 1 961. THE AT&S AUSTRIA IS REGULARLY FILING INCOME TAX RETURN IN INDIA. THE TR ANSFER PRICING OFFICER ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 2 (HEREINAFTER REFERRED TO AS THE TPO) VIDE ORDER D ATED 19/12/2016 UNDER SECTION 92CA (5) READ WITH 154 / 92CA (3) OF THE ACT DIRECT ED THE FOLLOWING ARMS LENGTH PRICE (HEREINAFTER REFERRED TO AS ALP) ADJUSTMENT S: (I).RECEIPT OF INTEREST ON LOAN AND ADVANCE (INR 12 ,59,12,941/-): ALP ADJUSTMENT BEING INR 40,34,89,761/-; (II).RECEIPT OF CORPORATE GUARANTEE FEE (INR 36,43, 759/-): ALP ADJUSTMENT BEING INR 36,43,760/; AND (III).RECEIPT OF IT SUPPORT SERVICE COST (INR 3,58, 02,269/-): ALP ADJUSTMENT BEING INR 9,48,760/- . SUBSEQUENTLY, BEING AGGRIEVED BY THE ORDER OF TPO, THE ASSESSEE FILED HIS OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (HER EINAFTER REFERRED TO THE DRP). THE DISPUTE RESOLUTION PANEL VIDE ORDER DAT ED 19/09/2017 ISSUED DIRECTIONS UNDER SECTION 144C (5) OF THE ACT AND DI RECTED THE LOWER AUTHORITY TO REDUCE THE ALP ADJUSTMENTS IN RESPECT OF INTEREST O N LOAN & ADVANCE AND CORPORATE GUARANTEE FEE BUT CONFIRMED THE ALP ADJUS TMENT IN RESPECT OF IT SUPPORT SERVICE COST. ACCORDINGLY, THE TPO (VIDE OR DER DATED 20/11/2017 ISSUED UNDER SECTION 92CA (3) READ WITH 144C (5) OF THE AC T) DIRECTED THE FOLLOWING ALP ADJUSTMENTS: (I) RECEIPT OF INTEREST ON LOAN AND ADVANCE: ALP ADJUST MENT REDUCED FROM INR 40,34,89,761/- TO INR 3,13,68,273 /- (II) RECEIPT OF CORPORATE GUARANTEE FEE: ALP ADJUSTMENT REDUCED FROM INR 36,43,760/- TO INR 9,72,959/- AND (III) RECEIPT OF IT SUPPORT SERVICE COST: ALP ADJUSTMENT BEING INR 9,48,760 /-, AS DETERMINED BY THE TPO. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 3 THEREAFTER, THE ASSESSING OFFICER (HEREINAFTER REFE RRED TO AS THE AO) VIDE ORDER DATED 29/11/2017 ISSUED UNDER SECTION 143(3) READ W ITH SECTION 144C (13) OF THE ACT DETERMINED THE TOTAL INCOME OF THE ASSESSEE CHA RGEABLE TO TAX IN INDIA FOR THE RELEVANT ASSESSMENT YEAR AS UNDER: TABLE NO. 1 COMPUTATION OF INCOME CHARGEABLE TO T AX PARTICULARS AMOUNT (INR) INTEREST INCOME (12,59,12,941+3,13,68,273) 15,72,81,214 CORPORATE GUARANTEE FEE (36,43,760+9,72,959) 46,16,719 IT SUPPORT SERVICE COST (3,58,02,269+9,48,760) 3,67,51,029 TOTAL 19,86,48,960 3. AGGRIEVED BY THE ORDER OF THE AO/TPO, THE ASSESS EE IS IN APPEAL BEFORE US. 4.. GROUND NOS. 1, 2 AND 3 ARE DIRECTED AGAINST THE ARMS LENGTH PRICE ADJUSTMENT OF INR 3,13,68,273/- MADE BY THE AO IN RESPECT OF R ECEIPT OF INTEREST ON LOANS AND ADVANCE GRANTED TO AT&S INDIA. 5. THE BRIEF QUA THE ISSUE ARE THE AT&S INDIA (BOR ROWER) RAISED LOANS / EXTERNAL COMMERCIAL BORROWING (HEREINAFTER REFERRED TO AS E CB) FROM AT&S AUSTRIA (LENDER). IN THIS CONNECTION, AT&S AUSTRIA ENTERE D INTO LOAN AGREEMENTS DATED 31 ST MAY, 2008 AND 1ST DECEMBER, 2008, WITH AT&S INDIA FOR ADVANCING THE AFORESAID ECBS TO THE LATTER AMOUNTING TO EURO 20.8 MILLION AND EURO 16.4 MILLION RESPECTIVELY. THE AFORESAID ECBS WERE APPRO VED BY THE RESERVE BANK OF INDIA (HEREINAFTER REFERRED TO AS THE RBI) UNDER THE AUTOMATIC ROUTE AS PER THE GUIDELINES ISSUED BY THE RBI ON ECBS. THE BORROWER OBTAINED LOAN REGISTRATION NUMBER (LRN) FOR THE SAID LOANS AS PER THE GUIDELI NES ISSUED BY THE RBI. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 4 THE BORROWER AGREED THAT THE RATES OF INTEREST APPL ICABLE FOR THE SAID LOANS (ECBS) WOULD BE LIBOR+350 BPS AND LIBOR+ 100 BPS RESPECTIV ELY AND THE AFORESAID INTEREST RATES WERE FIXED BY COMPLYING WITH THE ALL -IN-COST CEILINGS FIXED BY THE RBI VIDE CIRCULAR ISSUED AT THAT MATERIAL POINT OF TIME. THE SAID LOANS HAD AN AVERAGE MATURITY PERIOD OF MORE THAN FIVE YEARS. TH E LOAN PROCEEDS WERE AGREED TO BE USED BY THE BORROWER FOR THE PURPOSE OF PURCH ASING CAPITAL EQUIPMENT. IN THIS CONNECTION, ALL THE INSTRUCTIONS GIVEN IN THE CIRCULAR ISSUED BY THE RBI FOR ECB WERE FOLLOWED BY THE BORROWER. AT&S AUSTRIA ENT ERED INTO A DISTRIBUTION AGREEMENT WITH AT&S INDIA UNDER WHICH AT&S INDIA S OLD ITS MANUFACTURED GOODS TO AT&S AUSTRIA FOR FURTHER SALE TO INDEPENDE NT CUSTOMERS OUTSIDE INDIA. IN THIS CONNECTION, ATTENTION IS INVITED TO THE AD DENDUM TO DISTRIBUTION AGREEMENT DATED 15TH OCTOBER 2002 WHEREIN IT IS ME NTIONED UNDER PAYMENT TERMS THAT THE DISTRIBUTOR (I.E. AT&S AUSTRIA) MAY MAKE ADVANCE PAYMENTS ON REQUEST FROM THE SUPPLIER (I.E. AT&S INDIA) WHICH W OULD NOT EXCEED TWO MONTHS PROJECTED SALES OR EURO 5.0 MIO WHICHEVER IS LESS. THE ADVANCE PAYMENT WOULD BEAR INTEREST AT THREE MONTHS LIBOR(EURO) PLUS 100 BASIS POINTS PER ANNUM FROM THE DATE OF RECEIPT OF ADVANCE. THE ADVANCE RE CEIVED FROM THE DISTRIBUTOR WOULD BE ADJUSTED AGAINST FUTURE BILLINGS. IT IS PE RTINENT TO NOTE THAT THE TENURE OF THE EXPORT ADVANCE WAS LESS THAN THREE YEARS ( SHORT-TERM EXPORT ADVANCE ). IN THIS CONNECTION, ALL THE INSTRUCTIONS GIVEN IN THE CIRCULAR ISSUED BY THE RBI FOR EXPORT ADVANCE (INCLUDING THE MAXIMUM CEILING FIXED BY THE RBI) WERE FOLLOWED BY THE BORROWER. THE BORROWER CURRENTLY DEDUCTS WIT HHOLDING TAX AT THE RATE OF 10% PER ANNUM OUT OF THE INTEREST PAYABLE BY THE BO RROWER TO THE LENDER BEFORE REMITTING THE INTEREST TO THE LENDER. THE AFORESAID DEDUCTION OF TAX AT SOURCE IS BEING MADE UNDER THE PROVISIONS OF SECTION 195 OF T HE ACT READ WITH THE RELEVANT PROVISIONS OF THE DOUBLE TAXATION AVOIDANCE AGREEME NT (HEREINAFTER REFERRED TO AS THE DTAA) ENTERED INTO BETWEEN INDIA AND AUSTR IA. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 5 AS DISCLOSED IN FORM NO. 3CEB OF THE ASSESSEE (I.E. AT&S AUSTRIA) FOR THE AY 2013-14, THE INTERNATIONAL TRANSACTIONS INVOLVING R ECEIPT OF INTERESTS ON ECB AND EXPORT ADVANCE WERE AT ARMS LENGTH UNDER THE CUP M ETHOD. THE TPO REJECTED THE ASSESSEES PLEA AND DETERMINED THE ARMS LENGTH INTEREST RATE IN RESPECT OF ECB AS WELL AS EXPORT ADVANCE AT 20.45% PER ANNUM. THE DRP REJECTED THE AFORESAID RATE AND DETERMINED THE ARMS LENGTH INTE REST RATE FOR ECBS AS WELL AS EXPORT ADVANCE AT LIBOR PLUS 450 BASIS POINTS . ACCORDINGLY, THE ALP ADJUSTMENT IN RESPECT OF ECB CARRYING INTEREST RATE OF LIBOR PLUS 350 BASIS POINTS WAS COMPUTED AT INR 73,02,884/- AND THE ALP ADJUSTMENT IN RESPECT OF EXPORT ADVANCE WAS COMPUTED AT INR 2,40,65,389/-. T HUS, THE ALP ADJUSTMENTS IN RESPECT OF ECB AND ADVANCE AGGREGATED TO INR 3,1 3,68,273/-. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD DRP/TPO AND OTHER MATERIALS BROUGHT ON RECORD. BEFORE US, RITUPARNA SINHA, LD COUNSEL FOR THE ASSE SSEE, BEGINS BY POINTING OUT THAT AS DISCLOSED IN FORM NO. 3CEB OF AT&S INDIA FO R THE AY 2013-14, THE INTERNATIONAL TRANSACTIONS INVOLVING PAYMENT OF INT ERESTS ON ECB AND EXPORT ADVANCE BY AT&S INDIA TO AT&S AUSTRIA WERE AT ARMS LENGTH UNDER THE CUP METHOD. THE TPO ACCEPTED THAT THE AFORESAID INTERNA TIONAL TRANSACTIONS WERE AT ARMS LENGTH UNDER THE CUP METHOD IN THE HANDS OF A T&S INDIA AND DID NOT RECOMMEND ANY ALP ADJUSTMENT IN RESPECT THEREOF IN THE ORDER ISSUED UNDER SECTION 92CA(3) OF THE ACT TO AT&S INDIA. THEREFORE , WHERE THE TRANSACTION HAS BEEN ACCEPTED AT ARMS -LENGTH IN THE CASE OF BORROW ER (AT&S INDIA) AND NO ALP ADJUSTMENT WAS MADE, THE SAME SHOULD BE TREATED AT ARMS -LENGTH IN THE HANDS OF THE LENDER (AT &S AUSTRIA) ALSO. ON MERITS ALSO, T HE LD COUNSEL ARGUED THAT THE ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 6 ACTION OF THE AO IN MAKING AN ALP ADJUSTMENT OF INR 3,13,68,273/- IS BASED ON THE DECISION RENDERED BY THE DRP THAT THE ARMS LEN GTH INTEREST RATE WOULD BE LIBOR PLUS 450 BASIS POINTS IN RESPECT OF AN EXTERN AL COMMERCIAL BORROWING (ECB) CARRYING INTEREST RATE OF LIBOR PLUS 350 BASI S POINTS AND SHORT-TERM EXPORT ADVANCE CARRYING INTEREST RATE OF LIBOR PLUS 100 BASIS POINTS, WHICH IS NOT ACCEPTABLE. IT IS NECESSARY TO CONSIDER LIBOR A S THE APPROPRIATE BENCHMARK INTEREST RATE THAT CONFORMS TO THE ARMS LENGTH STA NDARD UNDER THE CUP METHOD. SINCE THE ASSESSEE CHARGED INTEREST TO AT&S INDIA O VER AND ABOVE LIBOR IN CASE OF LOAN AND ADVANCE, THEREFORE THE ALP ADJUSTMENT O F INR 3,13,68,273/-MADE BY THE AO MAY BE DELETED. 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HA S INVITED OUR ATTENTION TO THE DECISION OF THE SPECIAL BENCH OF THE INCOME TAX APP ELLATE TRIBUNAL (KOLKATA) IN THE MATTER OF INSTRUMENTARIUM CORPORATION LTD FINLA ND VS. ADIT [ITA NO. 1548 AND 1549 / KOL / 2009], WHEREIN THE COORDINATE BENC H RENDERED THE DECISION STATING THAT THE TRANSFER PRICING PROVISION CONTAIN ED IN CHAPTER X OF THE ACT DID NOT CONTEMPLATE TAKING OF A HOLISTIC VIEW I.E. CONS IDERING LOWERING OF THE OVERALL PROFIT OR INCREASING OVERALL LOSS FOR THE GROUP COM PANIES TAKEN TOGETHER. IN THE AFORESAID CASE, THE NON-RESIDENT ASSESSEE HA S GRANTED INTEREST FREE LOAN TO ITS INDIAN ASSOCIATED ENTERPRISE (AE). THE TPO HAS DE TERMINED ARMS LENGTH INTEREST INCOME IN THE HANDS OF THE NON-RESIDENT AS SESSEE AND ACCORDINGLY, MADE AN ARMS LENGTH INTEREST ADJUSTMENT IN THE HANDS OF THE NON-RESIDENT ASSESSEE. IT IS THE ASSESSEES CONTENTION THAT IF INTEREST IS CHARG ED BY THE NON-RESIDENT ASSESSEE TO ITS INDIA AE, THE RECEIPT IN THE HANDS OF NON-RESID ENT ASSESSEE WOULD BE CHARGEABLE TO TAX @10 PERCENT IN VIEW OF THE SPECIF IC PROVISION OF THE TAX TREATY. HOWEVER, THE CORRESPONDING DEDUCTION OF INTEREST EX PENSE IN THE HANDS OF INDIAN AE WOULD REDUCE TAXABILITY OF THE INDIAN AE WHICH W OULD OTHERWISE BE AT 36.75 PERCENT. THE NET EFFECT WOULD BE THAT THE INDIAN TA X BASE WOULD STAND ERODED BY 26.75 ( 36.75%-10%) PERCENT OF THE ARMS LENGTH PRI CE ADJUSTMENT IN RESPECT OF ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 7 INTEREST ON LOAN. IT WOULD TRIGGER THE PROVISION OF SUB-SECTION (3) OF SECTION 92 OF THE ACT AND HENCE, THE PROVISIONS OF THE TRANSFER P RICING COULD NOT BE PRESSED INTO SERVICE IN THIS CASE. THE SPECIAL BENCH REJECTED THE ABOVE HOLISTIC VIEW TAKEN BY THE ASSESSEE AND HELD THAT PROVISION OF SUB-SECTION (3) OF SECTION 9 2 OF THE ACT DID NOT CONTEMPLATE TAKING OF A HOLISTIC VIEW I.E. CONSIDERING LOWERING OF THE OVERALL PROFIT OR INCREASING OVERALL LOSS FOR THE GROUP COMPANIES TAK EN TOGETHER. THE PROVISION OF SUB-SECTION (3) OF SECTION 92 OF THE ACT WOULD BE A PPLIED TO THE NON-RESIDENT ASSESSEE INDEPENDENT OF THE TAXABILITY OF ITS INDIA N ASSOCIATED ENTERPRISE. HENCE, THE COMPUTATION OF ARMS LENGTH INTEREST INCOME IN THE HANDS OF THE NON-RESIDENT ASSESSEE WOULD NOT TRIGGER THE PROVISION OF SUB-SEC TION (3) OF SECTION 92 OF THE ACT. THE LD DR POINTED OUT THAT IN THE INSTANT CASE, AT& S INDIA PAID INTERESTS TO THE NON-RESIDENT ASSESSEE ON LOAN WHICH WERE BENCHMARK ED BY AT&S INDIA BY APPLYING THE CUP METHOD AND THE TPO HAD DULY ACCEPT ED THE ARMS LENGTH NATURE OF THE INTEREST PAYMENTS UNDER THE CUP METHOD IN TH E HANDS OF AT&S INDIA, BUT THIS DOES NOT MEAN THAT ADJUSTMENT SHOULD NOT BE MA DE IN THE HANDS OF AT&S AUSTRIA (ASSESSEE). THEREFORE, THE ARMS LENGTH PRI CE (ALP) ADJUSTMENT IS NECESSARY IN THE HANDS OF THE AT&S AUSTRIA (ASSESSE E) IRRESPECTIVE OF THE FACT THAT TPO HAD DULY ACCEPTED THE ARMS LENGTH NATURE OF TH E INTEREST PAYMENTS UNDER THE CUP METHOD IN THE HANDS OF AT&S INDIA. THEREFORE, I N THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE INCOME TAX APPELLATE TR IBUNAL (KOLKATA) IN THE MATTER OF INSTRUMENTARIUM CORPORATION LTD FINLAND V S. ADIT [ITA NO. 1548 AND 1549 / KOL / 2009](SUPRA), IT IS ABUNDANTLY CLEAR T HAT THE PROVISION OF SUB-SECTION (3) OF SECTION 92 OF THE ACT DID NOT CONTEMPLATE TA KING OF A HOLISTIC VIEW I.E. CONSIDERING LOWERING OF THE OVERALL PROFIT OR INCRE ASING OVERALL LOSS FOR THE GROUP ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 8 COMPANIES TAKEN TOGETHER. THE PROVISION OF SUB-SECT ION (3) OF SECTION 92 OF THE ACT WOULD BE APPLIED TO THE NON-RESIDENT ASSESSEE ( AT&S AUSTRIA) INDEPENDENT OF THE TAXABILITY OF ITS INDIAN ASSOCIATED ENTERPRI SE (AT&S INDIA). THEREFORE, THE TRANSFER PRICING ADJUSTMENT MADE BY THE TPO SHOULD BE SUSTAINED. 8. PER CONTRA, RITUPARNA SINHA, LD COUNSEL FOR THE ASSESSEE, SUBMITTED BEFORE US THAT IN THE JUDGMENT OF THE COORDINATE BENCH OF KOL KATA IN THE MATTER OF INSTRUMENTARIUM CORPORATION LTD FINLAND VS. ADIT [I TA NO. 1548 AND 1549 / KOL / 2009] (SUPRA), THE NON-RESIDENT ASSESSEE GRAN TED INTEREST FREE LOAN TO ITS INDIAN AE. NEITHER THE NON-RESIDENT ASSESSEE NOR TH E INDIAN AE DETERMINED THE ARMS LENGTH INTEREST RATE BY APPLYING ANY OF THE M ETHODS, BEING THE MOST APPROPRIATE METHOD, PRESCRIBED UNDER SECTION 92C OF THE ACT. THE TPO DETERMINED THE ARMS LENGTH INTEREST RATE IN THE HA NDS OF THE NON-RESIDENT ASSESSEE AND ACCORDINGLY, MADE AN ALP ADJUSTMENT IN THE HAND S OF THE NON-RESIDENT ASSESSEE. THE SPECIAL BENCH CONFIRMED THE AFORESAID ACTION OF THE TPO. BEFORE THE TRIBUNAL, THE ASSESSEE CONTENDED THAT IN CASE AN UPWARD ADJUSTMENT TO THE INCOME OF THE NON-RESIDENT ASSESSEE IS MADE IN RESP ECT OF INTEREST, IT WOULD LEAD TO FURTHER CORRESPONDING DEDUCTION IN THE HANDS OF THE INDIAN AE AND CONSEQUENTLY, RESULT IN EROSION OF TAX BASE OF INDIA. THE TRIBUNA L, UNDER THIS CIRCUMSTANCE, REJECTED THE CONTENTION OF THE ASSESSEE AS THE ARM S LENGTH INTEREST RATE HAS TO BE DETERMINED IN RESPECT OF AN INTERNATIONAL TRANSACTI ON AS PER THE PROVISION OF THE TRANSFER PRICING LAWS OF INDIA. HOWEVER, IN THE INS TANT CASE, AT&S INDIA PAID INTERESTS TO THE NON-RESIDENT ASSESSEE ( AT&S AUST RIA) ON LOAN AND EXPORT ADVANCE WHICH WERE APPROPRIATELY BENCHMARKED BY AT& S INDIA BY APPLYING THE CUP METHOD AND THE TPO HAD DULY ACCEPTED THE ARMS LENGTH NATURE OF THE INTEREST PAYMENTS UNDER THE CUP METHOD IN THE HANDS OF AT&S INDIA. IN VIEW OF THIS, THE AFORESAID DECISION OF THE SPECIAL BENCH IS NOT APPLICABLE ON THE FACTS OF THE NON-RESIDENT ASSESSEES CASE (AT &S AUSTRIA) UN DER CONSIDERATION. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 9 9. WE NOTE THAT THE ASSESSEE GRANTED LOAN AND ADVAN CE TO AT&S INDIA IN FOREIGN CURRENCY (EURO) AND AT&S INDIA REPAID PRINCIPAL / P AID INTEREST ON LOAN IN FOREIGN CURRENCY (EURO). THE ASSESSEE COMPANY ADOPT ED EURO-LIBOR AS APPROPRIATE BENCHMARK THAT CONFORMS TO THE ARMS LE NGTH STANDARD UNDER THE CUP METHOD. THE ASSESSEE (AT&S AUSTRIA ) APPLIED THE EU RO-LIBOR RATES PREVAILING DURING THE RELEVANT PERIOD FOR COMPUTATION OF INTER EST PAYABLE BY AT&S INDIA TO THE ASSESSEE AND FURTHER ADDED CREDIT SPREAD OF 350 BASIS POINTS (NET OF TAX) FOR LOAN AND 100 BASIS POINTS FOR ADVANCE AND CLAIMED T HAT THE INTEREST RECEIVED BY THE ASSESSEE (AT&S AUSTRIA) FROM AT&S INDIA IS AT A RMS LENGTH UNDER THE CUP METHOD. WE NOTE THAT IN THE CASE OF FOREIGN CURRENC Y LOAN ADVANCED BY ONE ASSOCIATED ENTERPRISE TO THE OTHER, LIBOR IS THE AP PROPRIATE BENCHMARK INTEREST RATE WHICH CONFORMS TO THE ARMS LENGTH STANDARD UN DER THE CUP METHOD. THE ASSESSEE CLAIMED THAT THE AFORESAID INTERNATIONAL T RANSACTIONS ARE AT ARMS LENGTH UNDER THE CUP METHOD, FOR THAT HE RELIED ON THE JUD GMENT OF THE HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. COTTON NATURALS (I) (P) LTD REPORTED IN [2015] 231 TAXMAN 401/ 55 TAXMANN.COM 523, WHEREIN IT WAS HELD AS FOLLOWS: FACTS THE ASSESSEE, MANUFACTURER AND EXPORTER OF RIDER AP PARELS, ADVANCED A FOREIGN CURRENCY LOAN TO ITS ASSOCIATED ENTERPRISE (AE) IN THE US AT THE INTEREST RATE OF 4% PER ANNUM. THE ASSESSEE SET UP THE AE IN THE US FOR THE PURPOS E OF MARKETING AND PROMOTING ITS EXPORT IN THE USA. THE ASSESSEE CONTENDED THAT THE AFORESAID INTEREST RATE WAS AT ARMS LENGTH AS THE RATE WAS COMPARABLE TO THE EXPORT PAC KING CREDIT RATE OBTAINED FROM INDEPENDENT BANKS IN INDIA. THE TPO DETERMINED THE ARMS LENGTH INTEREST RATE AT 14% PER ANNUM. THE DRP GRANTED PARTIAL RELIEF BY DETERM INING THE ARMS LENGTH INTEREST RATE AT 12.20%. ON APPEAL BY THE ASSESSEE, THE TRIBUNAL HELD THAT T HE CUP METHOD IS THE MOST APPROPRIATE METHOD IN ORDER TO ASCERTAIN THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION AS THAT OF THE ASSESSEE. THE TRIBUNAL FURTHER HELD THAT THE FINANCIAL POSITION AND CREDIT RATING OF THE SUBSIDI ARIES WOULD BE BROADLY THE SAME ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 10 AS THE HOLDING COMPANY. IN SUCH A SITUATION, DOMEST IC PRIME LENDING RATE WOULD HAVE NO APPLICABILITY AND LIBOR SHOULD BE TAKEN AS THE BENCHMARK INTEREST RATE UNDER THE CUP METHOD FOR THE SAID INTERNATIONAL TRA NSACTION. THE REVENUE PREFERRED APPEAL BEFORE THE HONBLE DE LHI HIGH COURT. THE HONBLE HIGH COURT HAS CONFIRMED THAT THE CUP METHO D WOULD BE THE MOST APPROPRIATE METHOD IN ORDER TO ASCERTAIN THE ARMS LENGTH INTEREST RATE IN RELATION TO THE FOREIGN CURRENCY LOAN ADVANCED BY ONE ASSOCI ATED ENTERPRISE TO THE OTHER. THE HONBLE DELHI HIGH COURT HAS CONFIRMED THE VIEW OF THE TRIBUNAL THAT THE CREDIT RATING OF THE SUBSIDIARIES WOULD BROADLY BE THE SAME AS THAT OF THE HOLDING COMPANY. IN SUCH A SITUATION, LIBOR SHOULD BE TAKEN AS THE BENCHMARK INTEREST RATE UNDER THE CUP METHOD IN RESPECT OF FOREIGN CUR RENCY LOAN ADVANCED BY ONE ASSOCIATED ENTERPRISE TO THE OTHER. THE HONBLE HIG H COURT HAS HELD THAT THE ARMS LENGTH INTEREST RATE SHOULD BE THE MARKET-DETERMINE D INTEREST RATE APPLICABLE TO THE CURRENCY CONCERNED IN WHICH THE LOAN WAS TO BE REPA ID. THE HONBLE HIGH COURT HAS HELD THAT THE CHAPTER X OF THE INCOME-TAX ACT, 1961 AND TRANSFER PRICING RULES CONTAINED IN THE INCOME-TAX RULES, 1962, DO N OT PERMIT THE REVENUE AUTHORITIES TO RESTRUCTURE ACTUAL BUSINESS TRANSACT IONS THAT ARE LEGITIMATE IN NATURE (I.E. TO RE-WRITE THE CHARACTER AND NATURE OF A LEG ITIMATE TRANSACTION). THE HONBLE HIGH COURT HAS REJECTED THE REASONING GIVEN BY THE TPO THAT THE TRANSFER PRICING ADJUSTMENT COULD RESTRUCTURE THE TRANSACTION TO REF LECT MAXIMUM RETURN THAT A PARTY COULD HAVE EARNED AND THAT WOULD BE THE YARDS TICK OR THE BENCHMARK FOR DETERMINING THE INTEREST PAYABLE BY THE SUBSIDIARY AE. THE HONBLE HIGH COURT HAS HELD THAT THE ABOVE IS NOT WHAT CHAPTER X OF TH E ACT AND RULES MANDATE AND STIPULATE. THE AFORESAID PROVISIONS PERMIT TRANSFER PRICING ADJUSTMENT SO AS TO BRING TO TAX WHAT WOULD HAVE BEEN PAID FOR THE TRAN SACTION IN THE SAME OR SIMILAR COMPARABLE CIRCUMSTANCES BY AN INDEPENDENT THIRD PA RTY. FINALLY, THE HONBLE ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 11 HIGH COURT HAS HELD THAT THE SUBSTANTIAL QUESTION O F LAW MENTIONED IN THE DECISION IS ANSWERED AGAINST THE REVENUE. 10. WE NOTE THAT LENDING MONEY IS NOT ONE OF THE MA IN BUSINESSES OF THE ASSESSEE (AT&S AUSTRIA) AND AT&S INDIA BEING A WHOLLY-OWNED SUBSIDIARY OF THE ASSESSEE, THE ASSESSEE IS NOT EXPOSED TO SIGNIFICAN T CREDIT RISK IN RESPECT OF THE LOAN MADE TO AT&S INDIA. THEREFORE, THE CREDIT RAT ING OF AT&S INDIA WOULD BROADLY BE THE SAME AS THAT OF THE ASSESSEE. HENCE, THE DRP WAS NOT JUSTIFIED IN ADDING CREDIT SPREAD OF 450 BASIS POINTS TO LIBOR, WHILE DETERMINING THE ARMS LENGTH INTEREST RATE IN RESPECT OF LOAN AND ADVANCE . WE NOTE THAT IN THE INSTANT CASE, THE DRP DID NOT MENTION IN HIS ORDER THE COMP ARABILITY ANALYSIS PRESCRIBED UNDER CLAUSE (A) OF SUB-RULE (1) OF RULE 10B OF THE INCOME-TAX RULES, 1962. THE SAID RULE IS REPRODUCED BELOW FOR READY REFERENCE A S FOLLOWS: DETERMINATION OF ARM'S LENGTH PRICE UNDER SECTION 92C . 10B . (1) FOR THE PURPOSES OF SUB-SECTION (2) OF SECTION 92C, THE ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION [ OR A SPECIFIED DOMESTIC TRANSACTION ] SHALL BE DETERMINED BY ANY OF THE FOLLOWING METHODS, BEING T HE MOST APPROPRIATE METHOD, IN THE FOLLOWING MANNER, NAMELY : (A) COMPARABLE UNCONTROLLED PRICE METHOD, BY WHICH, (I) THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFERRED OR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS, IS IDENTIFIED; (II) SUCH PRICE IS ADJUST ED TO ACCOUNT FOR DIFFERENCES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION [ OR THE SPECIFIED DOMESTIC TRANSACTION ] AND THE COMPARABLE UNCONTROLLED TRANSACTIONS OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS, WHICH COULD MATERI ALLY AFFECT THE PRICE IN THE OPEN MARKET; (III) THE ADJUSTED PRICE ARRIVED AT UNDER SUB- CLAUSE (II) IS TAKEN TO BE AN ARM'S LENGTH PRICE IN RESPECT OF THE PROPERTY TRANS FERRED OR SERVICES PROVIDED IN THE INTERNATIONAL TRANSACTION [ OR THE SPECIFIED DOMESTIC TRANSACTION ] ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 12 WE NOTE THAT LD DRP FAILED TO ANALYSE PRICE CHARGED FOR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS AND SUCH PRICE IS ADJUSTED TO ACCOUNT FOR DIFFERENCES, IF AN Y, BETWEEN THE INTERNATIONAL TRANSACTION. THEREFORE, THE FINDINGS OF THE LD DRP IS NOT AS PER CLAUSE (A) OF SUB- RULE (1) OF RULE 10B OF THE INCOME-TAX RULES, 1962, AS MENTIONED ABOVE. THE DRP DID NOT BRING ON RECORD ANY COMPARABLE UNCONTRO LLED TRANSACTION UNDER THE CUP METHOD FOR SUBSTANTIATING THAT THE INTEREST RAT E OF LIBOR PLUS 450 BASIS POINTS CONFORMED TO THE ARMS LENGTH STANDARD UNDER THE CUP METHOD. WE NOTE THAT LIBOR IS THE APPROPRIATE BENCHMARK INT EREST RATE FOR INTRA-GROUP LOANS DENOMINATED IN FOREIGN CURRENCY AND HENCE, TH E ARMS LENGTH INTEREST RATE DETERMINED BY THE DRP AT LIBOR PLUS 450 BASIS POINT S, BASED ON RESTRUCTURING OF THE INTERNATIONAL TRANSACTION UNDER CONSIDERATION, HAS NO LEGAL BASIS IN THE LIGHT OF THE DECISION RENDERED BY THE HONBLE HIGH COURT IN THE MATTER OF CIT VS. COTTON NATURAL (SUPRA). THEREFORE, THE ARMS LENGTH PRICE A DJUSTMENT MADE BY DRP/TPO NEEDS TO BE DELETED. 11. WE NOTE THAT ANOTHER JUDGMENT ON THE IDENTICAL FACTS WAS DELIVERED BY THE HONBLE HIGH COURT OF RAJASTHAN IN THE MATTER OF CI T VS. VAIBHAV GEMS LTD DATED 13 TH OCTOBER, 2017 REPORTED IN [2017] 88 TAXMANN.COM 12 (RAJ). IN THIS CASE THE ASSESSEE ADVANCED LOAN TO ASSOCIATED ENTERPRISE IN FOREIGN CURRENCY ON WHICH NO INTEREST WAS CHARGED. THE TPO PROPOSED ALP ADJUSTMENT AT THE RATE OF LIBOR PLUS 2% CREDIT SPREAD IN RESPECT OF THE AFORE SAID LOAN. THE TRIBUNAL CONFIRMED THE ADJUSTMENT PREVAILING AT THE RATE OF LIBOR PLUS 2% ON ACCOUNT OF INTEREST FREE LOANS PROVIDED BY VAIBHAV GEMS LTD TO ITS ASSOCIATED ENTERPRISE FOR THE RELEVANT ASSESSMENT YEAR. IN THIS CONNECTION, T HE HONBLE HIGH COURT OF RAJASTHAN PLACED RELIANCE ON THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 13 MATTER OF CIT V. COTTON NATURALS (I) (P) LTD REPORT ED IN [2015] 231 TAXMAN 401 / 55 TAXMANN.COM 523 (AS REFERRED TO HEREINABOVE ). THE HONBLE HIGH COURT OF RAJASTHAN HELD AS FOLLOWS: 11. REGARDING ITA NO.149/2015 PREFERRED BY THE ASS ESSEE IN VIEW OF THE DELHI HIGH COURT JUDGMENT (PARA NO.14), THE INTERNATIONAL TRAN SACTION IS REQUIRED TO BE ACCEPTED, THEREFORE, TRIBUNAL HAS COMMITTED SERIOUS ERROR. THE ASSESSEE WILL BE ENTITLED FOR THE BENEFIT OF AVERAGE LIBOR RATE EXIS TING AT THAT TIME WHICH WAS 0.79% AND ADDITION OF ADHOC 2% IS NOT PROPER. IN THAT VIE W OF THE MATTER, THE ADDITION OF 2% INTEREST IN THE INCOME IS REQUIRED TO BE QUASHED AN D SET ASIDE. IT MAY BE NOTED HERE THAT THE HONBLE HIGH COURT OF RAJASTHAN CONFIRMED THAT LIBOR WOULD BE THE APPROPRIATE BENCHMARK FOR INTERE ST ON INTRA-GROUP LOAN IN FOREIGN CURRENCY AND IN THIS CONNECTION, NO CREDIT SPREAD IS TO BE ADDED TO LIBOR FOR DETERMINING THE ARMS LENGTH INTEREST RATE. THE AFORESAID DECISION OF THE HONBLE HIGH COURT OF RAJASTHAN IS CONFIRMED BY THE HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VAIBHAV GEMS LTD REPORTED IN [2018] 99 TAXMANN.COM 2 (SC). 12. THE LD COUNSEL ALSO CITED BEFORE US THE JUDGMEN T OF THE HONBLE HIGH COURT OF BOMBAY IN THE MATTER OF CIT V. TATA AUTOCOMP SYS TEMS LTD, DATED 15 TH FEBRUARY, 2015, REPORTED IN [2015] 56 TAXMANN.COM 2 06 (BOMBAY). IN THIS CASE THE RESPONDENT-ASSESSEE, ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC PARTS AND RENDERING ENGINEERING SERVICES, ADVANCED AN AMO UNT OF EURO 26.25 LAKHS TO ITS WHOLLY OWNED SUBSIDIARY IN GERMANY. THE RESPOND ENT-ASSESSEE CHARGED NO INTEREST ON THE ABOVE LOAN. THE TPO DETERMINED THE ARMS LENGTH INTEREST ON THE LOAN ADVANCED BY THE RESPONDENT-ASSESSEE TO ITS GER MAN SUBSIDIARY AT 10.25%. THE SAID MEASURE OF RATE OF INTEREST WAS ON THE BAS IS OF LENDING RATE CHARGED BY THE BANKS IN INDIA. THE DRP ENHANCED ALP I.E. THE I NTEREST ON THE LOAN GIVEN BY THE RESPONDENT-ASSESSEE TO ITS GERMAN ASSOCIATED EN TERPRISE TO 12%. THE HONBLE TRIBUNAL HELD THAT AS THE LOAN WAS ADVANCED TO ASSO CIATED ENTERPRISE IN GERMANY ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 14 AND THE SAME WAS CONSUMED IN GERMANY, THE CLAIM OF THE RESPONDENT-ASSESSEE TO ADOPT EURIBOR RATE AS STATED BEFORE THE TPO WAS REA SONABLE AND DESERVED TO BE ACCEPTED. THE HONBLE HIGH COURT, HAVING CONSIDERED THAT THE TRIBUNAL ADOPTED EURIBOR RATE AS BENCHMARK INTEREST RATE, CONFIRMED THE ACTION OF THE TRIBUNAL AND DISMISSED THE REVENUES APPEAL. IT IS PERTINENT TO NOTE THAT THE HONBLE RAJASTHAN HIGH COURT, WHILE RENDERING THE AFORESAID DECISION IN THE MATTER OF VAIBHAV GEMS LT D (SUPRA), HAD TAKEN INTO CONSIDERATION THE DECISION DATED 15 TH FEBRUARY, 2015, OF THE HONBLE HIGH COURT OF BOMBAY IN THE MATTER OF CIT V. TATA AUTOCOMP SYS TEMS LTD (SUPRA). THE HONBLE RAJASTHAN HIGH COURT REJECTED THE PRINCIPLE ENUNCIATED BY THE HONBLE HIGH COURT OF BOMBAY IN THE MATTER OF TATA AUTOCOMP SYSTEMS LTD (SUPRA) AND STRONGLY RELIED UPON THE DECISION OF THE HONBLE HI GH COURT OF DELHI IN THE MATTER OF COTTON NATURALS (SUPRA). WE NOTE THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. COTTON NATURALS (I) (P) LTD (SUPRA) AND THE DECISIO N OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. VAIBHAV GEMS LTD (SUPRA) GO IN FAVOUR OF THE ASSESSEE. HOWEVER, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. TATA AUTOCOMP SYSTEMS LTD HELD THAT THE ARMS LENGTH INT EREST RATE WOULD BE DETERMINED BASED ON THE BENCHMARK PREVAILING IN THE COUNTRY IN WHICH THE LOAN WAS CONSUMED. WE NOTE THAT AS PER THE SETTLED JUDIC IAL PRINCIPLE, WHERE THERE ARE TWO CONTRARY VIEWS TAKEN BY DIFFERENT HIGH COURTS, THEN THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPTED, FOR THAT WE RELY ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PR ODUCTS LTD REPORTED IN [1972] 88 ITR 192 (SC), WHEREIN THE HONBLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSES SEE MUST BE ADOPTED. THIS IS A WELL-ACCEPTED RULE OF CONSTRUCTION RECOGNISED BY TH IS COURT IN SEVERAL OF ITS ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 15 DECISIONS. WE ALSO RELY ON THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT VS. NAGA HILLS TEA CO. LTD. REPORTED IN [1973] 89 ITR 236 (SC), WHEREIN IT IS HELD THAT: IF A PROVISION OF A TAXING STATUTE CAN BE REASONABL Y INTERPRETED IN TWO WAYS, THAT INTERPRETATION WHICH IS FAVOURABLE TO THE ASSESSEE, HAS GOT TO BE ACCEPTED. THIS IS A WELL ACCEPTED VIE W OF LAW. IN VIEW OF THIS, WE ADOPT THE AFORESAID VIEW TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. COTTON NATURALS (I) (P) LTD (SUPRA) AND THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. VAIBHAV GEMS LTD AND HENCE, ACCEPT THAT LIBOR IS THE APPROPRIATE BENCHMARK THAT CONFORMS TO THE ARMS LE NGTH STANDARD UNDER THE CUP METHOD. 13. WE NOTE THAT JURISDICTIONAL COORDINATE BENCH O F ITAT KOLKATA, IN THE MATTER OF M/S ELECTROSTEEL CASTINGS LTD VS. DCIT DATED 25. 11.2016 BEARING IT (SS) NO. 47 TO 53/KOL/2014 & 256/KOL/2015 & 66/KOL/2016 FOR AY 2003-04 TO AY 2011- 12 AND IT (SS) NO. 54 TO 60/KOL2014 & 313/KOL/2015 & 124/KOL/2016 FOR AY 2003-04 TO AY 2011-12, ON THE IDENTICAL FACTS, HELD AS FOLLOWS: THE ASSESSEE, MANUFACTURER AND EXPORTER OF DUCTILE IRON PIPE, PROVIDES INTEREST FREE LOAN TO ITS NON-RESIDENT ASSOCIATED ENTERPRISE (AE). THE TPO PROPOSES TO COMPUTE THE ARMS LENGTH INTEREST RATE AT COST OF F UND IN THE HANDS OF THE ASSESSEE (HAVING BEEN THE BASE RATE OF 8%) PLUS CREDIT SPREA D OF 7% (WHICH WAS ADDED TO THE BASE RATE ON THE REASONING GIVEN BY THE TPO THAT TH E CREDIT RATING OF THE AE WOULD BE CC+ OR CC). THE LD. DRP HAS HELD THAT COMPUTATION OF PERCENTAGE OF INTEREST TO BE ADDED FOR CREDIT RATING OF THE AE (BORROWER) AS DONE BY THE T PO IS ARBITRARY AND HAS NO BASIS WHATSOEVER. THE LD. DRP HAS NOTED THAT THE TPO RELI ES UPON A BOOKLET CORPORATE RATING CRITERIA ISSUED BY STANDARD & POORS IN TH E YEAR 2006 FOR ARRIVING AT THE CREDIT RATING OF CC+ OR C OF THE AE. THE BOOKLE T PRESCRIBES CREDIT RATING BASED ON VARIOUS RATIOS LIKE EBIT INTEREST COVERAGE, RETU RN ON CAPITAL ETC. AND ALSO CREDIT RATINGS BASED ON SIZE OF THE CORPORATE. HOWEVER, TH E INCOME-TAX ACT, 1961, READ WITH THE TRANSFER PRICING RULES PRESCRIBING FOR COM PUTATION OF ARMS LENGTH PRICE HAS NOT AUTHORISED THE AO TO ASSIGN CREDIT RATING T O CORPORATE AES. THEREFORE, THE LD. DRP HAS HELD THAT THE ACTION OF THE TPO IS ARBI TRARY AND NOT AS PER LAW. THE LD. DRP, HOWEVER, APPLIES THE CBDTS SAFE HARBOUR R ULES IN THE CASE OF LENDING BETWEEN AES WHEREIN THE CBDT HAS OPINED THAT ADDITI ON OF ADDITIONAL 3% (AMOUNT ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 16 OF LOAN EXCEEDING RS. 50 CRORE) ON ACCOUNT OF CREDI T RATING AND RISK OF BORROWER AE WOULD BE ADDED TO THE BASE RATE OF INTEREST CHARGED ON LOANS. THE JURISDICTIONAL TRIBUNAL HAS HELD THAT INSTEAD OF THE BASE RATE OF 8% (WHICH IS BASED ON LENDING RATES OF BANKS WITHIN INDIA FOR CO MMERCIAL BORROWING), IT WOULD BE APPROPRIATE TO APPLY LIBOR RATE (I.E. NOT THE DO MESTIC LENDING RATE). REGARDING CREDIT SPREAD, THE TRIBUNAL HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI TRIBUNAL IN THE MATTER OF KOHINOOR FOODS LTD VS. ACIT REPORTED IN (2014) 52 TAXMANN.COM 454 (DELHI - TRIB.). THE HONBLE DELHI TRIBUNAL IN THE AFORESAID CASE HAS HELD THAT THERE ARE WELL SETTLED MODALITIES FOR ADVANCING OF LOAN BY FINANCIAL INSTITUTIONS WHOSE PRIMARY PURPOSE IS TO ADVANCE FU NDS WITH COMMERCIAL CONSIDERATION TO EARN INTEREST OUT OF THE TRANSACTI ONS. SUCH TRANSACTIONS ARE GOVERNED BY DIFFERENT CONSIDERATIONS LIKE EARNINGS, GUARANTEE OF LOAN, MARKET CONDITIONS, POLITICAL AND LEGAL SITUATION OF VARIOU S COUNTRIES ETC. THE ADVANCING OF LOAN BETWEEN TWO ASSOCIATED ENTERPRISES CANNOT BE A KIN TO FINANCIAL INSTITUTIONS. HENCE, THE HONBLE TRIBUNAL IS OF THE VIEW THAT THE CORRECT COMPARABLE WHICH CAN BE APPLIED IN THESE FACTS AND CIRCUMSTANCES IS THE LIBRO RATE WHICH IS INTERNATIONALLY RECOGNIZED. WE NOTE THAT TPO, AFTER VERIFYING THE DETAILS SUBMI TTED BY AT&S INDIA, DID NOT DIRECT ANY ALP ADJUSTMENT IN THE HANDS OF AT&S INDI A FOR THE ASSESSMENT YEAR 2013-14 IN RESPECT OF PAYMENT OF INTEREST ON LOAN A ND ADVANCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, THE TPO DIRECTED ALP ADJUSTMENT IN THE HANDS OF THE ASSESSEE ( AT &S AUSTRIA) IN RESPECT O F THE SAME INTERNATIONAL TRANSACTIONS FOR THE SAME ASSESSMENT YEAR AS REFERR ED TO HEREINABOVE. THOUGH THE DRP DIRECTED THE AO/TPO TO REDUCE THE ALP ADJUSTMEN T PROPOSED IN THE DRAFT ASSESSMENT ORDER, THE DRP COULD NOT APPRECIATE THAT THE STAND TAKEN BY THE TPO IN THE CASE OF AT&S INDIA FOR THE ASSESSMENT YEAR 2 013-14 WAS INCONSISTENT WITH THE STAND TAKEN BY THE TPO IN THE CASE OF ASSESSEE ( AT &S AUSTRIA) FOR THE ASSESSMENT YEAR 2013-14 IN RESPECT OF THE SAME INTE RNATIONAL TRANSACTION AND HAVING SAME LOAN AGREEMENT. WE NOTE THAT AO/DRP ERRED MAKING AN ALP ADJUSTMENT OF INR 3,13,68,273/- WITHOUT APPRECIATING THAT THE TPO CONSIDERED THE SA ID INTERNATIONAL TRANSACTIONS AT ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 17 ARMS LENGTH IN THE HANDS OF AT&S INDIA PVT LTD FOR THE ASSESSMENT YEAR 2013- 14, BUT CONSIDERED THE SAID INTERNATIONAL TRANSACTI ONS AS NOT AT ARMS LENGTH IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2013- 14, THEREBY CONTRADICTING HIS OWN STAND. AS MENTIONED ABOVE, THAT THE PAYMENTS OF INTEREST O N LOAN AND INTEREST ON ADVANCE IN THE HANDS OF AT&S INDIA SATISFIED THE TE ST THAT THE TRANSACTIONS DID NOT RESULT IN HIGHER OUTGOINGS THAN THOSE WHICH WOULD H AVE BEEN MADE BY PERSONS ENTERING INTO SIMILAR TRANSACTIONS WITH UNRELATED P ARTIES IN COMPARABLE CIRCUMSTANCES. IT SIGNIFIED THAT THE AFORESAID TRAN SACTIONS DID NOT CAUSE EROSION OF TAX BASE OF INDIA AND HENCE, WERE AT ARMS LENGTH. THAT IS, ONCE IT WAS ADMITTED BY THE TPO THAT THE PAYMENTS OF INTEREST ON ECB AND AD VANCE WERE AT ARMS LENGTH IN THE HANDS OF AT&S INDIA FOR THE ASSESSMENT YEAR 2013-14 (I.E. THE SAID TRANSACTIONS DID NOT RESULT IN SHIFTING OF PROFIT O UT OF INDIAN TAX JURISDICTION IN THE HANDS OF AT&S INDIA), IT WAS UNSUSTAINABLE FOR THE TPO TO HOLD THAT THE SAME INTERNATIONAL TRANSACTIONS AS AFORESAID RESULTED IN SHIFTING OF PROFIT OUT OF INDIAN TAX JURISDICTION IN THE HANDS OF THE ASSESSEE FOR T HE SAME ASSESSMENT YEAR AS MENTIONED HEREIN ABOVE AND TO MAKE ARMS LENGTH PRI CE ADJUSTMENT IN THE HANDS OF THE ASSESSEE (AT & S AUSTRIA) IN RESPECT OF THE SAID INTERESTS. THE DRP THEREFORE ERRED IN DIRECTING ALP ADJUSTMENT IN RESP ECT OF THE AFORESAID INTEREST ON LOAN AND ADVANCE IN THE HANDS OF THE ASSESSEE. 14. THE INDIAN TRANSFER PRICING LAWS CONTAINED IN C HAPTER X OF THE ACT HAS NOT CONTEMPLATED DETERMINATION OF ARMS LENGTH PRICE OF AN INTERNATIONAL TRANSACTION IN TWO DIFFERENT WAYS IN THE HANDS OF PAYEE (I.E. A SSESSEE IN THE INSTANT CASE- AT & S AUSTRIA) AND THE PAYER (I.E. AT&S INDIA IN THE INSTANT CASE). IN THE EVENT IT IS DONE, THE SAME WOULD PRODUCE ANOMALOUS RESULT WHICH IS NEVER INTENDED BY THE LEGISLATURE. THUS, THE APPROACH ADOPTED BY THE TPO TO BENCHMARK THE SAME INTERNATIONAL TRANSACTION IN TWO DIFFERENT WAYS IN THE HANDS OF TWO DIFFERENT ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 18 TAXPAYERS FOR THE SAME ASSESSMENT YEAR SIGNIFIES AR BITRARINESS IN THE ACTION OF THE TPO. IN THE INSTANT CASE, THE PAYMENT OF INTEREST MADE B Y AT&S INDIA TO AT&S AUSTRIA ON THE ONE HAND AND THE RECEIPT OF INTEREST BY AT&S AUSTRIA FROM AT&S INDIA ON THE OTHER HAND HAVE TAKEN PLACE UNDER THE SAME AGREEMENT I.E. LOAN AGREEMENT AND DISTRIBUTION AGREEMENT. IN THIS SCENA RIO, IF THE ARMS LENGTH INTEREST RATE IS DETERMINED BY THE DRP AT LIBOR PLU S 450 BASIS POINTS IN THE HANDS OF AT&S AUSTRIA, THEN THE INTERNATIONAL TRANS ACTIONS UNDER CONSIDERATION WOULD NEVER BE AT ARMS LENGTH IN THE HANDS OF AT&S INDIA. SIMILARLY, IF THE INTERNATIONAL TRANSACTIONS UNDER CONSIDERATION ARE ACCEPTED BY THE TPO TO BE AT ARMS LENGTH IN THE HANDS OF AT&S INDIA, THE SAME W OULD NEVER BE AT ARMS LENGTH IN THE HANDS OF AT&S AUSTRIA. THUS, THE INTE RNATIONAL TRANSACTIONS UNDER CONSIDERATION WOULD NEVER BE AT ARMS LENGTH BOTH I N THE HANDS OF AT&S AUSTRIA AND AT&S INDIA SIMULTANEOUSLY. THE LEGISLATURE HAS NEVER SHOWN AN INTENTION TO TREAT THE SAME INTERNATIONAL TRANSACTION IN TWO DIF FERENT WAYS IN THE HANDS OF TWO ASSOCIATED ENTERPRISES SUCH THAT THERE WOULD BE ARM S LENGTH PRICE ADJUSTMENT AT LEAST IN THE HANDS OF ONE OF THE ASSOCIATED ENTERPR ISES. HENCE, THE APPROACH ADOPTED BY THE DRP/TPO IS NOT ACCEPTABLE. WE NOTE THAT THE ASSESSEE GRANTED LOAN AND ADVANCE TO AT&S INDIA IN FOREIGN CURRENCY (EURO) AND AT&S INDIA REPAID PRINCIPAL / P AID INTEREST ON LOAN AND ADVANCE IN FOREIGN CURRENCY (EURO). HENCE, IN THE I NSTANT CASE, EURO-LIBOR WOULD BE THE APPROPRIATE BENCHMARK THAT CONFORMS TO THE ARMS LENGTH STANDARD UNDER THE CUP METHOD. THE ASSESSEE APPLIED THE EURO -LIBOR RATES PREVAILING DURING THE RELEVANT PERIOD FOR COMPUTATION OF INTER EST PAYABLE BY AT&S INDIA TO THE ASSESSEE AND FURTHER ADDED CREDIT SPREAD OF 350 BASIS POINTS (NET OF TAX) FOR LOAN AND 100 BASIS POINTS FOR ADVANCE. HENCE, THE I NTEREST RECEIVED BY THE ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 19 ASSESSEE FROM AT&S INDIA IS AT ARMS LENGTH UNDER T HE CUP METHOD. IN THE ASSESSEE`S CASE, THE DRP DID NOT MENTION IN HIS ORD ER THE COMPARABILITY ANALYSIS PRESCRIBED UNDER CLAUSE (A) OF SUB-RULE (1) OF RULE 10B OF THE INCOME-TAX RULES, 1962. THE DRP DID NOT BRING ON RECORD ANY COMPARABL E UNCONTROLLED TRANSACTION UNDER THE CUP METHOD FOR SUBSTANTIATING THAT THE IN TEREST RATE OF LIBOR PLUS 450 BASIS POINTS CONFORMED TO THE ARMS LENGTH STANDARD UNDER THE CUP METHOD. THEREFORE, TAKING INTO ACCOUNT THESE FACTS AND CIRC UMSTANCES AS NARRATED ABOVE WE DELETE THE UPWARD ADJUSTMENT OF INR 3,13,68,273/- T O THE INCOME OF THE ASSESSEE. 15. GROUND NO. 4 TO 9 ARE DIRECTED AGAINST THE ARM S LENGTH PRICE ADJUSTMENT OF INR 9,48,760/- MADE BY THE AO IN RESPECT OF RECOVER Y OF INFORMATION TECHNOLOGY (IT) SERVICE COST FROM AT&S INDIA. 16. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHO RTLY ARE AS FOLLOWS. THE ASSESSEE ENTERED INTO THE IT COST POOLING AGREEMEN T WITH ITS GROUP COMPANIES INCLUDING AT&S INDIA UNDER WHICH ALL THE PARTIES TO THE AFORESAID AGREEMENT COMBINED TOGETHER FOR FINANCING THE OBJECT OF ARRAN GING IT PRODUCTS AND RELATED SERVICES PRIMARILY FROM UNRELATED IT COMPANIES. IT IS PERTINENT TO NOTE THAT THE ASSESSEE, IN ORDER TO ARRANGE IT PRODUCTS AND RELAT ED SERVICES FOR THE BENEFIT OF GROUP COMPANIES, ENTERED INTO SEVERAL AGREEMENTS WI TH UNRELATED IT COMPANIES SUCH AS IBM, MICROSOFT, SIEMENS, T-SYSTEMS AND SO F ORTH.THE COST INCURRED BY THE ASSESSEE FOR ARRANGING IT PRODUCTS AND RELATED SERVICES WAS ALLOCATED ON ACTUAL BASIS TO ALL THE PARTIES TO THE AGREEMENT US ING APPROPRIATE ALLOCATION KEYS AS MENTIONED IN THE AFORESAID AGREEMENT. NO PROFIT ELE MENT WAS ADDED TO THE ACTUAL COST FOR THE PURPOSE OF ALLOCATION OF THE SAME TO T HE PARTIES TO THE AFORESAID AGREEMENT. AT&S AUSTRIA ACTED AS ADMINISTRATOR TO T HE PERIODICAL COST POOLING PROCESS AND COLLECTED THE TOTAL COSTS FROM THE PART IES TO THE AGREEMENT. THE COST ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 20 ALLOCATION WAS DULY VERIFIED AND CERTIFIED BY THE I NDEPENDENT AUDITOR OF AT&S AUSTRIA, NAMELY, PWC WIRTSCHAFTSPRFUNG GMBH, VIDE LETTER DATED 3 RD MAY 2013. THE TPO COULD NOT APPRECIATE THE AFORESAID ARRANGEM ENT MADE WITHIN THE GROUP FOR SECURING IT PRODUCTS AND RELATED SERVICES FROM UNRELATED IT COMPANIES. THE TPO HELD IN HIS ORDER THAT THE ASSESSEE PROVIDED TH E REQUISITE SERVICES ON COST TO COST BASIS. HOWEVER, IN THE COMMERCIAL WORLD, ANY T HIRD PARTY WOULD HAVE PROVIDED SERVICES ALONG WITH AN ELEMENT OF PROFIT M ARK-UP. THE TPO HAD JUST MENTIONED NAMES OF FIVE INDEPENDENT COMPANIES AND T HEIR OP/TC RATIO IN HIS ORDER. HE COMPUTED THE ARITHMETIC MEAN OF THE OP/TC OF THE FIVE COMPANIES AT 2.65% AND ACCORDINGLY, MADE AN UPWARD ADJUSTMENT OF INR 948,760/- TO THE INCOME OF THE ASSESSEE (I.E. 2.65% OF INR 3,58,02,2 69/-). THE TPO DID NOT MENTION THE METHOD APPLIED BY HIM F OR BENCHMARKING THE SAID TRANSACTION. HE DID NOT DOCUMENT ANY COMPARABILITY ANALYSIS IN HIS ORDER WITH REFERENCE TO THE FUNCTION-ASSET-RISK PROFILE (FAR ) OF THE SAID COMPANIES. IN THE DRAFT ASSESSMENT ORDER, THE AO HELD THAT THE SERVIC ES RENDERED BY THE ASSESSEE FELL WITHIN THE DEFINITION OF ROYALTY AS WELL AS FEES FO R TECHNICAL SERVICES AS PER ARTICLE 12 OF THE DOUBLE TAX AVOIDANCE AGREEMENT (DTAA) E NTERED INTO BETWEEN INDIA AND AUSTRIA. THE DRP CONFIRMED THE ADDITION M ADE BY THE AO/TPO TO THE TUNE OF RS. 9,48,760/- AND DISMISSED THE OBJECTIONS OF THE ASSESSEE. 17. AGGRIEVED BY THE ORDER OF THE DRP/TPO, THE ASSE SSEE IS IN APPEAL BEFORE US. 18. RITUPARNA SINHA, LD COUNSEL FOR THE ASSESSEE SU BMITTED BEFORE THE BENCH THAT THE TPO MENTIONED IN HIS ORDER FOR THE ASSESSMENT Y EAR 2013-14 THAT THE ASSESSEE PROVIDED REQUISITE SERVICES ON COST TO COST BASIS. THE LD COUNSEL RELIED ON THE DECISION OF THE HONBLE KOLKATA TRIBUNAL IN AT&S IN DIA VIS--VIS AT&S ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 21 AUSTRIAS OWN CASE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. THE LD COUNSEL POINTED OUT THAT THE AO, ON THE SAME FACTS AND CIRCUMSTANCES OF THE CASE AS STATED HEREIN ABOVE FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION, ALLEGED THAT THE SERVICES PROVIDED WERE IN THE NATURE OF FEES FO R TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE ACT. THE AO REJECTED THE A SSESSEES CONTENTION THAT THE PAYMENT CONSTITUTED REIMBURSEMENT OF EXPENDITURE TO AT&S AUSTRIA. SINCE THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE, THE AO DISAL LOWED THE ENTIRE PAYMENT UNDER SECTION 40(A)(I) OF THE ACT. ON APPEAL, THE CIT(A) SUSTAINED THE ORDER OF THE AO. ON FURTHER APPEAL BY ASSESSEE THE TRIBUNAL NOTED T HAT AT&S AUSTRIA ENTERED INTO AGREEMENTS WITH SEVERAL COMPANIES (IBM, MICROSOFT, SAP) FOR UTILIZING THEIR PRODUCTS. IN TURN, IT PERMITTED THE GROUP COMPANIES TO UTILIZE THOSE PRODUCTS AND THE TOTAL PAYMENTS MADE TO THE SERVICE PROVIDERS WE RE ALLOCATED TO THE GROUP COMPANIES WHICH ACTUALLY UTILISED THE SERVICES. PLA CING RELIANCE INTER ALIA ON THE DECISION OF THE HONBLE HIGH COURT OF CALCUTTA IN T HE CASE OF CIT V DUNLOP RUBBER CO. LTD. REPORTED IN 142 ITR 493, TRIBUNAL HELD THAT THE TRANSACTION UNDER CONSIDERATION WAS REIMBURSEMENT OF EXPENDITUR E AND NO INCOME COULD BE SAID TO HAVE GENERATED REQUIRING DEDUCTION OF TAX. SINCE THERE WAS NO LIABILITY OF DEDUCTION OF TAX AT SOURCE, SECTION 40(A)(I) OF THE ACT COULD NOT BE INVOKED. IT IS TO BE NOTED THAT FOR THE SUCCEEDING ASSESSMEN T YEARS (AY 2004-05, AY 2005- 06, AY 2006-07 AND AY 2008-09), THE HONBLE TRIBUNA L FOLLOWED THEIR OWN DECISION AS STATED HEREINABOVE ON THE SAME FACTS AN D CIRCUMSTANCES OF THE CASE AND GRANTED RELIEF TO AT&S INDIA. IN VIEW OF THE AB OVE, LD COUNSEL PRAYED THE BENCH THAT THE SHARED IT COST RECOVERED BY THE ASSE SSEE FROM AT&S INDIA IN THE INSTANT TO NEITHER FEES FOR TECHNICAL SERVICES NOR ROYALTY IN THE HANDS OF THE ASSESSEE IN INDIA, THEREFORE ARMS LENGTH PRICE ADJU STMENT OF RS. 9,48,760/- SHOULD BE DELETED. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 22 19. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE H AS PRIMARILY REITERATED THE STAND TAKEN BY THE DRP/TPO, WHICH WE HAVE ALREADY N OTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 20. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. WE NO TE THAT THERE IS MERIT IN THE SUBMISSIONS OF THE LD COUNSEL, AS THE ISSUE INVOLVE D IN THESE GROUNDS ARE COVERED BY THE JUDGMENTS OF THE COORDINATE BENCH IN THE CAS E OF AT&S INDIA VIS--VIS AT&S AUSTRIAS, OWN CASE, FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. IT SHOULD BE NOTED THAT THE IT PRODUCTS AND RELATED SE RVICES ARRANGED BY THE ASSESSEE FROM INDEPENDENT IT COMPANIES FOR THE USE OF AT&S I NDIA WERE INTEGRAL PART OF THE BUSINESS OF AT&S INDIA. THE AFORESAID PRODUCTS AND SERVICES CONNECTED TO AT&S INDIA WITH ALL THE GROUP COMPANIES, GLOBAL SUP PLIERS, GLOBAL CUSTOMERS AND OTHER PARTIES FOR THE PURPOSE OF BUSINESS, ENABLED AT&S INDIA TO RECORD AND STORE SUBSTANTIAL AMOUNT OF BUSINESS DATA AND TO SHARE TH E SAME WITH THE GROUP COMPANIES AND FURTHER ENABLED AT&S INDIA TO CONDUCT ITS BUSINESS EFFECTIVELY AND EFFICIENTLY IN THE MODERN COMPUTERIZED BUSINESS ENVIRONMENT THROUGHOUT THE WORLD. IN RETURN, AT&S INDIA PAID ITS DUE SHARE OF COST TO THE ASSESSEE WHICH DID NOT INCLUDE ANY PROFIT ELEMENT. THE PAYMENT MADE BY AT&S INDIA TO THE ASSESSEE IS I N THE NATURE OF REIMBURSEMENT OF COST WHEREBY AT&S INDIA PAID ITS D UE SHARE OF THE EXPENSES INCURRED BY THE ASSESSEE ON THE IT SYSTEM MAINTAINE D UNDER THE IT COST POOLING AGREEMENT. HENCE, THE RECOVERY OF COST IN THE HANDS OF THE ASSESSEE COULD NOT BE INCOME CHARGEABLE TO TAX IN INDIA. ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 23 21. WE NOTE THAT ASSESSEE ENTERED INTO IT COST POO LING AGREEMENT WITH ITS GROUP COMPANIES INCLUDING AT&S INDIA UNDER WHICH AL L THE PARTIES TO THE AFORESAID AGREEMENT COMBINED TOGETHER FOR FINANCING THE OBJECT OF ARRANGING IT PRODUCTS AND RELATED SERVICES PRIMARILY FROM UNRELA TED IT COMPANIES (IBM, MICROSOFT, SAP ETC.).THE COST INCURRED BY THE ASSES SEE FOR ARRANGING IT PRODUCTS AND RELATED SERVICES WAS ALLOCATED ON ACTUAL BASIS TO ALL THE PARTIES TO THE AGREEMENT USING APPROPRIATE ALLOCATION KEYS AS MENT IONED IN THE AFORESAID AGREEMENT. NO PROFIT ELEMENT WAS ADDED TO THE ACTUA L COST FOR THE PURPOSE OF ALLOCATION OF THE SAME TO THE PARTIES TO THE AFORES AID AGREEMENT. NO THIRD PARTY WAS GIVEN ACCESS TO THE IT PRODUCTS AND RELATED SER VICES ARRANGED BY THE ASSESSEE UNDER THE IT COST POOLING AGREEMENT. AT THIS JUNC TURE IT IS APPROPRIATE TO QUOTE THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. BANKIPUR CLUB LTD REPORTED IN [1997] 92 TAXMANN 278 (SC), WHEREIN THE HONBLE APEX COURT, BY TAKING A CUE FROM HALSBURY LAWS OF ENGLAND, HAS ENUNCIATED THE FOLLOWING PRINCIPLE: WHERE A NUMBER OF PERSONS COMBINE TOGETHER AND CON TRIBUTE TO A COMMON FUND FOR THE FINANCING OF SOME VENTURE OR OBJECT AN D WILL IN THIS RESPECT HAVE NO DEALINGS OR RELATIONS WITH ANY OUTSIDE BODY, THE N ANY SURPLUS RETURNED TO THOSE PERSONS CANNOT BE REGARDED IN ANY SENSE AS PR OFIT. THERE MUST BE COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND THE PARTICIPATORS. IF THESE REQUIREMENTS ARE FULFILLED, IT IS IMMATERIAL WHAT P ARTICULAR FORM THE ASSOCIATION TAKES. TRADING BETWEEN PERSONS ASSOCIAT ING TOGETHER IN THIS WAY DOES NOT GIVE RISE TO PROFITS WHICH ARE CHARGEABLE TO TAX. WE NOTE THAT THE ASSESSEE ENTERED INTO IT COST POO LING AGREEMENT WITH ITS GROUP COMPANIES INCLUDING AT&S INDIA UNDER WHICH AL L THE PARTIES TO THE AFORESAID AGREEMENT COMBINED TOGETHER FOR FINANCING THE OBJECT OF ARRANGING IT PRODUCTS AND RELATED SERVICES FOR ALL THE PARTIES T O THE AFORESAID AGREEMENT. NO ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 24 THIRD PARTY (I.E. THIRD PARTY MEANS ENTITY NOT BEIN G PARTY TO THE IT COST POOLING AGREEMENT) WAS GIVEN ACCESS TO THE IT PRODUCTS AND RELATED SERVICES ARRANGED BY THE ASSESSEE UNDER THE IT COST POOLING AGREEMENT. THE COSTS INCURRED BY THE ASSESSEE FOR ARRANGING IT PRODUCTS AND RELATED SERV ICES WERE ALLOCATED TO THE PARTIES TO THE AFORESAID AGREEMENT ON ACTUAL BASIS (I.E. WITHOUT ADDING ANY PROFIT ELEMENT TO THE COST) USING APPROPRIATE ALLOCATION K EYS MENTIONED IN THE AFORESAID AGREEMENT. THUS, THERE WAS COMPLETE IDENTITY BETWEE N THE CONTRIBUTORS TO THE IT COST POOL AND PARTICIPATORS IN THE BENEFIT UNDER TH E AFORESAID AGREEMENT I.E. BOTH PARTIES HAVING BEEN AT&S GROUP COMPANIES. THE FUND CONTRIBUTED BY THE GROUP COMPANIES WAS NOT SPENT FOR ANY PURPOSE WHICH WAS N OT WITHIN THE SCOPE OF THE AFORESAID AGREEMENT. THE PAYMENT MADE BY AT&S INDIA TO THE ASSESSEE IS I N THE NATURE OF REIMBURSEMENT OF COST, THEREFORE WE DELET E THE ADDITION OF RS.9,48,760/-. 22. DURING THE COURSE OF HEARING THE LD COUNSEL INF ORMS THE BENCH THAT ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 10 AND 11, THEREF ORE, WE DISMISS THEM AS NOT PRESSED. 23.GROUND NO. 12 TO 15 ARE DIRECTED AGAINST THE ARM S LENGTH PRICE ADJUSTMENT OF INR 9,72,959/- MADE BY THE TPO/DRP IN RESPECT OF RE CEIPT OF CORPORATE GUARANTEE FEE FROM AT&S INDIA. 24. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LE ARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER PASSED BY THE DI VISION BENCH OF THIS TRIBUNAL IN THE CASE OF M/S EMAMI LIMITED, IN ITA NO.1958/KOL/ 2017, ASSESSMENT YEAR: 2013-14 WHEREBY THE ISSUE CORPORATE GUARANTEE HAS BEEN DISCUSSED AND ADJUDICATED IN FAVOUR OF ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 25 THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE A FORESAID ORDER OF THE TRIBUNAL, A COPY OF WHICH WAS ALSO PLACED BEFORE THE BENCH. 25. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE TPO/AO. 26. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF M/S EMAMI LIMITED, IN ITA NO.1958/KOL/2017, ASSESSMENT YEAR: 2013-14. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 9. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO TH E SUBMISSION OF THE PARTIES AND PERUSING THE JUDICIAL DECISIONS RELIED UPON BY THE LD. AR, WE FIND THAT THE ISSUE INVOLVED, IN RESPECT TO CORPORATE GUARANTEE, IN THE PRESENT APPEAL IS NO LONGER RES INTEGRA. WE NOTE THAT FINANCIAL GUARANTEE IS A PROM ISE MADE BY A PERSON (THE GUARANTOR) TO A LENDER (GUARANTEED PARTY) PROMISING TO PAY THE LENDER THE MONEY OWED TO IT BY THE BORROWER (OBLIGOR) ON WHOSE BEHAL F THE GUARANTEE IS GIVEN, IF THE BORROWER FAILS TO PAY BACK THE DEBT DUE TO THE LENDER. A GUARANTEE TO A LENDER THAT A LOAN WILL BE REPAID, GUARANTEED BY A COMPANY OTHER THAN THE ONE WHO TOOK THE LOAN, IS CALLED A CORPORATE GUARANTEE. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT EXTENDING CORPORATE GUARANTEE FOR BORROWINGS BY SUBSIDIARIES WAS A SHAR EHOLDER ACTIVITY, THAT IT WAS NOT AN INTERNATIONAL TRANSACTION, THAT NO FEE WAS W ARRANTED SINCE NO COST WAS INCURRED, AND THAT BANK GUARANTEES WERE NOT COMPARA BLE TO CORPORATE GUARANTEES SINCE THE BUSINESS OF THE BANK WAS DIFFERENT FROM T HAT OF A CORPORATE. BEFORE US, LD DR FOR THE REVENUE SUBMITTED THAT THE RE ARE PLETHORA OF JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN HELD THAT THE CO RPORATE GUARANTEE IS IN THE NATURE OF SERVICE PROVIDED BY THE TAXPAYER TO ITS A SSOCIATE ENTERPRISES (AES) AND HENCE SHOULD BEAR A CHARGE. THE JUDGMENTS HAVE EXPL ICITLY HELD THAT AFTER THE INCOME TAX ACT,1961 WAS AMENDED BY THE FINANCE ACT, 2012 TO INCLUDE 'GUARANTEE' WITHIN THE DEFINITION OF 'INTERNATIONAL TRANSACTION' WITH RETROSPECTIVE EFFECT FROM 01.04.2002, THE CORPORATE GUARANTEE SHO ULD BE BENCHMARKED FROM ARMS LENGTH PERSPECTIVE. 10. HOWEVER, AFTER HEARING BOTH THE PARTIES, WE NOT E THAT THERE ARE PLETHORA OF JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN HELD TH AT CORPORATE GUARANTEE DOES NOT CONSTITUTE AN INTERNATIONAL TRANSACTION AND ACC ORDINGLY THERE SHOULD NOT BE A CHARGE. WE NOTE THAT IN ASSESSEES CASE UNDER CONSI DERATION, THE ASSESSEE, IN ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 26 ORDER TO AVOID PROTRACTED LITIGATION MADE AN ESTIMA TED ADJUSTMENT OF RS.51,50,327/- @ 1% OF THE CORPORATE GUARANTEE AMOU NT AS FEES FOR CORPORATE GUARANTEE, FOR INCOME TAX PURPOSES. HOWEVER, THE TP O REJECTED THE METHOD ADOPTED BY THE ASSESSEE AND RECOMPUTED THE ARMS L ENGTH PRICE BY MAKING UPWARD ADJUSTMENT. WE NOTE THAT THE ASSESSEE HAS EXTENDED THIS CORPORA TE GUARANTEE AS A SHAREHOLDER ACTIVITY HENCE THE ADJUSTMENT SHOULD NOT BE MADE. T HE PRIMARY OBJECT OF THE ASSESSEE IS TO HELP THE SUBSIDIARY COMPANY AND PROT ECT ITS INTEREST AND THERE IS NO OBJECT OF THE ASSESSEE COMPANY TO EARN THE INTEREST INCOME BY FURNISHING THE CORPORATE GUARANTEE TO THE ASSOCIATED ENTERPRISES. WE NOTE THAT IN THE JUDGMENT OF THE CO-ORDINATE BENCH OF ITAT AHMADABAD, IN THE CASE OF MICRO LINK LIMITED VS. ACIT [TS-568-ITAT-2015] (AHD) WHEREIN THE CO-OR DINATE BENCH HAS HELD THAT CORPORATE GUARANTEE DOES NOT CONSTITUTE INTERN ATIONAL TRANSACTION AS PER SECTION 92B OF THE ACT AS AMENDED BY THE FINANCE AC T, 2012. THE RELEVANT EXTRACTS OF THE JUDGMENT IS REPRODUCED AS UNDER: ON A CONCEPTUAL NOTE, THUS, THERE IS A VALID SCHO OL OF THOUGHT THAT THE CORPORATE GUARANTEES CAN INDEED BE A MODE OF OWNERS HIP CONTRIBUTION, PARTICULARLY WHEN AS IS OFTEN THE CASE, WHERE SUCH A GUARANTEE IS GIVEN, IT COMPENSATES FOR THE INADEQUACY IN THE FINANCIAL POS ITION OF THE BORROWER; SPECIFICALLY THE FACT THAT THE SUBSIDIARY DOES NOT HAVE ENOUGH SHAREHOLDERS FUNDS. THERE CAN BE NUMBER OF REASONS, INCLUDING REGULATOR Y ISSUES AND MARKET CONDITIONS IN THE RELATED JURISDICTIONS, IN WHICH S UCH A CONTRIBUTION, BY WAY OF A GUARANTEE, WOULD JUSTIFY TO BE A MORE APPROPRIATE A ND PREFERRED MODE OF CONTRIBUTION VIS-A-VIS EQUITY CONTRIBUTION ... ' ' ... IN OTHER WORDS, THESE GUARANTEES WERE SPECIFI CALLY STATED TO BE IN THE NATURE OF SHAREHOLDER ACTIVITIES. THE ASSESSEE'S CLAIM OF THE GUARANTEES BEING IN THE NATURE OF QUASI CAPITAL, AND THUS BEING IN THE NATU RE OF A SHAREHOLDER'S ACTIVITY, IS NOT REJECTED EITHER. THE CONCEPT OF ISSUANCE OF CORPORATE GUARANTEES AS A SHAREHOLDER ACTIVITY IS NOT ALIEN TO THE TRANSFER P RICING LITERATURE IN GENERAL .. '.... WE HAVE NOTICED THAT THE 'OECD TRANSFER PRIC ING GUIDELINES FOR MULTINATIONAL ENTERPRISES AND TAX ADMINISTRATIONS S PECIFICALLY RECOGNIZES THAT AN ACTIVITY IN THE NATURE OF SHAREHOLDER ACTIVITY, WHICH IS SOLELY BECAUSE OF OWNERSHIP INTEREST IN ONE OR MORE OF THE GROUP MEMB ERS, I.E. IN THE CAPACITY AS SHAREHOLDER 'WOULD NOT JUSTIFY A CHARGE TO THE RECI PIENT COMPANIES'. IT IS THUS CLEAR THAT A SHAREHOLDER ACTIVITY, IN ISSUANCE OF C ORPORATE GUARANTEES, IS TAKEN OUT OF AMBIT OF THE GROUP SERVICES. CLEARLY, THEREF ORE, AS LONG AS A GUARANTEE IS ON ACCOUNT OF, WHAT CAN BE TERMED AS 'SHAREHOLDER'S ACTIVITIES', EVEN ON THE FIRST PRINCIPLES, IT IS OUTSIDE THE AMBIT OF TRANSFER PRI CING ADJUSTMENT IN RESPECT OF ARM'S LENGTH PRICE. ' ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 27 ' .... WE ARE IN AGREEMENT WITH THESE VIEWS. THERE CAN THUS BE ACTIVITIES WHICH BENEFIT THE GROUP ENTITIES BUT THESE ACTIVITIES NEE D NOT NECESSARILY BE 'PROVISION FOR SERVICES'. THE FACT THAT THE OECD CONSIDERS SUC H ACTIVITIES IN THE SERVICES SEGMENT DOES NOT ALTER THE CHARACTER OF THE ACTIVIT IES. WHILE THE GROUP ENTITY IS THUS INDEED BENEFITED BY THE SHAREHOLDER ACTIVITIES , THESE ACTIVITIES DO NOT NECESSARILY CONSTITUTE SERVICES ... ' ' .... THE ISSUANCE OF FINANCIAL GUARANTEE IN FAVOU R OF AN ENTITY, WHICH DOES NOT HAVE ADEQUATE STRENGTH OF ITS OWN TO MEET SUCH OBLI GATIONS, WILL RARELY BE DONE. THE VERY COMPARISON, BETWEEN THE CONSIDERATION FOR WHICH BANKS ISSUE FINANCIAL GUARANTEES ON BEHALF OF ITS CLIENTS WITH THE CONSID ERATION FOR WHICH THE CORPORATE ISSUE GUARANTEES FOR THEIR SUBSIDIARIES, IS ILL CON CEIVED. ... THESE GUARANTEES DO NOT HAVE ANY IMPACT ON IN COME, PROFITS, LOSSES OR ASSETS OF THE ASSESSEE. THERE CAN BE A HYPOTHETICAL SITUAT ION IN WHICH A GUARANTEE DEFAULT TAKES PLACE AND, THEREFORE, THE ENTERPRISE MAY HAVE TO PAY THE GUARANTEE AMOUNTS BUT SUCH A SITUATION, EVEN IF THAT BE SO, I S ONLY A HYPOTHETICAL SITUATION, WHICH ARE, AS DISCUSSED ABOVE, EXCLUDED. WHEN AN AS SESSEE EXTENDS AN ASSISTANCE TO THE ASSOCIATED ENTERPRISE, WHICH DOES NOT COST ANYTHING TO THE ASSESSEE AND PARTICULARLY FOR WHICH THE ASSESSEE CO ULD NOT HAVE REALIZED MONEY BY GIVING IT TO SOMEONE ELSE DURING THE COURSE OF I TS NORMAL BUSINESS, SUCH AN ASSISTANCE OR ACCOMMODATION DOES NOT HAVE ANY BEARI NG ON ITS PROFITS, INCOME, LOSSES OR ASSETS, AND, THEREFORE, IT IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION UNDER SECTION 92B (1) OF THE ACT .... ' 11. WE RELY ON THE JUDGMENT OF THE CO-ORDINATE BENC H OF ITAT, DELHI IN THE CASE OF BHARTI AIRTEL LTD. VS. ACIT IN I.T.A. NO. 5816/K OL/2012, WHEREIN THE DEFINITION OF INTERNATIONAL TRANSACTION IN VIEW OF THE AMENDME NTS, VIDE FINANCE ACT, 2012, HAD BEEN DISCUSSED AND IT WAS HELD THAT THE PROVISI ON OF CORPORATE GUARANTEE IS NOT AN INTERNATIONAL TRANSACTION. THE RELEVANT EXT RACT OF THE JUDGMENT IS REPRODUCED AS UNDER: PARA 23 .... THE ISSUE WHETHER GIVING A CORPORATE GUARANTEE AMOUNTS TO AN INTERNATIONAL TRANSACTION' HAS NOT BEEN RAISED OR DISCUSSED IN THE CASES WHERE ALP ADJUSTMENTS HAVE BEEN UPHELD AND THEREFORE THOS E DECISIONS CANNOT BE PUT AGAINST THE TAXPAYER ..... ' 'PARA 27.... THE EXPLANATION INSERTED VIDE FINANCE ACT 2012 IS TO BE READ IN CONJUNCTION WITH THE MAIN PROVISION AND IN HARMONY WITH THE SCHEME OF PROVISION UNDER SECTION 92B OF THE ACT. IT IS ESSEN TIAL THAT IN ORDER TO BE AN 'INTERNATIONAL TRANSACTION' PROVIDING CORPORATE GUA RANTEE SHOULD HAVE A BEARING ON THE PROFITS, INCOME LOSSES OR ASSETS OF THE ENTE RPRISE ...:' ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 28 'PARA 31. THE CONTENTS OF THE EXPLANATION FORTIFIE S, RATHER THAN MITIGATES, THE SIGNIFICANCE OF EXPRESSION 'HAVING A BEARING ON PRO FITS, INCOME, LOSSES OR ASSETS' APPEARING IN SECTION 92B( 1) OF THE ACT ... ' 'PARA 33 .... THE ONUS IS ON THE TAX AUTHORITIES TO DEMONSTRATE THAT THE TRANSACTION IS OF SUCH NATURE AS TO HAVE 'BEARING O N PROFITS, INCOME, LOSSES OR ASSETS OF THE ENTERPRISE' AND HAS TO BE ON REAL BAS IS EVEN IF IN PRESENT OR IN FUTURE, AND NOT ON CONTINGENT OR HYPOTHETICAL BASIS ....' PARA 32.... THERE CAN BE A SITUATION IN WHICH A GU ARANTEE DEFAULT TAKES PLACE AND THEREFORE, THE ENTERPRISE MAY HAVE TO PAY THE G UARANTEE AMOUNT BUT SUCH A SITUATION EVEN IF THAT BE SO IS ONLY A HYPOTHETICAL SITUATION .....' 'PARA 32 ..... WHEN AN ASSESSEE EXTENDS AN ASSISTAN CE TO THE ASSOCIATED ENTERPRISE WHICH DOES NOT COST ANYTHING TO THE ASSE SSEE AND PARTICULARLY FOR WHICH THE ASSESSEE COULD NOT HAVE REALIZED MONEY BY GIVING IT TO SOMEONE ELSE DURING THE COURSE OF ITS NORMAL BUSINESS, SUCH AN A SSISTANCE OR ACCOMMODATION DOES NOT HAVE ANY BEARING ON ITS PROFITS, INCOME, L OSSES OR ASSETS AND THEREFORE IT IS OUTSIDE THE AMBIT OF INTERNATIONAL TRANSACTION U NDER SECTION 92B(1) OF THE ACT. ...' 'PARA 35 .... IN THE CASE OF GE CAPITAL CANADA -VS- THE QUEEN, THE TAX COURT OF CANADA HAS INDEED DEALT WITH ALP DETERMINATION OF T HE GUARANTEE FEES, BUT THEN IT WAS DONE IN THE LIGHT OF THEIR DOMESTIC LAW PROV ISIONS WHICH ARE QUITE AT VARIANCE WITH THE INDIAN TRANSFER PRICING LEGISLATI ON .....' SIMILAR VIEWS HAVE BEEN HELD BY VARIOUS COORDINATE BENCHES, INCLUDING JURISDICTIONAL AS UNDER: I) TEGA INDUSTRIES LTD. VS. DCIT [I.T.A. NO. 912/2012 DATED. 03.08.2016, [KOL TRIB.] II) MARICO LTD. VS. ACIT [TS-411-ITAT-2016 (MUM)-TP] III) TVS LOGISTICS SERVICES LTD. [TS-324-ITAT-2016 (CHNY )-TP] IV) MANUGRAPH INDIA LTD. [TS 324-ITAT 2016 (MUM)-TP] V) SIRO CLINPHARM PVT. LTD. VS. DCIT [ITS-185- ITAT 20 16 (MUM)-TP] VI) APOLLO HEALTH STREET LTD. VS. DCIT [TS-184- ITAT 20 14 (HYD)-TP] THEREFORE, BASED ON THE ABOVE MENTIONED PRECEDENTS, WE NOTE THAT THE PROVISION OF CORPORATE GUARANTEE IS NOT AN INTERNATIONAL TRAN SACTION. HENCE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE CO-ORDINATE BENCHES C ITED ABOVE, WE CONFIRM THE FINDINGS OF THE LD. CIT(A). 27. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH, IN THE CASE OF M/S EMAMI LIM ITED, IN ITA ITA NO.95/KOL/2018 AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGE SELLSCHAFT 29 NO.1958/KOL/2017, ASSESSMENT YEAR: 2013-14, (SUPRA) AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE T O PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE COORDINAT E BENCH. RESPECTFULLY FOLLOWING THE ABOVE BINDING PRECEDENT, WE DELETE TH E ADDITION OF RS.9,72,959/-. 28. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31/01/20 20. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED:31./01/2020 RS, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- AT & S AUSTRIA TECHNOLOGIE & SYSTEMTECHNIK AKTIONGESELLSCHAFT 2. / THE RESPONDENT.- DCIT, CIRCLE-11(1), KOLKATA 3. '() / THE CIT(A), 4. ' / CIT 5. , , / DR, ITAT, KOLKATA 6. 1 / GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA .