M/s. GMR Infrastructure Limited, Bengaluru V. Assistant Commissioner Of Income Tax, Central Circle-2(2), Bengaluru

MA 106/BANG/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8898 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 25-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Appeal No. Appellant Respondent Assessment Year M.P. Nos. 105 to 108/Bang/2022 (in C.O. Nos. 111 to 114/Bang/2017 (in ITA Nos. 1741 to 1744/Bang/2017)) M/s. GMR Infrastructure Ltd., No. 25/1, Skip House, Museum Road, Bangalore – 560 025. PAN: AABCG8889P The Assistant Commissioner of Income Tax, Central Circle – 2(2), Bangalore. 2010-11 to 2013-14 Assessee by : Shri Sunil Jain, CA Revenue by : Shri K.R. Narayana, Addl. CIT DR Date of Hearing : 04-11-2022 Date of Pronouncement : 07-11-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present miscellaneous petitions arises out of consolidated order dated 25/05/2022 passed by this Tribunal. Common issue arises in all the four MPs filed by the assessee. 2. The Ld.AR submitted that while deciding Issue No. 2, this Tribunal in respect of corporate guarantee, relied on decision of Xchanging Solutions Ltd. vs. DCIT reported in [2017] 78 taxmann.com 54 (Bangalore-Trib.) passed by the Coordinate Bench. Page 2 of 4 M.P. Nos. 105 to 108/Bang/2022 3. The Ld.AR submitted that while reproducing the relevant paragraphs from the above decision, inadvertently following para was missed out to be reproduced from the above decision. To the reproduction already made in the impugned order in para 5.17 at page 19 of the impugned order following reproduction may be read in continuation. “16. We further note that the DRP for the Assessment Year 2011-12 vide its direction dt.3011.2015 as well as for the Assessment Year 2010-11 accepted the assessee's argument that an appropriate adjustment that the value of corporate guarantee received from its arm's length be granted. In para 2.9 of the said direction of DRP as under : " 2.9 As far as the argument of corporate guarantee received by the taxpayer is concerned the same carries merit. In the interest of fairness, the TPO is directed to provide adjustment for the value of corporate guarantees received by the taxpayer form its AEs after verification of individual transactions." Accordingly, we set aside this issue to the record of the A.O./TPO to recomputed the ALP by considering the arm's length guarantee fees at 0.5% and further by providing appropriate adjustment for corporate guarantee received by the assessee from its arm's length.” 4. The Ld.AR further submitted that, the observations by this Tribunal in case of Xchanging Solutions Ltd. vs. DCIT (supra), reveal that guarantee fees of 0.5% is to be considered as a rate for computing the ALP of the transaction. It is also submitted that assessee had also provided guarantee on behalf of the AEs for which the same rate has to be applied and appropriate adjustment is to be granted. It is the submission of Ld.AR that no findings in respect of the same has been given in para 5.18 to that effect. 5. We have considered the submissions having regard to the observations of this Tribunal in the impugned order. It is a fact that assessee had obtained guarantee through the AEs and also had provided bank guarantee to the AE in India. The Ld.TPO Page 3 of 4 M.P. Nos. 105 to 108/Bang/2022 had applied the credit rating that went as high as 50% which is not in accordance with the commercial principles. This Tribunal in the decision of Xchanging Solutions Ltd. vs. DCIT (supra) has considered similar situation by granting an appropriate adjustment for the corporate guarantee received by the assessee while computing the arms length margin. We accordingly modify para 5.18 by observing as under: “5.18 In the above decision, this Tribunal has considered the commission on guarantee fee at 0.5%. In view of the above, we direct the Ld.AO/TPO to recompute the rate of commission attributable to the corporate guarantee by providing appropriate adjustment for the corporate guarantee received by the assessee in the present facts of the case in the light of the above decision.” In the result, all the four M.Ps. filed by the assessee stands allowed. Order pronounced in the open court on 07 th November, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 07 th November, 2022. /MS / Page 4 of 4 M.P. Nos. 105 to 108/Bang/2022 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore