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The Tax PublishersITA No. 1287/Mum/2017 & ITA No. 6083/Mum/2018
2021 TaxPub(DT) 1983 (Mum-Trib)INCOME TAX ACT, 1961
Section 92C
There was no infirmity in adoption of internal CUP, i.e., average guarantee fees that was paid by assessee to, RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank and Yes Bank, for standing guarantee on its behalf of assessee in case of third parties, viz., ONGC, BG Exploration, etc. and substitution of the same on an ad hoc basis by 2% by TPO could not be sustained.
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Transfer pricing - Determination of ALP - Provision of financial guarantee in favour of AE - Assessee benchmarked the transaction by adopting internal CUP-TPO made ad hoc adjustment
Assessee extended financial guarantee to banks in order to facilitate raising of loans by its AEs and benchmarked guarantee fees on the basis of Internal CUP, i.e., as per average of @ 0.43% that was paid by it to certain banks. TPO took ALP of guarantee fees at 2%.Held: There was no infirmity in adoption of internal CUP, i.e., average guarantee fees that was paid by assessee to, RBS (formerly known as ABN Amro Bank); Kotak Mahindra Bank and Yes Bank, for standing guarantee on its behalf of assessee in case of third parties, viz., ONGC, BG Exploration, etc, and substitution of the same on an ad hoc basis by 2% by TPO could not be sustained.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13 & 2014-15
INCOME TAX ACT, 1961
Section 92C
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