INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of arm's length price - Commission chargeable by assessee from its AE on international transaction entered into under section 92B with its AE -

Assessee was engaged in business of manufacturing of conductor, oil and rubber. TPO had proposed adjustment in the ALP of international transaction entered into by assessee with its AE of providing corporate guarantee for availing loans from banks. The said adjustment to ALP by TPO as determined by TPO led to assessment order passed by AO under section 143(3) read with section 144C, wherein AO made addition to income of assessee of the aforestated adjustment to ALP as determined by TPO. Tribunal computed ALP @ 0.5% of corporate guarantee given by the assessee to its AE on loans availed. Held: Tribunal in assessee's own case had computed ALP of its international transaction with its same AE of providing corporate guarantee on loans availed by its AE wherein ALP of commission on said corporate guarantee was determined at 0.5%. No reasons to deviate from aforesaid orders of Tribunal taking a consistent view and following the rules of consistency as laid down by Supreme Court in the case of Radhasoami Satsang v. CIT [1992 TaxPub(DT) 0858 (SC)], AO was directed to determine ALP of corporate guarantee commission @0.5% on international transaction of providing corporate guarantee by the assessee to its AE for availing loans.

Followed:Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 0858 (SC)Relied:CIT v. M/s. Everest Kento Cylinders Ltd. (2015) 58 Taxmann.com 254 (Bom) : 2015 TaxPub(DT) 2547 (Bom-HC) Everest Kanto Cylinder Ltd. v. Dy. CIT (2013) 34 Taxmann.com 19 (Mum-Trib)

REFERRED :

FAVOUR : Partly in assessee's favour

A.Y. :

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