TAKE SOLUTIONS LTD.,CHENNAI vs. ITO, CORPORATE WARD-6(1), CHENNAI

Ground No. 1 is general in nature and requires no adjudication.

Ground No. 2 [2.1 to 2.9] raised by the assessee in challenging the action of the Assessing Officer and DRP in enhancing the rate for computing

The assessee provided corporate guarantee to its wholly owned subsidiary Take Solutions Global Holdings Pte. Ltd. (Singapore). The guarantee to the extent of ₹.227.06 Crores was outstanding during the year. In pursuance to the order passed by the TPO giving effect to the directions of the DRP-2, Bengaluru determining the corporate guarantee commission at 2.55%, the Assessing Officer made TP adjustment by making addition of ₹.5,79,00,300/- and added to the income of the assessee.

The ld. AR Shri K. Parsanna, Advocate submits that the Assessing Officer and the DRP failed to apply the Arm’s Length Price (ALP) of guarantee charges as 1% by relying upon the decision of the Tribunal in assessee’s own case for the assessment year 2018-19. We have perused the order of the Tribunal in assessee’s own case for the assessment year 2018-19 in IT(TP)A No. 43/Chny/2022 dated 06.06.2023, wherein, the Tribunal sustained the TP adjustment computed at 1% by the TPO by relying upon Tribunal’s order for the AY 2012-13, which was confirmed by the DRP. Under the above facts and circumstances, we direct the Assessing Officer to apply the ALP of guarantee charges as 1% and recompute the TP adjustment. Thus, the ground raised by the assessee is allowed.

Ground No. 3 [3.1 to 3.4] raised by the assessee in challenging the action of the Assessing Officer and DRP in making disallowance under section 14A of the Act by invoking Rule 8D of the Income Tax Rules, 1962.

The assessee earned exempt income of ₹.18,90,84,481/- and offered suo-motu disallowance under section 14A of the Act r.w. Rule 8D for ₹.84,68,600/-. However, the Assessing Officer in his order under section 144C(1) of the Act, determined the disallowance under section 14A r.w. Rule 8D of ₹.3,49,66,838/- in para 4.4.2 of the assessment order. The assessee disputed the same before the DRP. The DRP directed the Assessing Officer to recompute the disallowance under section 14A of the Act r.w. Rule 8D by excluding the investment in foreign companies, which is reproduced in para 4.6 of the assessment order. Accordingly, the Assessing Officer recomputed the disallowance under section 14A r.w. Rule 8D and the variation of ₹.1,89,09,200/- was brought to tax.

Before us, the ld. AR submits that the disallowance should be computed by considering only those investments which have yielded exempt income during the year. We find force in the arguments of the ld. AR. Similar issue on identical facts was considered by the Tribunal for AY 2018-19 and remanded the matter to the file of the Assessing Officer for fresh examination. Accordingly, for the assessment year under consideration also, we remand the matter to the file of the Assessing Officer for fresh

Ground No. 4 [4.1] in challenging the alleged difference between the turnover as per service tax return and income offered to tax has not been pressed at the time of hearing and accordingly, ground No. 4 is dismissed as not pressed.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.