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Facts
The appeal by Tata Consumer Products Limited ('the assessee') arose from the Ld. AO's orders related to assessment year 2021-22. The issues involved a transfer pricing adjustment for corporate guarantee, denial of claims for bonus and EPF, short grant of TDS/TCS credit, and denial of deduction u/s 80M of the Act.
Held
The Tribunal directed that the corporate guarantee fee should be restricted to 0.5% based on a previous ruling for the same assessee. For the deduction u/s 80M, the AO was directed to examine and grant the claim as per law. The AO was also directed to grant credit for TDS/TCS after examination.
Key Issues
The core issues were the appropriate rate for corporate guarantee adjustment and the eligibility for deduction u/s 80M, along with other claims like bonus, PF, and TDS/TCS credit.
Sections Cited
143(3), 144C(13), 144B, 92B, 43B, 80M, 153, 234A, 234C, 270A
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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Tata Consumer Products Limited, (Successor to Tata Coffee Limited w.e.f. 1st April 2024), 1, Bishop Lefroy Rd, Kolkata - 700020 [PAN: AABCC0241R] ……..…...…………….... Appellant vs. Assistant Commissioner of Income Tax, Circle 4(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata - 700069 ................................ Respondent Appearances by: Assessee represented by : Sirram Seshadri Himani Sheth Aditya Kejriwal, Ars Department represented by : Praveen Kishore, CIT-DR Date of concluding the hearing : 26.08.2025 Date of pronouncing the order : 27.10.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from Ld. AO’s Orders passed u/s 143(3), r.w.s. 144C(13), r.w.s. 144B of the Income Tax Act, 1961 (hereafter “the Act”), dated 29.10.2024.
1.1 In this case, there are several issues which require to be adjudicated. We may briefly mention then as under:
(a) Transfer Pricing adjustment on account of Corporate Guarantee (CG). The Ld. Transfer Pricing Officer) (TPO) has worked out a CG @ 1%, whereas Tata Consumer Products Limited (successor of Tata Coffee Ltd.) initially the assessee has pleaded that CG is not an “international transaction” for the purposes of section 92B of the Act, but thereafter has also taken the alternative plea that following judicial precedents, such CG should be in the region of 0.3% to 0.5% only.
(b) Denial of claim of bonus and EPF u/s 43B of the Act.
(c) Short grant of credit for TDS/TCS.
(d) Denial of claim u/s 80M of the Act. For this issue, additional grounds of appeal have also been taken.
1.2 The assessee has filed the present appeal with the following grounds:
“1.0 On the facts and circumstances of the case & law, the final assessment order under section 143(3) r.w.s. 144C(13) read with section 144B of the Income Tax Act, 1961 (Act') dated 29 October 2024 passed by the Assessment unit, Income Tax Department ('Ld. AO) and the directions under section 144C(5) of the Act dated 24 September 2024 passed by the Ld. Dispute Resolution Panel (DRP) are erroneous and bad in law. 2.0 On the facts and circumstances of the case & in law, the final assessment order under section 143(3) twa. 144C(13) read with section 1441B of the Act dated October 29, 2024 and Ld. DRP's directions under section 144C(5) of the Art dated 24 September 2024 are barred by limitation provided under section 153 of the Act and hence, deserves to be held as void-ab-initio, bad in law and time-barred. 3.0 That on the facts and circumstances of the case and in law, the Learned Transfer Pricing Officer (Ld. TPO)/ Learned Dispute Resolution Panel ('Ld. DRP") grossly erred in making an adjustment of INR 2,00,21,945 to the income of the Appellant on account of corporate guarantee fee. 3.1 That on the facts and circumstances of the case and in law, the Ld. TPO/ Ld. DRP erred in not appreciating the fact that the transaction of corporate guarantee extended by the Appellant to its Associated Enterprise - Tata Coffee Vietnam Company Limited ('AE') does not fall within the definition of "International transaction" under section 928 of the Income Tax Act, 1961 (Act). 3.2 That on the facts and circumstances of the case and in law, the Ld. TPO/ Ld. DRP erred in disregarding the fact that the provision of corporate guarantee to its AE was in the Appellant's own interest and consequently the same should be considered to be a shareholder activity and hence no separate guarantee fee is warranted. 3.3 Without prejudice to the above grounds, the Ld. TPO/Ld. DRP has erred in Tata Consumer Products Limited (successor of Tata Coffee Ltd.) not considering the submission of the Appellant that the transaction of Corporate Guarantee has been subject to adjudication at various Tribunals and the Hon'ble Tribunals have upheld the arm's length rate for such transaction at 0.3% to 0.5% 4.0 That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in denying claim of Rs. 3,17,92,677/- towards bonus, made on payment basis under section 438 of the Act without any basis, in the computation sheet forming an integral part of the final assessment order u/s 143(3) r.w.s. 144C(13) of the Act 5.0 That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in denying claim of Rs. 14,662/- towards Provident fund, made on payment basis under section 43B of the Act without any basis, in the computation sheet forming an integral part of the final assessment order u/s 143(3) r.w.s. 144C(13) of the Act. 6.0 That on the facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in not granting claim of deduction u/s 80M of the Income tax Act, without assigning any reason thereof, while computing total income under the Act. 6.1 That on the facts and in the circumstances of the case and in law, the Ld. DRP has grossly erred in not adjudicating the objection relating to grant of claim of deduction u/s 80M of the Income tax Act to the appellant, without assigning any reason thereof. 7.0 On the facts and circumstances of the case and in law, the Ld. AO erred in not allowing TDS & TCS credit to the tune of INR 1,13,577/-without assigning any reason thereof, 8.0 On the facts and circumstances of the case and in law, the Ld. AO. erred in computing interest u/s 234A of the Act of INR 12,18,392/-, which is erroneous and not as per law. 9.0 On the facts and circumstances of the case and in law, the Ld. AO. erred in computing consequential interest u/s 234C of the Act of INR 68,668/-, which is erroneous and not as per law. 10.0 The Ld. AO has grossly erred in initiating penalty proceedings u/s 270A of the Act mechanically and without recording any satisfaction for its initiation. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds stated hereinabove either before or at the time of hearing the appeal. The above grounds are without prejudice to each other.” 1.3 The assessee has also taken additional grounds regarding denial of claim u/s 80M of the Act as under:
“The appellant company begs to take the following additional grounds of appeal in the subject appeal, which do not involve any fresh investigation of facts, but Tata Consumer Products Limited (successor of Tata Coffee Ltd.) pertains to question of law and therefore may please be admitted and adjudicated upon based on the decision of the Supreme Court in the case of National Thermal Power Co. Ltd. reported in 229 ITR 383. The additional grounds of appeal may please be read in continuation with Ground no 6 of Form 36. 6.2 That on the facts and in the circumstances of the case, the Appellant be allowed claim of deduction u/s 80M of INR 44,12,07,111/- being lower of dividend received of INR 44,12,07,111 and dividend declared of INR 56,03,11,110/-, in accordance with the express provisions of section 80M of the Act. 6.3 That on the facts and in the circumstances of the case, the Ld. Assessing officer may kindly be given direction to allow correct claim of deduction u/s 80M of INR 44,12,07,111/- (i.е., deduction u/s 80M of INR 28,01,55,555/- claimed in the return and additional amount of INR 16,10,51,556/-), being eligible to the appellant as per the provisions of the Act. The Appellant submits that the above grounds are independent and without prejudice to one another.”
2. Before us, the Ld. AR made a statement at the Bar, followed by written submissions, that the assessee was not pressing grounds 1, 2 and 10 specifically. The Ld. AR also stated that ground numbers 8 and 9 (charging of interest u/s 234A of the Act) were consequential and hence not specifically required to be adjudicated.
2.1 Regarding the CG issue, the Ld. AR has filed a brief submission, which he relied on. The same is as follows:
“Covered by the order of the Hon’ble Jurisdictional Tribunal in the case of Tata Consumer Products Limited for AY 2014-15 [ITA 372/Kol/2021] & AY 2015-16 [ITA 373/Kol/2021] wherein the Hon’ble Tribunal, under similar facts and circumstances, had adjudicated that the rate of corporate guarantee should be restricted to 0.5% (Refer Page 21 of the Case Law Compendium submitted on 15 July 2025].” 2.2 Regarding Ground Nos. 4 and 5, pertaining to payment of Bonus and PF it was mentioned that relief sought in the said grounds were already granted by the Ld. AO vide his order u/s 154 dated 24.07.2025. Thereafter, these two grounds were also not pressed.
2.3 Regarding the additional grounds pertaining to claim u/s 80M of the “During AY 21-22, the assessee company received dividend income of Rs. 44,12,07,111/-. Further the company distributed eligible dividend of Rs. 56,03,11,110/-. Hence the assessee is eligible for deduction u/s 80M of Rs. 44,12,07,111/-being lower of dividend received (Rs. 44.12 Crs) and dividend declared (Rs. 56.03 Crs) in accordance with the express provision of Section 80M of the Act. (Please refer chart showing claim of deduction u/s 80M filed during hearing on 26 August 2025) In view of the above, it is respectfully submitted that the Ld. AO may kindly be directed to verify and allow correct claim of deduction u/s 80M of Rs. 44,12,07,111/- i.e., deduction u/s 80M of Rs. 28,01,55,555/- claimed in the return (already granted vide rectification order dated 24 July 2025) and additional amount of Rs. 16,10,51,556/- as evident from facts on record.”
The Ld. DR, on the other hand, relied on the orders of authorities below.
We have carefully considered the arguments of Ld. AR/DR and have also gone through the documents before us. Regarding the issue of CG, there is already a decision from a Coordinate Bench in the assessee’s own case [ITA Nos. 372 & 373/Kol/2021, order dated 17.09.2024]. The relevant portion from the same is as under:
“6.5 Although the Ld. TPO as well as the Ld. CIT(A) have highlighted the higher risks were involved in the case of the assessee which required application of corporate guarantee fee @ 2%, however, since in the assessee's own case in the earlier year, corporate guarantee fee @0.5% has been applied on the same guarantee, hence, respectfully following the order of the coordinate Bench of the Tribunal in the assessee's own case for AY 2012-13, we direct the Ld. AO to apply corporate guarantee fee @ 0.5% of the loan outstanding at the year end as against 2% charged during the assessment proceedings. Hence, Ground Nos. 2.0 to 2.7 in relation to corporate guarantee fee are partly allowed. Following this finding, the CG is restricted to 0.5% from 1% assessed by the Ld. TPO, with consequential relief to the assessee.
4.1 Regarding the issue of deduction u/s 80M of the Act, it is directed that the Ld. AO must examine this issue and grant the same to the assessee, as per law.
4.2 Regarding the credit for TDS/TCL, it is directed that the Ld. AO must
In result, appeal of the assessee is partly allowed.