SHAPOORJI PALLONJI AND COMPANY PRIVATE LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -3(3)(1), MUMBAI

The learned Commissioner of Income-tax (Appeals)-58 erred in not passing the final assessment order dated 07 February 2017 within the time limit prescribed under provision of Section 153 of the Act which provides the outer time limit for passing the final assessment order and hence, the assessment proceeding is time barred and liable to be quashed. Additional supplementary ground of appeal

The appellant prays that the order of the CIT(A) on the above Assessment Year 2012-2013 & 2013-2014 ground be set aside and that of the Assessing Officer be restored.”

The facts relevant for adjudication of Cross-Appeals pertaining to Assessment Year 2013-2014 are as follows. The Assessee is a domestic company primarily engaged in the business of civil construction, real estate, trading of construction materials and construction related services. For the Assessment Year 2013-2014, the Assessee filed Return of income on 29/11/2013 declaring ‘Nil’ income under normal provisions of the Act and Book Profit of INR.37,27,12,684/- under Section 115JB of the Act. The case of the Assessee was selected for scrutiny. During the course of assessment proceeding, the Assessing Officer noted that the Assessee had entered into International Transactions with its Associated Enterprises (AEs) Therefore, reference was made under Section 92CA(1) of the Act to the Transfer Pricing Officer (TPO) for determination of the Arm's Length Price (ALP) in relation to the International Transaction with its AE. Vide Order Sheet noting, dated 03/10/2016, the TPO raised queries regarding Guarantee Commission and the Assessee was asked to show cause as to why Guarantee Commission at the rate of 1.5% should not be charged on the guarantees given by the Assessee to its AEs. In response, the Assessee provided the following details of Letter of Comfort and Financial/Performance Guarantees provided by the Assessee to third parties on behalf of its AE’s during the relevant previous year and filed submissions vide letter, dated 13/10/2016.: A. Letter of Comfort [LOC] SNo. Name of AE Guarantee extended to Amount (INR) A1. ICICI Bank, Bahrain 3,20,69,45,000 Shapoorji Pallonji A2. Mid East LLC Emirates NBD Bank PJSC 1,40,40,26,500 A3. Armada D1 Allahabad Bank - Hong Kong 1,35,88,75,000 Branch Assessment Year 2012-2013 & 2013-2014 B. Financial Guarantee SNo. Name of AE Guarantee extended to Amount (INR) B1. Natural Oil Exim Bank 51,56,60,000 Ventures Co. Ltd. C. Performance Guarantee SNo. Name of AE Guarantee extended to Amount (INR) C1. Shapoorji Pallonji Barwa City Real Estate 1,00,86,12,280 Mid Qatar WLL Company, WLL

The TPO noted that the Assessee had raised following contentions: (a) Giving LOC/Guarantee by the Assessee on behalf of its AEs does not constitute an ‘International Transaction’ (b) The LOC/Guarantees provided were incidental to the business and in the nature of shareholder activity (c) Without prejudice to the above, it was contented that the arm’s length commission to be charged by the Assessee from AEs should be determined in the range of 0.25% to 0.50% 5. The TPO, after considered the submissions made by the Assessee, concluded that the LOC/Guarantees given by the Assessee fell within the definition of term ‘International Transactions’ as contained in Section 92B of the Act read with Explanation thereto (inserted with retrospective effect from 01/04/2002). Thereafter, the TPO proceeded to determine the ALP of LOC/Guarantee Commission in respect of each of the LOC/Guarantees and concluded as under: “7. The computation of arm's length margin for Guarantee Commission is done as follows: Sr. AE Amount Guarantee/ Remarks No. Cost Paid 1. Shapoorji AED =7,50,00,000 0.80% p.a. The assesssee has not Pallonji Mid Rs. 320,69,45,000 plus a provided the amount of East LLC Remarks non- processing fee paid. refundable However, in the case of processing fee Exim Bank the assesse has paid a processing (Mentioned fee of 0.50% plus taxes. under points 8 This is a good internal Assessment Year 2012-2013 & 2013-2014 and 9 of the CUP. Hence the arm's Master Facility length margin of Agreement Guarantee Commission with ICICI is fixed in this case as Bank) 0.80% plus 0.50% plus 0.20% (to cover the various applicable taxes and the risks associated with the transactions, like the credit risk etc). 2. Shapoorji AED=97,000,000 Details not As the details are not Pallonji Mid Rs 1,404,026,500 available available, the arm's East LLC length guarantee commission in this case is held to be the average of the arm's length guarantee commissions charged in other international transactions of the assessee ie average of 1.5%, 0.66% and 0.70%, which comes to 0.95% 3. Armada D1 USD = 25,000,000 Recovered @ Amount recovered based Rs.1,358,875,000 0.75% for FY on costs charged by the 2012-13 banks. As direct internal CUP is available, this transaction is considered to be at ALP. 4. Shapoorji 1,008,612,280 Rs. Nil The arm's length Pallonji Mid guarantee commission in Qatar WLL this case is held to be the average of the arm's length guarantee commissions charged in other international transactions of the assessee ie average of 1.5%, 0.66% and 0.70%, which comes to 0.95% 5. Natural Oil 515,660,000 One time The arm's length Ventures guarantee guarantee commission is Co Ltd commission of held to be 0.50% plus 0.50% of the 0.20% (to cover the Loan Facility various applicable taxes plus service and the risks associated tax with the transactions, like the credit risk of the AE, currency and country risk etc.) Total (INR) 7,494,118,780 Assessment Year 2012-2013 & 2013-2014 8. In view of the above, the total adjustment with regard to Guarantee Commission is as under: ` Sr. AE Amount Arm’s Length Amount of No. Guarantee Adjustment Margin 1. Shapoorji AED =59,000,000 Rs. 0.75% 24052088 Pallonji Mid 320,69,45,000 East LLC 2. Shapoorji AED=97,000,000 Rs 0.75% 10530199 Pallonji Mid 1,404,026,500 East LLC 3. Armada D1 USD = 25,000,000 0.75% 10191563 Rs.1,358,875,000 4. Shapoorji 1,008,612,280 0.95% 4898770 Pallonji Mid Qatar WLL 5. Natural Oil 515,660,000 0.70% 7060286 Ventures Co Ltd Total (INR) 7,494,118,780 5,67,32,905 8.1 In view of above, an adjustment of Rs.5,67,32,905/- is proposed to the international transaction of the assessee.” 6. Thus, vide order, dated 20/10/2016, passed under Section 92CA(3) of the Act, the TPO proposed Transfer pricing addition of INR.5,67,32,905/-. The Assessing Officer passed Draft Assessment Order, dated 16/12/2016, under Section 143(3) read with Section 144C(1) proposing the aforesaid Transfer Pricing Addition of INR. INR.5,67,32,905/-. The Assessing Officer also disallowed deduction of INR.12,95,04,995/- claimed by the Assessee under Section 35DD of the Act in the computation of income for the Assessment Year 2013-2014. Since the Assessee preferred not to file any objections before the Dispute Resolution Panel, the Assessing Officer passed the Assessment Order, dated 07/02/2017 under Section 143(3) read with Section 144C(3) of the Act making (a) Transfer Pricing Addition of INR.5,67,32,905/- and (b) Disallowance of INR.12,95,04,995/- as per Section 35DD of the Act. Assessment Year 2012-2013 & 2013-2014

In appeal preferred by the Assessee challenging the above additions/disallowance, the Learned CIT(A) vide Order, dated 23/12/2024, provided partial relief. The Learned CIT(A) deleted the Transfer Pricing Addition made in respect of LOC and the disallowance of INR12,95,04,995/- made by the Assessing Officer under Section 35DD of the Act. The Learned CIT(A) sustained the Transfer Pricing Addition in respect of Financial/Performance Guarantee to the extent of the following: Particulars Adjustment Sustained by Amount Sustained by Learned CIT(A) Learned CIT(A) (in INR.) LOC issued to bankers Nil Nil Performance guarantee to 0.5% or actual cost incurred 50,43,061 third party customers by assessee plus 10% markup Financial guarantees to 0.5% or actual cost incurred 25,78,300 bankers by assessee plus 10% markup Total 76,21,361

Now, both, the Revenue as well as Assessee are in appeal before this Tribunal being aggrieved by the above Order, dated 23/12/2024, passed by the Learned CIT(A).

We have given thoughtful consideration to the rival submissions.

We note that the Assessee had provided following LOCs which were in effect during the relevant previous year: (a) LOC to ICICI Bank, Bahrain in Financial Year 2008-09 which was continuing in the relevant previous year. The principle activity of Shapoorji Pallonji MidEast LLC, Dubai (for short 'SP Mid East') was building construction. ICICI Bank, Bahrain had granted the non-fund based facilities to SP Mid East for completion of the huge construction projects. In relation thereto, the Assessee had issued LOC to ICICI Bank, Bahrain.

The Assessing Officer treated the issuance of LOCs by the Assessee to third parties as International Transactions defined in Section 92B of the Act read with Explanation thereto. However, in appeal preferred by the Assessee, the Learned CIT(A) concluded that issuance of LOCs did not constitute international Transaction in the facts and circumstances of the present case. The findings returned by the Learned CIT(A) are as under: “In the present case The assessee has also placed reliance on the judgment of Asian Paints (ITA No. 2754/Mum/2014). In this case, the Hon. Tribunal has given finding on the basis of nature of ‘letter of comfort’. In this case, as mentioned in Para 5 as per the terms of letter of comfort, the assessee was required to intimate the bank in the case of any disinvestment/divestment of shares. The assessee has given unconditional undertaking that:

We have heard both the sides on the issue under consideration and have perused the material on record.

As regards determination of ALP for Financial/Corporate Guarantee transaction, the Tribunal restored the issue back to the file of TPO/Assessing Officer with certain directions. The relevant extract of decision of Tribunal in the Assessee’s own case for the Assessment Year 2015-2016 and 2016-2017 [ITA No. 2026 & 2027/Mum/2021, Common Order, dated 06/03/2025] reads as under:

On the other hand, ld. DR objected the additional evidences filed by the assessee. The ld. DR also submitted that since there was no internal CUP available in the case of the assessee, therefore, the TPO has rightly applied external CUP method to determine the commission for the bank guarantee extended by the assessee for the purpose of associated enterprises.

The Assessee had provided a Performance Guarantee to Shapoorji Pallonji Qatar WLL (for short ‘SP Qatar’) for construction of Barwa City in Qatar. It is admitted position that the Performance Guarantee was issued based on the terms stipulated in the tender documents which stipulated that the contract was required to be backed by a Performance guarantee issued by the parent company. The TPO/Assessing Officer treated the aforesaid transaction of granting performance guarantee by the Assessee as an International Assessment Year 2012-2013 & 2013-2014 Transaction and made transfer pricing addition of INR.48,98,770/- holding that the Assessee should have charged commission at the arm’s length rate of 0.95%2. In appeal preferred by the Assessee, the Learned CIT(A) granted partial relief by directing the Assessing Officer to restrict the transfer pricing addition to (a) rate of 0.5% or (b) actual cost incurred by the Assessee plus 10% markup, whichever is more; and directed the Assessing Officer to delete the balance amount of transfer pricing adjustment made in respect of the Financial Guarantee. Both the Assessee and Revenue have challenged the aforesaid order of the Learned CIT(A).

During the course of hearing the Learned Authorised Representative for the Assessee had contended that issuance of performance guarantee did not constitute an international transaction under Section 92B of the Act. Reliance in this regard was placed upon the decision of Tribunal in the case of the Assessee for the Assessment Year 2015-2016 and 2017-2018 [ITA No. 2026 & 2027/Mum/2021, Common Order, dated 06/03/2025] and the decision of Co-ordinate Bench of the Tribunal in the case of Afcons Infrastructure Limited vs. Additional CIT [ITA No. 1135 & 1357/Mum/2014]. Per contra, the Learned Departmental Representative relied upon the order passed by the authorities and referred to the performance guarantee issued by the Assessee to contend that the issuance of performance guarantee constituted international transaction in the present case.

We have perused the decision cited on behalf of the Assessee and are of the view that the same were rendered in different set of facts and are not applicable to the present case. In all the decisions cited on behalf of the Assessee, it was held that the performance guarantee transaction did not qualify as international transaction 2 The average of the arm's length guarantee commissions charged in other international transactions of the Assessee (i.e average of 1.5%, 0.66% and 0.70%) which comes to 0.95% [Paragraph 7 of the Transfer Pricing Order passed under Section 92CA(3) of the Act] Assessment Year 2012-2013 & 2013-2014 since the assessee issuing the performance guarantee was not subjected to any obligations. In this regard, we deem it appropriate to refer to the decision of the Tribunal in Assessee’s own case for the Assessment Year 2015-2016 [ITA No. 2026/Mum/2021, Common Order, dated 06/03/2025] wherein while deleting the transfer pricing addition in relation to performance guarantee given by the Assessee to Qatar Perolem on behalf of is AE (i.e. SP Qatar) the Co-ordinate Bench of the Tribunal had held as under:

As regards determination of ALP for Performance Guarantee transaction is concerned we note that the Learned CIT(A) has merely followed the approach and reasoning adopt for determining ALP of financial guarantee transaction and has restricted the rate of performance guarantee commission to 0.5% or actual cost incurred by the assessee plus 10% mark up, whichever is higher. We have already rejected the aforesaid approach adopted by the Learned CIT(A) while adjudicating the issue of transfer pricing addition in respect of financial guarantee and have restored the issue back to the file of the TPO/Assessing Officer for determination of ALP afresh using one of the prescribed methods. Accordingly, we set aside the transfer pricing addition relating to Performance Guarantee made by the Assessing Officer with the directions to the Assessing Officer to recomputed the transfer pricing addition, if any, after determining arms length rate of performance guarantee commission in respect of the transaction under consideration as per the prescribed method keeping in view the terms of the performance guarantee including the cap on the maximum liability of the Assessee in terms of the same. Since we have restored the issue back to the file of the TPO/Assessing Officer, all the rights and contentions of the Assessee are left open.

Accordingly, in view of Paragraph 15, 20 and 25 above, (a) Ground No.1.1 and 1.6 raised by the Assessee is allowed for statistical purposes, (b) Ground No.1.2. to 1.5. raised by the Assessee are dismissed, (c) Ground No.1.7 raised by the Assessee is dismissed as being general in nature, (d) Ground No.2 to 6 raised by the Revenue are dismissed, (e) Ground No.7 raised by the Revenue is dismissed as having been rendered infructuous, and (f) Ground No. 8 raised by Assessment Year 2012-2013 & 2013-2014 the Revenue is allowed for statistical purpose.

In November 2012, the Assessee paid an amount of INR.25,00,00,000 as stamp duty pertaining to the aforesaid scheme of arrangement. Out of the aforesaid amount paid, the Assessee's share of expenses was INR.15,64,81,274/-. The balance amount was reimbursed to the Assessee by other companies which were part of composite scheme of arrangement. Out of the aforesaid stamp duty payment of INR.15,64,81,274/-, an amount of INR.12,79,23,980/- related to stamp duty paid in respect of immovable properties acquired under the aforesaid scheme was capitalized in the books of accounts during the relevant previous year. In the Computation of Income for the Assessment Year 2013- 2014, the Assessee claimed deduction of INR.12,79,23,980/- under Section 35DD of the Act.

The Assessee had debited expenses pertaining to scheme of arrangement amounting to INR.26,35,025/- to the Profit & Loss Account in during the previous year relevant to Assessment Year 2011-12 and had claimed deduction for 1/5th of such expenses in Assessment Year 2011-12 and AY 2012-2013. The Assessee claimed deduction for the balance amount of INR.15,81,015/- [INR.26,35,025/- less INR.10,54,010/-] during the Assessment Year Assessment Year 2012-2013 & 2013-2014 2013-2014 under Section 35DD of the Act.

Thus, the Assessee claimed deduction of INR.12,95,04,995/- [INR.12,79,23,980/- plus INR.15,81,015/-] under Section 35DD of the Act.

The Assessing Officer disallowed the deduction claimed by the Assessee under Section 35DD of the Act observing that: (a) The expenditure is for paying stamp duty for registration of immovable properties on the name of the Assessee and not stamp duty for transfer of shares. Therefore, it is clearly capital in nature, (b) Assessee itself admitted the fact that the expenditure is capital in nature and mentioned the same in notes to accounts; (c) Assessee has claimed entire expenditure in current year which is not allowable as per Section 35DD of the Act, (d) Assessee has offered to no explanation despite specifically asked during the course of assessment as to why this amount should not be added to the total income being not allowable as deduction.

Being aggrieved, the Assessee carried the issue in appeal before the Learned CIT(A). The Learned CIT(A) granted relief to the Assessee holding that the Assessee was entitled to claim deduction of INR.12,95,04,955/- under Section 35DD of the Act.

Being aggrieved, the Revenue has carried the issue in appeal before this Tribunal. The Assessee has also filed supplementary additional grounds vide letter dated 18/09/2025.

We have heard both the sides and have perused the material on record.

We note that Section 35DD of the Act was introduced by way of Finance Act, 1999 (with effect from 01/04/2020). Vide Circular Assessment Year 2012-2013 & 2013-2014 No.779, dated 14/09/1999, issued by Central Board of Direct Taxes (CBDT) the rationale behind introduction of amendments made in Provisions of the Act applicable in relation to amalgamation, demerger and slump sale was explained by the CBDT. As per Paragraph 56.4 (Clause xiii) of the said Circular Section 35DD was inserted to provide for amortisation of expenditure in case of amalgamation/demerger. Therefore, we are of the view that the deduction claimed by the Assessee cannot be denied solely on the ground that the expenditure related to amalgamation/merger as has been contended in Ground No.1 raised by the Assessee.

We note that Section 35DD provides for deduction of such expenditure in five successive previous years beginning with the previous year in which amalgamation or demerger takes place at one-fifth of the expenditure in each year and reads as under:

Bare perusal of Section 35DD(1) of the Act makes it clear that in case an assessee (being an Indian Company) incurs expenditure wholly and exclusively for the purpose of amalgamation/demerger, then such assessee is allowed to claim deduction of an amount equal to 1/5th of such expenditure for a period of 5 years from year in which amalgamtion/demerger takes place. However, Section 43B of the Act provides for deduction for expenses (otherwise allowable) as per the provisions of the Act, on payment basis in the year of payment. Any sum payable by way of tax/duty under any law for the time being in force falls within the ambit of Section 43B(a) of the Act. During the course of hearing Learned Authorized Representative Assessment Year 2012-2013 & 2013-2014 for the Assessee had placed reliance upon the decision of Tribunal in the case of Mahyco Seeds Ltd. (merged with Maharashtra Hybrid Seeds Co. Ltd.), Mumbai vs. DCIT 1 (2), Mumbai [ITA No.2235/Mum/2016, Assessment Year 2005-2006, dated 11/08/2017] wherein the Hon'ble Tribunal has allowed the deduction claimed by Assessee under Section 35DD as allowable expenditure under Section 43B of the Act in the year of payment. Relevant extracts reproduced as under:

As regards deduction of INR.15,81,015/- allowed by the Learned CIT(A) is concerned, we are of the view that the Assessee was allowed to claim deduction only to the extent of 1/5th of the expenses of INR.26,35,025/- debited to the Profit & Loss Account during the year relevant previous year given the mandate of Section 35DD of the Act. The Assessee has not claimed deduction for the aforesaid expenses on actual payment basis. We do not find any merit in the contention advanced on behalf of the Assessee that since the relevant previous year would be the last year (of the 5 years specified in Section 35DD of the Act), the Assessee should be allowed to claim deduction of entire residual amount of INR.15,81,015/- not claimed by the Assessee in earlier years. In our view the aforesaid contention runs contrary to the mandate of Section 35DD of the Act which provides for deduction to the extent of only 1/5th of eligible expenditure over a period of 5 years from year in which demerger takes place. Therefore, we restore the disallowance made by the Assessing Officer under Section 35DD of the Act to the extent of INR.10,54,010/- and allow Assessee’s claim for deduction to the extent of INR.5,27,005/-.

In view of paragraph 38 and 39 above, disallowance made by the AO under Section 35DD of the Act to the INR.10,54,010/- is restored. As regards the balance amount of INR.12,84,50,985/- allowed as deduction by the Learned CIT(A) we decline to interfere with the order passed by the Learned CIT(A) to the extent of such amount. Thus, Ground No. 1 raised by the Revenue is partly allowed.

In view of above, Ground No. 3, 5, 6, 7, 8 and 9 raised by the Assessee (raised as Supplementary Additional Ground) Assessee are dismissed and Ground No.4 (also raised as Supplementary Additional Ground) raised by the Assessee is Allowed. Assessment Year 2012-2013 & 2013-2014 Ground No.9 [Department’s Appeal]

In view of above, above Ground No.9 raised by the Revenue seeking setting aside of the order passed by the Learned CIT(A) is partly allowed in terms of adjudication of Ground No.1 to Ground No. 8 raised by the Revenue herein above.

By way of Letter dated 05/05/2025 the Assessee has also challenged the validity of Assessment Order on the ground the same is barred by limitation. No arguments were advanced by both the sides during the course of hearing. Therefore, the issue raised is the said ground are left open. In terms of aforesaid Ground No.2 raised Assessee is dismissed at this stage.

In result appeal preferred by the Assessee and Revenue for the Assessment Year 2013-2014 are partly allowed.

The facts relevant for adjudication of Cross-Appeals pertaining to Assessment Year 2012-2013 are as follows. The Assessee is a domestic company primarily engaged in the business of civil construction, real estate, trading of construction materials and construction related services. For the Assessment Year 2012-2013, Assessment Year 2012-2013 & 2013-2014 the Assessee filed Return of income on 29/11/2012 declaring total loss of INR.1,30,64,21,515/- under normal provisions of the Act and Book Profit of INR.54,30,88,947/- under Section 115JB of the Act. Thereafter, the Assessee filed a revised Return of Income on 11/03/2014 declaring total loss of INR.1,30,64,21,515/- under normal provisions of the Act and Book Profit of INR.54,35,88,947/- under Section 115JB of the Act. The case of the Assessee was selected for scrutiny. During the course of assessment proceeding, the Assessing Officer noted that the Assessee had entered into International Transactions with its Associated Enterprises(AEs), therefore, reference was made under Section 92CA(1) of the Act to the Transfer Pricing Officer (TPO) for determination of the Arm's Length Price (ALP) in relation to the International Transactions with its AE. The TPO vide Order Sheet noting dated 03/12/2014 the TPO ask the Assessee about the details of guarantees provided by the Assessee to its AE’s during the relevant previous year. In response the Assessee provided the following details: D. Letter of Comfort SNo. Name of AE Guarantee extended to Amount (INR) A1. Shapoorji Pallonji ICICI Bank, Bahrain 2,12,53,31,620 Mid East LLC A2. Emirates NBD Bank PJSC 7,64,50,00,000 E. Standby Letter of Credit SNo. Name of AE Guarantee extended to Amount (INR) B1. Shapoorji Pallonji Union Bank of India 69,22,02,600 Libya JSC F. Performance Guarantee SNo. Name of AE Guarantee extended to Amount (INR) C1. Shapoorji Pallonji Barwa City Real Estate 94,51,15,600 Mid Qatar WLL Company, WLL G. Corporate Guarantee SNo. Name of AE Guarantee extended to Amount (INR) D1. Natural Oil Exim Bank 50,87,00,000 Ventures Co. Ltd. Assessment Year 2012-2013 & 2013-2014

Vide Order Sheet Entry dated 25/03/2015, the Assessee was asked to show cause as to why Guarantee Commission @1.5% should not be charged on the guarantees given by the Assessee to its AEs. In response the Assessee filed submissions vide letter dated 30/03/2015. The TPO noted that the Assessee had raised following contentions: (A) The transactions of Guarantee under consideration were not covered by the definition of International Transactions (B) The Guarantees provided were incidental to the business and in the nature of shareholder activity (C) Without prejudice, to the above, it was contented that the commission should be in the range of 0.25% to 0.50% 48. The TPO considered the submissions made by the Assessee and concluded that the guarantees under consideration fell within the definition of ‘International Transactions’ as contained in Section 92B of the Act read with Explanation thereto (inserted with retrospective effect from 01/04/2002). Thereafter, the TPO proceeded to determine the ALP of Guarantee Commission in respect of each of the guarantees and concluded as under: “12. The computation of arm's length margin for Guarantee Commission is done as follows: Sr. AE Amount Guarantee/ Remarks No. Cost Paid 1. Shapoorji AED 7,50,00,000 0.80% p.a. The assesssee has not Pallonji Mid =104,25,000 plus a provided the amount of East LLC Rs. 212,82,068 Remarks non- processing fee paid. =Rs.1,08,28,31,62 refundable However, in the case of 0 processing fee Exim Bank the assesse has paid a processing (Mentioned fee of 0.50% plus taxes. under points 8 This is a good internal and 9 of the CUP. Hence the arm's Master Facility length margin of Agreement Guarantee Commission with ICICI is fixed in this case as Bank) 0.80% plus 0.50% plus 0.20% (to cover the various applicable taxes and the risks associated Assessment Year 2012-2013 & 2013-2014 with the transactions, like the credit risk etc). 2. Shapoorji AED=550 Million Details not As the details are not Pallonji Mid = Rs available available, the arm's East LLC 7,64,50,00,000 length guarantee commission in this case is held to be the average of the arm's length guarantee commissions charged in other international transactions of the assessee ie average of 1.5%, 0.66% and 0.70%, which comes to 0.95% 3. Shapoorji Rs.69,22,02,600 Recovered @ Amount recovered based Pallonji 0.66% for FY on costs charged by the Libya JSC 2011-12 banks. As direct internal (working CUP is available, this provided transaction is considered below) to be at ALP. 4. Shapoorji 94,51,15,600 Rs. Nil The arm's length Pallonji Mid guarantee commission in Qatar WLL this case is held to be the average of the arm's length guarantee commissions charged in other international transactions of the assessee ie average of 1.5%, 0.66% and 0.70%, which comes to 0.95% 5. Natural Oil 50,87,00,000 One time The arm's length Ventures guarantee guarantee commission is Co Ltd commission of held to be 0.50% plus 0.50% of the 0.20% (to cover the Loan Facility various applicable taxes plus service and the risks associated tax with the transactions, like the credit risk of the AE, currency and country risk etc.) Total (INR) 11,91,63,49,820 8. In view of the above, the total adjustment with regard to Guarantee Commission is as under: ` Sr. AE Amount Arm’s Length Amount of No. Guarantee Adjustment Margin Assessment Year 2012-2013 & 2013-2014 1. Shapoorji AED 7,50,00,000 0.50% 3,18,79,974 Pallonji Mid =104,25,000 East LLC Rs. 212,82,068 =Rs.1,08,28,31,620 2. Shapoorji AED=550 Million 0.95% 7,26,27,500 Pallonji Mid = Rs 7,64,50,00,000 East LLC 3. Shapoorji Rs.69,22,02,600 0.66% Nil Pallonji Libya JSC 4. Shapoorji 94,51,15,600 0.95% 89,78,598 Pallonji Mid Qatar WLL 5. Natural Oil 50,87,00,000 0.70% 35,60,900 Ventures Co Ltd Total (INR) 11,91,63,49,820 11,70,46,972 14 In view of above, an adjustment of Rs.511,70,46,972/- is proposed to the international transaction of the assessee.”

Thus, vide order, dated 06/11/2015, passed under Section 92CA(3) of the Act, the TPO proposed Transfer pricing addition of INR.11,70,46,972/-. The Assessing Officer passed Draft Assessment Order, dated 22/02/2016, under Section 143(3) read with Section 144C(1) proposing, inter-alia, the above Transfer Pricing Addition. Since the Assessee preferred not to file any objections before the Dispute Resolution Panel, the Assessing Officer passed the Assessment Order, dated 20/04/2016 under Section 143(3) read with Section 144C(3) of the Act. After making the aforesaid Transfer Pricing Addition the Assessing Officer assessed total loss for the Assessment Year 2012-2013 at INR.97,94,04,731/- under normal provisions of the Act and Book Profits at INR.60,20,41,406/- under Section 115JB of the Act.

Aggrieved by the Assessment Order, the Assessee preferred appeal before the Learned CIT(A). The Learned CIT(A) vide Order, dated 23/12/2024, provided partial relief in respect of the transfer pricing adjustment. The Learned CIT(A) deleted the Transfer Pricing Assessment Year 2012-2013 & 2013-2014 Addition of INR.10,45,07,474/- made by the TPO in respect of Letter of Comfort issued by the Assessee to its AEs. The Learned CIT(A) also provided relief to the Assessee by restricting the addition made in respect of Performance Guarantee and Corporate Guarantee given by the Assessee to its AEs to INR.47,25,578/- (as against INR.89,78,598/-) and INR.25,43,500/- (as against INR.35,60,900/- ), respectively. Thus, the Learned CIT(A) sustained Transfer Pricing Addition to the extent of INR.72,69,078/- as against INR.11,70,46,972/- made TPO/Assessing Officer.

Now, both, the Revenue as well as Assessee are in appeal before this Tribunal being aggrieved by the above Order, dated 23/12/2024, passed by the Learned CIT(A).

We note that Grounds raised in the present Cross-Appeals are identical to those raised in Assessment Year 2013-2014

During the course of hearing both the sides made submissions identical to those made in relation to grounds raised in Cross- Appeals for the Assessment Year 2013-2014. Both the sides had agreed that our finding/adjudication on the grounds raised in Cross- Appeals for the Assessment Year 2013-2014 shall apply mutatis mutandis to grounds raised in Cross-appeals for the Assessment Year 2012-2013. Accordingly, keeping in view identical facts and circumstances, and adopting the reasoning given while adjudicating [Assessee’s Appeal] and [Department’s Appeal] for the Assessment Year 2013-2014 hereinabove, we proceed to adjudicate grounds raised

In view of adjudication of identical grounds raised in appeal for the Assessment Year 2013-2014 herein above, we uphold the order passed by the Learned CIT(A) deleting the Transfer Pricing Adjustments of INR.10,45,07,474/- made by the Assessing Officer/TPO in respect of LOC whereas the Transfer Pricing adjustments made in respect of Financial/Corporate Guarantee and Performance Guarantee are set aside with directions identical to those given while disposing identical grounds (Ground No.1.1 to 1.7 raised by the Assessee and Ground No.2 to 8 raised by the Revenue) raised in appeal for the Assessment Year 2013-2014 hereinabove.

Accordingly (a) Ground No.1.1 and 1.6 raised by the Assessee are allowed for statistical purposes, (b) Ground No.1.2. to 1.5. raised by the Assessee are dismissed, (c) Ground No.1.7 raised by the Assessee is dismissed as being general in nature, (d) Ground No.1 to 5 raised by the Revenue are dismissed, (e) Ground No.6 raised by the Revenue is dismissed as having been rendered infructuous, and (f) Ground No. 7 raised by the Revenue is allowed for statistical purpose.

In view of the above, Ground No. 8 raised by the Revenue is partly allowed.

By way of Letter dated 05/05/2025 the Assessee has also challenged the validity of Assessment Order on the ground the same is barred by limitation. No arguments were advanced by both the sides during the course of hearing. Therefore, the issue raised is the said ground are left open. In terms of aforesaid Ground No.2 raised Assessee is dismissed at this stage.

In result appeal preferred by the Assessee and Revenue for the Assessment Year 2012-2013 are partly allowed.

In conclusion all the 4 appeals are partly allowed.