THE PRINCIPAL COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM vs. M/S OLAM AGRO INDIA PVT LTD

:3: ITA Nos.21 & 22 of 2023 JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. In these Income Tax Appeals preferred by the revenue against a common order of the Income Tax Appellate Tribunal dated 27.12.2022, although various substantial questions of law have been raised, we find from a reading of the impugned order of the Tribunal that it does not really consider the issues that were raised before it by the revenue, which was in appeal before the Tribunal, aggrieved by the orders of the First Appellate Authority under the Income Tax Act in relation to the assessment years 2011-2012 and 2012-2013. 2. Before the Tribunal, the revenue had essentially impugned the order of the First Appellate Authority to the extent it had allowed risk adjustment in case of exports at the rate of 2% in lieu of 1% that was allowed by the Transfer Pricing Officer, and further to the extent that the appellate authority had allowed the commission on the corporate guarantee on the gross loan limits and not on the actual loan availed. The facts, as discernible from the orders of the First Appellate Authority, would indicate that the assessee had claimed a market risk of 2.5% and the Transfer Pricing Officer had reduced the same to 1%. The First Appellate Authority had partly accepted the claim of the assessee

:4: ITA Nos.21 & 22 of 2023 and enhanced it to 2%. The revenue was, therefore, in appeal before the Tribunal contending that the claim for market risk ought not to have exceeded 1% as allowed by the Transfer Pricing Officer. On the issue of commission on corporate guarantee, while the Transfer Pricing Officer had found that the expenses claimed in respect of the corporate guarantee that was offered in favour of the assessee by Olam International Limited ought to be based on the actual exposure of the assessee to the banks from which the loans were availed, the Appellate Authority found that the expenses towards commission charges on the corporate guarantee could extend to the gross guarantee amount for which Olam International Limited had given the guarantee. In the appeal before the Tribunal, the stand of the revenue was that the expenditure towards commission for the corporate guarantee should be limited only to the quantum of actual exposure of the assessee to the various banks from which it had availed loans. 3. When we peruse the impugned order of the Tribunal, which is a common order passed for both the assessment years aforementioned, we find that both the aforementioned issues have not been considered by the Appellate Tribunal on merits although there were specific grounds of appeal raised by the revenue. Under the said circumstances, we feel it appropriate to set aside the impugned order of the Tribunal and remand the matter back to the Tribunal for a fresh decision on

:5: ITA Nos.21 & 22 of 2023 merits on both the aforementioned issues that have been raised by the revenue in their grounds of appeal filed before the Appellate Tribunal. Taking note of the lapse of time since the impugned order of the Tribunal, we direct that the fresh order of the Tribunal shall be passed within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the parties. The Income Tax Appeals are thus allowed by way of remand, and without answering the questions of law raised. Sd/-

DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- SYAM KUMAR V.M. JUDGE mns

:6: ITA Nos.21 & 22 of 2023 APPENDIX OF ITA 21/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER PASSED BY THE TPO U/S 92CA (3) OF THE IT ACT DATED 28.01.2015 FOR ASSESSMENT YEAR 2011-12 Annexure B TRUE COPY OF THE ORDER OF THE AO DATED 26.03.2015 FOR ASSESSMENT YEAR 2011-12 Annexure C TRUE COPY OF THE ORDER PASSED BY THE CIT (A) ON 07.03.2019 FOR ASSESSMENT YEAR 2011- 12 Annexure D TRUE COPY OF THE GROUNDS OF APPEAL FILED BEFORE THE ITAT Annexure E TRUE COPY OF THE ORDER OF THE ITAT DATED 27.12.2022 FOR THE ASSESSMENT YEAR 2011-12

:7: ITA Nos.21 & 22 of 2023 APPENDIX OF ITA 22/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER U/S 92CA(3) OF THE INCOME TAX ACT, 1961 DT 20.01.2016 FOR THE ASSESSMENT YEAR 2012-13 Annexure B TRUE COPY OF THE ASSESSMENT ORDER OF THE AO DATED 28.03.2016 FOR ASSESSMENT YEAR 2012- 13 Annexure C TRUE COPY OF THE ORDER PASSED BY THE CIT (A) ON 07.03.2019 FOR ASSESSMENT YEAR 2012- 13 Annexure D TRUE COPY OF THE GROUNDS OF APPEAL FILED BEFORE THE ITAT FOR ASSESSMENT YEAR 2012-13 Annexure E TRUE COPY OF THE CERTIFIED COPY OF THE ORDER OF THE ITAT DATED 27.12.2022 FOR ASSESSMENT YEAR 2012-13